Android tablet shipments have outpaced Apple iPad shipments all year. But it’s only in the last quarter that Android tablet revenue has surpassed iPad revenue for the first time.
But not the last.
“For the first time Android devices accounted for a greater share of the market in revenue terms than iOS,” Morgan Stanley analyst Katy Huberty said in a research note today. “Android revenue share reached 46.2 percent in 3Q13, for the first time exceeding iPad share of 45.6 percent. Android’s unit share grew to 66.7 percent from 58.5 percent a year ago, largely driven by Samsung and Lenovo, while iPad share declined to 29.7 percent from 40.2 percent.”
Apple fans, this may be temporary, since iPad Air and iPad Mini retina tablets hit the market late in the quarter, but it’s a sign of things to come.
iPad shipments dipped sharply in the first calendar quarter of the year, resulting in a year-over-year drop in iPad sales by about 2.5 million tablets — a challenging feat, one might think, in a rising market. That continued, to a degree, in the second calendar quarter of the year, with Android reaching 60 percent tablet market share. And we saw it again in the third quarter, as Samsung doubled tablet shipments while Apple grew an anemic .6 percent, with bargain-basement whitebox tablet vendors selling more than Cupertino.
Now those unit numbers are coming home to roost.
For the Apple loyalists that immediately pipe up and say that revenue is not profit and that Apple makes much more profit from tablets than Samsung and the entire world of Android hardware manufacturers, you’re right. And to those who say that with the new iPads, Apple will regain any lost revenue share this Christmas quarter, I agree with you.
But that’s irrelevant.
Profit is a trailing indicator. And in the big picture, the overwhelming tide is to Android, in device diversity, in device quantity, in usage, in sales volume, in revenue. That tide will continue in the first calendar quarter of 2014 and beyond, and it will inevitably impact overall profitability and margin numbers. And despite the fact that Apple has a very sweet app ecosystem that still pulls in double the revenue of Google Play, that’s been an ever-decreasing advantage over the past two years.
The arc of the market seems inevitable.
The only thing that could change it is a sea change in Apple’s strategy: a commitment to fighting at the low end of the market — if not the basement, at least the first and second floor. And if not in the U.S., where Apple still has very, very strong market share, at least in developing markets, which are actually buying 75 percent of all new mobile devices.
And that, the company is unwilling or politically unable, internally, to do.
So the company with arguably the slightly better operating system, slightly better app/media/accessory ecosystem, is pissing away its advantages. Sure, there’s proportionately less revenue and profit to be made in Asia and Africa and Eastern Europe today — compared to the American and Western European markets — but that is not a condition which will remain forever.
The problem is that as it changes over the coming years, Android will have achieved a lock on the market. In fact, it already has.
We have seen this movie before.