Apple's Undervalued Tablet Dominance
Apple's worldwide market share of tablet shipments was down 14% in the second quarter, year over year, according to data from IDC. This spells doom for Apple's iPad segment, right? Nope.
Last year, Apple refreshed its iPads in March, giving Apple a fresh tablet to boost sales in the second quarter. In the second quarter of this year, however, Apple's iPad was almost five months old.. Talk about a tough comparison.
Apple shareholders shouldn't fret. The operating environment may be tough, but Apple's iPad segment still boasts significant market share -- 32.4% according to IDC, nearly double Samsung's 18% share. And, keep in mind, this data is based on quarterly shipments, not total installed base -- so it's going to fluctuate widely on a quarter-by-quarter basis.
Furthermore, consumers still love the iPad. In April, J.D. Power and Associates' 2013 U.S. Tablet Satisfaction Study ranked Apple's iPads No. 1.
The second half of the year will almost certainly be a very different story. With Apple's tablet refresh rumored to come this quarter, Apple's year-over-year market share comparisons should begin to look a bit nicer.
The overall trend
Zooming out to look at the overall trend, Apple's prospects look bright. Despite Apple's aging tablets, total tablets shipped was up an impressive 59.6% during the quarter, according to IDC.
Though Samsung is certainly doing an excellent job at competing with Apple in the tablet market, the market's obvious continued demand for tablets in general should help Apple when it refreshes its product line.
Even more, Samsung's ascent in the tablet market isn't indicative of the success other tablet makers are having. The rest of the competitors remain small players. Asus came in third on IDC's study, at just 4.5%.
Succeeding in tablets isn't easy. Just look at Microsoft, whose failed attempt in the tablet market left them unnamed on IDC's report. Even worse, the company took an embarrassing $900 million charge "related to Surface RT inventory adjustments," when it reported its fourth-quarter results.
Moving the needle
At 18% of revenue, a solid quarter from Apple's iPad segment could move the needle on the company's bottom line. Thanks to its cheap valuation, the needle doesn't need to move very far. And given a fast-growing tablet market that is basically ruled by just two companies, it's very likely that Apple's iPad segment will perform solidly when it introduces its new line-up in 2013.
Editor's note: An earlier version of this article contained an error comparing the size of Apple's market share with Samsung's.
If tablets alone can move the needle, just imagine if Apple does unexpectedly introduce a new revolutionary product. You can't deny Apple's history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in The Motley Fool's free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.
The article Apple's Undervalued Tablet Dominance originally appeared on Fool.com.Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple 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.