Apple Is No. 2, and That's Okay

Apple Is No. 2, and That's Okay

In a world of falling prices on Android tablets -- and a lack of a springtime iPad rollout -- it wasn't a surprise to see Apple's once-dominant share of this market come undone.

Apple disappointed the market two weeks ago when it announced that it cleared just 14.6 million iPads during its latest quarter. It sold 17 million of the devices during the same fiscal third quarter a year earlier.

Is the tablet craze toast, or is Apple becoming a smaller player?

IDC confirms that Google's Android has taken the lead here as the platform of choice with new tablet buyers, just as it did in the smartphone market a couple of years ago.

The data may seem grim for the class act of Cupertino. That's OK, Apple fans. You don't have to bail, Apple investors.

IDC shows that worldwide tablet shipments soared nearly 60% during this year's second quarter, despite Apple's 14% slide. The cruel math of Apple's absolute decline in a rapidly expanding pie is that its share of the market has fallen to 32% from 60% a year earlier.

There's nothing wrong with grabbing the silver medal and nearly a third of the market, especially when Microsoft is way behind with the bronze at a mere 4%.

Investors should take comfort in knowing that Apple is not only a relevant player, but one that serves the higher end of the market where buyers have the means to spend more in the iOS ecosystem.

If you don't think a third of the market is enough, size up the smartphone world.

IDC put out a fresh study today showing that iPhone's share of the market has fallen from 17% to 13% during the same quarter. Google's Android is once again the share-chomping beast, going from 69% of the market to a resounding 79% chunk. Again we have Microsoft at a distant third with 4%.

Gaining market share doesn't come cheap. In Google's case you have to give away your product as open source, something that Apple is unlikely to ever do. In Microsoft's case you have to commit to send Nokia billions to back your fledgling platform, and even with the success of Nokia's Windows-fueled Lumia phones we're talking about Mr. Softy's sliver of the market inching up from 3.1% to 3.7% over the past year.

Apple is in a good place.

It may not seem that way now -- especially if Apple's share continues to slide -- but keep in mind that the market actually applauded Apple's iPhone performance in its latest quarter. Selling 31.2 million iPhones was the lone bright spot in Apple's fiscal third quarter, even if turns out to be just 13% of the 236.4 million smartphones that IDC claims shipped during the period.

There is money to be made as the distant silver medalist, as long as you're serving the right 32% of tablet buyers and 13% of smartphone buyers. It's the segment that spends money. It's the sliver that developers want to reach.

There will naturally come a point where it's bad to be in second place, especially if Microsoft miraculously gains ground or Apple keeps sliding. However, with new iPhone and iPad rollouts expected later this year, it won't be long before Apple is once again gaining share in growing markets.

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Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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