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Apple’s tablet sales seem to be sliding south while the company still swims in oceans of cash. This year’s second quarter was challenged by Windows and Android tablets, causing the famed iPad to lose ground. According to the International Data Corporation (IDC), the tablet market will experience a more sluggish growth than in its previous year, as indicated by total market shipments which declined in this year’s first quarter by 1.5 percent.
Although Apple, longstanding leader in the industry, maintains its number one spot in tablet sales, the second quarter this year revealed that worldwide total sales had increased by 11 percent to 49.3 million units sold. Apple is concerned that Lenovo, Samsung (who increased unit sales by about 100,000) and Asus are gaining in their hold on the market share. Even though Apple currently steadies 26.9 percent of the total market, the IDC showed that their numbers were on the decline by 9.3 percent. Developing countries have been sourcing less expensive Android tablets, which has been key in lowering overall tablet prices.
IDC’s research analyst, Jitesh Ubrani, sees a new phase for tablets, in that the playing field is being leveled by smaller vendors. Part of the consumer interest is in larger screen smartphones which, according to IDC’s Research Director for Tablets, Jean Philippe Bouchard, is lasting longer than previously expected, particularly in regards to ownership cycles. Only recently did the market focus shift from Apple and Samsung to smaller competitors such as Lenovo, which is now in command of third place. Asus and Acer round out the top five, respectively.
Bouchard acknowledged that deceleration in the tablet market was directly connected to the fact that the commercial market has not caught up quickly to the idea of utilizing tablets in business settings. The learning curve is in place as Apple’s Tim Cook is in “fight back” mode through offerings that are enterprise-specific for corporate use, with the new unveiling of the IBM-Apple partnership. They struck a deal last week, agreeing to jointly sell the iPad and the iPhone to large companies. This is likely to expand the swim in the oceans of cash while putting a halt to Apple’s slide.
All eyes seem to be on Lenovo. Not only did they snag 4.9 percent of the tablet market, their “other” market has captured 37 percent as well, which makes them prime to continue gaining traction. While their overall market share appears to be small, their growth rate topped 64 percent. High feature products are part of the Lenovo strategy. They reported to Harvard Business Review that this is now the PC “Plus” era and they intend to dominate it by winning tablet sales, winning mobile phone sales and to ultimately become the leader in server business. Lenovo gets it; that mastering the PC business is the connection to mastering the tablet business. Strategists believe Lenovo is on the right track.
Apple may be sliding south with their tablet sales, but they continue to swim in oceans of cash and own the more significant portions of the overall market. Apple Inc.’s cash, according to Bank of America’s Wealth Management Division of U.S. Trust, has triple the amount of cash as the U.S. government. Unhappy shareholders are squawking for buy-back programs that would increase their per-share earnings, rather than having all that cash to sit idle. Although Tim Cook has listened to Carl Icahn’s suggestions regarding that issue, the consistent posting of sales volume seems to encourage Apple’s “cash lock” as long as investors are getting some type of return.
By Jill Boyer-Adriance