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Monday, June 10, 2013

How Demand for Low-Cost Tablets will Drive Growth

There once was a time when Apple had been able to maintain its media tablet lead by delivering a quality experience at a premium price. But as a growing number of analyst opinions raise new doubts about ongoing leadership -- the consumer electronics (CE) brand may have lost some of its caché in the marketplace.

Even though the iPad maker exited the first quarter of 2013 with a 50 percent share of all tablet shipments, the Google Android ecosystem is poised to overtake iOS -- according to the latest market study by ABI Research.

The big variable for Android leadership success is progress in China. The Chinese consumer elite still seem to be upbeat about the Apple brand -- and there's a growing ability for more consumers to afford technology devices.

However, the selection of smaller 7 inch Android tablets has become very popular, even though most currently lack the Google suite of apps and Android Play marketplace.

Moreover, a push for sub-$200 tablets is keeping Android relevant in both developed and emerging markets. In particular, the increased demand for these devices seems to be fueled by novice internet users.

Combined with the free Wi-Fi hotspot access phenomenon, low-cost tablet ownership will likely help remove the final barrier of entry to the Global Networked Economy for many people.

"It’s inevitable that Google Android tablets will overtake Apple iOS-powered slates, though we see no single vendor challenging Apple’s dominance anytime soon," says Jeff Orr, senior practice director at ABI Research.

With media tablets commercially available for more than four years, momentum is shifting toward value and affordability -- putting these devices within reach for more of the mainstream population.

Average selling price (ASP) and size have been moving down-market since Android tablets started honing in on the opportunity in 2012.

Rather than try to unseat Apple in the 10 inch class space, tablet vendors sought a defensible area they could own -- the result is the 7 inch class devices.

Facing manufacturing limits in its first quarter of offer, the 7.9 inch iPad Mini put a dent in the larger iPad sales and Apple profits. The first quarter of 2013 saw Apple cover its backlog and approach the typical 4-6 weeks of sales channel inventory.

ABI Research estimates that iPad mini represented 49 percent of units and 39 percent of total iPad revenues. ABI says that they expect iPad minis to become the predominant iPad model after the second quarter of 2013.