Report: Apple iPad No Longer Dominates Tablet Market

Lower priced competition helped trim the Apple iPad’s media tablet market share lead in 4Q, but it was the introduction of Apple’s iPhone 4S that provided the stiffest competition. Apple shipped 15.4 million iPads and iPad 2s in 4Q 2011, a 39% increase, but Apple’s overall market share lead slipped to 57% from 64% on a quarterly basis, according to the latest iSuppli Display Materials & Systems Service report.

“Shipments of the iPad line fell short of IHS estimates in the fourth quarter as many loyal Apple customers devoted their dollars to shiny new alternatives,” commented Rhoda Alexander, senior manager, tablet and monitor research for IHS. “However, the primary alternative wasn’t the Kindle Fire–which debuted to solid sales in the fourth quarter–but Apple’s own iPhone 4S smartphone. The rollout of the iPhone 4S in October generated intense competition for Apple purchasers’ disposable income, doing more to limit iPad shipment growth than competition from the Kindle Fire and other media tablets.”

Amazon’s Kindle Fire launch contributed to the decline in iPad shipments, particularly in the US market, which accounted for more than half of global 4Q media tablet sales, according to IHS. Amazon shipped 3.9 million Kindle Fire tablets in 4Q, fueling a double-digit market share gain that reached 14.3%. That led Amazon to surpass Samsung as the world’s second biggest seller of media tablets. The long-term viability of the Kindle “will hinge on the success of Amazon’s business gamble, which depends on tablet sales driving substantial new online merchandise sales at Amazon.com in order to obtain profitability,” Alexander commented.

Apple shipped 40.5 million iPads and iPad 2s for 2011 as a whole, according to IHS, an increase of 168% from 15.1 million in 2010. That was good enough to earn a 62% media tablet market share, down from 87% in 2010. Samsung held on to second place for the year, shipping 6.1 million Galaxy Tabs, 9.4% than in 2010. Amazon ranked third for the year, with a market share of 6%.

Competitors chose to resort to sharp price reductions to try to slow Apple’s dominance of the media tablet market, putting pressure on profitability. Further complicating things for competitors, Apple is reportedly preparing the iPad 3 for a March launch, IHS noted.