Tablets to account for nearly 50 per cent of 2014 PC shipments

News 26 Nov, 2013

Canalys research suggests Apple and Samsung might face a tough time in the tablet market in the years to come.

Tablets will out sell all other PC form factors combined next year, with forecasts suggesting 285 million units will ship in 2014.

That’s according to analyst Canalys, who claim tablets will account for almost 50 per cent of the total client PC market next year, up from 40 per cent in Q3 2013.

The market watcher said it expects tablet shipments to keep growing well into 2017, when it predicts 396 million of the devices will be sold.

Android-powered devices are expected to account for 65 per cent of the devices shipped in 2014, it added.

Apple and Samsung will remain the vendors to beat in the tablet category for some time to come, said Canalys, but will face some stiff competition as its rivals continue to refine their offerings.

The iPad maker’s focus on maintaining its gross margins means its share of the overall PC market is likely to decline over time, explained Tim Coulling, senior analyst at Canalys.

“Apple’s decline in PC market share is unavoidable when considering its business model. Samsung narrowly took the lead in EMEA this quarter and Apple will lose its position to competitors in more markets in the future,” he said.

However, it’s not all bad news for Apple, added Coulling, because it’s one of the few firms making money out of the booming tablet market at the moment.

“Premium products attract high value consumers; for Apple, remaining highly profitable and driving revenue from its entire ecosystem is of greater importance than market share statistics,” he said.

Samsung, Canalys predicts, will gradually see its share of the Android-powered tablet market eaten away by the likes of Acer, Asus, Lenovo and HP, as well as some less well-known tablet makers.

In Q3 2013, the South Korean’s products accounted for 27 per cent of Android tablet shipments.

“With the cost and time-to-market advantages afforded by their Chinese supply chain, these small-to-micro brand vendors are eating up tablet market share,” said Canalys analyst James Wang.

“The rise of small-to-micro brand vendors has proved there is a demand for entry-level Android tablets in every country and in every region.”

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"Apple’s decline in PC market share is unavoidable when considering its business model."

What does he mean by this?

He means tablets are not PCs *eyeroll*

And that Apple sells mostly laptops

What he means is HP and Lennovo increased market share as compared with Apple in the last quarter. What he seems to have failed to appreciate is that traditional PC sales are in decline while tablets are on the rise (largely due to the revolution the Tablet, driven by Apple's iPad, has brought to the market) and Apple's share of that shrinking market has continued to increase at the same rate it has done for the last 7 years or longer. Several other PC vendors at the low cost end of the market have recently seen margins squeezed to an extent they are no longer competitive and they have essentially imploded. It appears HP and Lenovo have shared the spoils and have taken up those low end sales, not Apple.

So Apple's performance actually remains as strong as it has been for many years relative to the market as a whole, and the reason for the traditional PC market shrinking as it is, is also pretty much due to the success of another product category lead by Apple.

What is now also happening is that as low-end tablet devices improve, the low end, which is a greater share of the market, but represents far less profit share, is switching from traditional PC's to tablet devices at a faster rate and Apple isn't picking up (nor, it should probably be said, does it particularly care for) most of that business.

Except it doesn't (he didn't do his research) clearly market in every quarterly report from Apple iOS devices make up the lion's share of both revenue and profit. I dislike stupid reporters.

And what percentage of tablet profits does Apple have? Nearly all of it.

Correct - so this article - if I'm reading it right - makes no sense ...

OR - Apple's tablet market % will decline, along with its computer/laptop market %, while Apple continues to increase shipments and/or profits and builds a healthy eco system for all its devices... because, Apple has no interest in the sub $200 tablet market (which is probably a good thing).

No idea what it means, but it's a strange thing to say when Apple is the only company that's actually growing in the PC market.

We took it to mean that Apple's share of the PC market will decline in time because of its focus on gross margins, and as competitive pressure within the tablet and wider PC market increases.

Let's see. Apple's philosophy is to take the part of the market that pays a profit. That's difficult to understand, is it?

Well, it's not quite correct. Lenovo actually makes money on PCs as well. So those two companies (Apple and Lenovo) are the only two making money on PCs. Which explains Dell and HP wanting to get out of making traditional PCs altogether.

You're right, and I basically meant what you said - Apple's PC business is growing while the PC industry as a whole is making less money.

Though I'm not sure how companies that are failing at PCs expect to be profitable in any other computing field.

But but but... If you don't capture the low end of the market, you'll lose *gasp* market share!

Yes, but it seems strange to call that "bad news" for Apple, right after declaring that they're one of the two tablet "vendors to beat" and will remain so "for some time to come", in an article saying how tablets are half of the PC market, and growing.

Won't it also be bad news for Samsung? Apple and Samsung together have a huge majority in the tablet market today. *Any* competitive pressures will almost certainly mean they will both lose market share.

This is like saying that Oldsmobile's decline in the automobile market was "unavoidable" 100 years ago, "considering its business model" -- and neglecting to mention Ford at all (or vice versa). Sure, it's technically true that when you're the first big success story of a particular field, your market share in that field can only go down. That's also true of your early competitors, and has nothing to do with your business model.

Actually what you say was correct until about 1 year ago. Not now. Sales are declining for Apple as they are for the traditional PC market as a whole, just at a slower rate than for the market as a whole. This is because of the impact of tablets. However their share of the traditional PC market continues to increase just as it has done for years, so they continue to perform, relatively speaking, very well. In terms of gain in market share, they have been outperforming all their rivals for years, until last quarter, when bother HP and Lenovo market share increased dramatically.

This is where many analysts seem to have got confused. The relative market share increase of HP and Lenovo has occurred at the same time as there has been a collapse in market share for the low end manufacturers. So it very much looks as though, due to the shrinking market and squeezed margins (especially in the low end) some low end manufacturers/suppliers are going to the wall. Unsurprisingly it is HP and Lenovo who are picking up their business, not Apple. This has meant that just for this latest quarter, though the market as a whole is shrinking HP and Lenovo have increased sales (at the expense of low end rivals). Analysts are jumping on the story that these two have gained sales volume in absolute terms, while in absolute terms Apple - as part of the shrinking market (though still outperforming the market average remember) have lost sales and are coming out with the usual doom predictions. All that has really happened is that there has been consolidation amongst low end supply - a segment of the market Apple aren't active in. When customers are on their update cycle and would have been in the market for Asus or Acer are finding they no longer provide competitive options, they are going for HP or Lenovo instead.

Traditional PC market customer's are however still switching to Macs at the same rate as they have done for the past 8-9 years. Apple have much higher margins, far more profit and don't scrabble about for the low end, which represents huge volume/effort/risk for little to no reward.

There is no evidence from current performance to support the statement "Apple's share of the PC market will decline in time because of its focus on gross margins, and as competitive pressure within the tablet and wider PC market increases."

The competitive pressure and high-end/low-end preferences of the market is no different today than it has ever been in relation to their business model which has proved and continues to prove a thorough success. This kind of statement appears to be built on a kind of logic that is the reverse of the gamblers fallacy "they've been doing so well something's gotta give." and a misunderstanding of the dynamics of a shrinking traditional PC market.

Of course at some point in time, their share will decline just as at some point in time the sun will collapse. It's just that the current figures in fact illustrate it is the reverse that continues to be the case.

Market Share without profit is meaningless. Apple has this amazing business plan that involves making a profit and that seems to be the most important fact in all of this.

The thing with Samsung (samesung?) is that they are more than willing to sell junk devices - be they PCs (do they even sell traditional PCs?), phones and tablets ...

Apple simply likes to make "great" devices. You may not like them, you may love them - or you may simply find that Apple make best device for your needs for the money ... or not, but Apple clearly has no interest in - say shipping an iPhone 3GS with iOS 3 as the main system - since well that has not been supported in some time, yet Samsung has no issue with this ... so they grab a greater share of the "smart phone" market - only the majority (51++++ %) of their "smartphones" are not smart at all - many do not even have data plans, since there is no point and less malware that way (and more security).

and by "He" you mean "She".