Google and Microsoft Chip Away At Apple’s Dominance in Tablets

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Gartner has just launched updated forecasts for the global tablet market. [1] It predicts that Apple (NASDAQ:AAPL) will lose much of its market share in the tablet market while Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) will gain a sizable market share with Android and Windows respectively, by the end of 2016.

Check out our complete analysis of Apple, Google and Microsoft.

Apple, which can be considered the first mover in the tablet space, launched the iPad in 2010. It was followed by the launch of a series of Android tablets, which failed to gain any significant traction in 2010, but managed to push Apple’s market share down to around 61% in 2011 thanks to Amazon’s Kindle Fire, tablets by Samsung, Motorola, HTC and others, and most importantly, cheap Android tablets by Chinese OEMs which were a huge hit in emerging markets like China and India.

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While Apple’s iPad remains the most popular tablet to date, its dominant position in the tablet space is threatened by Google and Microsoft, both of which are focused on capturing a significant portion of the tablet market.

Google will focus on the budget segment …

Google launched Ice Cream Sandwich, a unified smartphone-tablet version of Android in 2011, and is apparently planning to enter the tablet market itself with the Nexus Tablet or the Google Pad, an inexpensive tablet aimed at the budget conscious market, which should help it rack up sales quickly, taking market share away from Apple.

… and Microsoft will target the high-end & enterprise segments

On the other hand, we have Microsoft, which is set to launch Windows 8 by the end of 2012. Since growth in the desktop market has almost flattened, Microsoft is looking at the tablet market to compensate for the slowdown in Windows desktop license sales. Given Microsoft’s focus on tablets, its massive user base in the desktop and notebook markets, and its enterprise reach, it has a good chance of capturing tablet market share, especially in the enterprise and high-end segments.

With the competition hotting up, Apple’s market share in tablets may end up being much lower than 45%, which is what Gartner is currently predicting. While iPad sales have seen tremendous growth in the last couple of years, it’s only in the next few years that it will face some real competition. We currently expect iPad sales to reach 100 million units by 2016, with sales growing at a lower rate than what Gartner projects.

Will Apple’s reign come to an end? Possibly!

While we do expect Apple to continue to capture a lion’s share of the total profit in the tablet space, in terms of unit sales, Google and Microsoft have a good shot at displacing Apple as the market leader. Google, especially, with its focus on tablets priced below $200 has a very good shot of becoming the major player in the tablet market, just as it has dominated the smartphone market.

With a third of Google’s value being generated by its mobile advertising, which is potentially driven by smartphone and tablet sales, and more than 25% of Microsoft’s value driven by Windows sales, there is no way they are giving up without a fight.

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  1. Gartner Predicts 665 Million Tablets In Use By 2016, Over 45% Of Them iPad Devices, Techcrunch []