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How Apple Lost Momentum within the Tablet Market

​There's been a big shift in product category leadership for media tablets in the mobile computing market. At the mid-point of 2013, ABI Research identified a trio of events signaling that the Apple iPad family of products had lost significant market share to the Google Android ecosystem.

During the second quarter of 2013, the number of Android-powered tablets surpassed iOS-based slates for the first time, and tablet-related hardware revenues reached parity.  But the most important event was that the average selling price (ASP) of the iPad is rapidly approaching the market average.

Overall tablet shipments in the quarter dropped 17 percent sequentially, while growing 23 percent year-over-year for the same quarterly period.

"Smaller 7-inch class tablets are finally the majority of shipments," says Jeff Orr, senior practice director at ABI Research.

The 7.9-inch iPad mini represented about 60 percent of total iPad shipments and 49 percent of iPad-related device revenues in the quarter.

Tablet shipments in the second quarter of 2013 achieved revenues of $12.7 billion. For the first time, iPad represented only 50 percent of worldwide end-user revenues -- this was seen as the key turning point.

Apple split the market with all other branded vendors at $6.3 billion in the quarter. Similarly, the change in the vendor landscape can be seen through the ASP of tablets. In the past year, iPad ASPs dropped 17 percent while the rest of market increased 17 percent.

So, why did the Apple product leadership lose momentum in the marketplace?

The iPad drop is primarily attributed to the introduction and volume shift to the smaller iPad mini. They had to compete with the Google Nexus 7, and other similar devices that are very popular.

Apple is still a leader in tablets, though its lineup has now been matched and bested by several competitors in the Google Android ecosystem. This full impact of the shift in demand within the market has not yet run its course. Therefore, ABI has cautioned Apple not to become complacent.

"Twelve months is a long time for the peak lifecycle of a contemporary tablet. To remain a leader, Apple must continue to innovate and address real-world market needs," adds Orr.

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