The latest analysis from market research firm IDC shows that Apple snagged nearly three-quarters of the tablet market during the fourth quarter of 2010. Though Samsung’s 7-inch Galaxy Tab offered some competition, Apple captured 83 percent of the market for 2010, and most analysts believe that with the iPad 2, Apple can maintain about 80 percent share for 2011 as well.
IDC’s research also showed that Amazon’s Kindle continues to be a market leader, grabbing almost half of the e-reader market in fourth quarter 2010. With Amazon representing the closest competition to Apple with respect to available content and e-commerce infrastructure, Forrester researcher Sarah Rotman believes Amazon is best poised to give Apple the most credible threat to its dominating market position, assuming it could assemble a more general-purpose tablet with a color screen.
The overall tablet market grew 124 percent consecutively from third quarter to fourth quarter 2010, outpacing IDC’s previous projections. IDC recorded a total of 10.1 million “media tablets” sold in the fourth quarter, up from 4.8 million the previous quarter. Apple sold a smidge more than 7.3 million iPads, good for 73 percent market share. Samsung managed to capture 17 percent share according to IDC, suggesting Samsung moved about 1.7 million units. The remaining 10 percent of the market belonged to “a number of smaller regional players.”
“Strong holiday sales of media tablets were in line with IDC projections and strong consumer interest in the category while device vendors scrambled to offer products competitive with Apple’s iPad and now iPad 2,” Loren Loverde, IDC vice president of Consumer Device Trackers, said in a statement. “Media tablets are on pace to reach shipments of roughly 50 million units in 2011.”
The recently launched Motorola Xoom tablet was believed to be capable of taking on the iPad with its beefy specs and tablet-optimized Android 3.0 OS. However, the Xoom shipped to market missing a few promised hardware and software features, some rough edges, and pricing that is largely considered to be a major impediment to its wide adoption.
Forrester’s Rotman agrees with the IDC assessment that the Xoom, as well as upcoming competitors to the iPad such as Samsung’s Galaxy Tab 10.1, RIM’s PlayBook and HP’s Touchpad, are all competent and well-made devices. However, as Rotman wrote in her blog, all of these tablets have “fatally flawed product strategies.”
These competitors are either priced higher than comparable iPads, come with carrier contracts, or both. Forrester’s research indicates that consumers aren’t interested in accepting long-term contracts for tablets in the same way they have been accustomed to doing with mobile phones.
Furthermore, none of the competitors have the combination of content, channel, and cachet that Apple does. No single vendor has music, video and apps in as great a number as the iTunes Store. Apple also has a phalanxof retail stores to highlight its products in addition to big-box retailers like Walmart, Target, and carrier partners. And the iPad 2 — which launches Friday — is thinner, lighter, and arguably more stylish than the original.
“In a post-PC world, consumers have a more intimate relationship with their devices,” Rotman wrote on her blog. “They use them on the couch and in bed and not just at their desk. They show their devices to other people. Fostering that desire is a smart way to differentiate your piece of glass from other pieces of glass that perform essentially the same functions.”
IDC is predicting that Apple will hold on to 70 to 80 percent of the tablet market in 2011. Forrester is betting on closer to 80 percent, at least in the United States. “We expect 24.1 million tablets to sell in the United States this year, at least 20 million of which will be iPads,” Rotman said. Those figures are further supported by market research firm ChangeWave’s latest consumer survey on tablet demand. Consumers planning to by a tablet overwhelmingly consider an iPad their top choice — 82 percent plan to get an iPad in the next 90 days — while the Xoom, PlayBook and Galaxy Tab only garnered a few percentage points each.
Rotman believes that Amazon, the current market leader in e-reader sales, represents the company that has the best chance to offer the combination of hardware, software, sales channel capacity, and media offerings to effectively compete with Apple at this stage in the game.
“Amazon could create a compelling Android- or Linux-based tablet offering easy access to Amazon’s storefront — including its forthcoming Android app store — and unique Amazon features like one-click purchasing, Amazon Prime service, and its recommendations engine,” Rotman wrote. Microsoft and Sony are also seen as having similar potential, but neither have yet demonstrated the capability to leverage that potential as successfully as Apple in the mobile market.
Whether Amazon decides to jump into the tablet market or not, though, the company is still doing well with its Kindle e-readers. The revised Kindle 3 with its $149 price boosted Amazon’s fourth quarter e-reader market share to 48 percent, up from 40 percent in the third quarter. The overall market grew considerably at the same time—up to 6 million units versus just 2.7 million in the third quarter, for a total of 12.8 million e-readers sold in 2010.
Pandigital just edged Barnes & Noble for second place for the fourth quarter, slotting the vendor of the Nook and Nook Color in at number three. China’s Hanvon took fourth place, while Sony’s 81 percent increase in sales was enough for fifth place.