Today’s headline got the tech and business worlds all a twitter, and even made yours truly take notice: “Android tablets capture 62% of market share in 2013, beating out iPad for the first time.”
Could it be true? How could Apple let such a thing happen?
Now read the headline again. It says “Android tablets” which many vendors produce—Samsung, Asus, LG, Sony, etc.—compared to Apple, the only producer of the iPad. As such, Apple remains the most successful single purveyor of tablets, enjoying a marketshare of about 36%, compared to its next closest rival, Samsung, at just over 19%.
Granted, the success of cheaper and more abundant Android tablets has got to have Apple looking nervously over its shoulder. After all, wasn’t the iPad mini and iPad Air going to help Apple stay atop the tablet heap?
On the Smartphone side of things, Apple’s market share dipped in 2013 to about 12%, while Samsung’s marketshare held steady at around 32% (smartphones operating the Android operating system account for some 78% of the market). Again, Apple’s performance was despite the introduction of two highly anticipated products, the iPhone 5S and the iPhone 5C.
What gives? With Steve Jobs in the grave, has the Apple lost a bit of its luster?
Apple’s stock price peaked at over $700 a share in September 2012, fell to $393 in April 2013, and now seems to have settled out in the $520 range, give or take. On the other hand, Google (maker of the Android operating system) has seen its stock rise from around $700/share to more than $1,200.
Say it ain’t so, (Apple CEO) Tim Cook, say it ain’t so!
Could Apple be getting too big for its britches, too complacent? Perhaps . . .
While Apple was the clear frontrunner/innovator with the iPod, iPhone, and iPad, what has it done for us lately?
- Bigger smartphone screen? Chalk that up to Samsung.
- Lower price point? Again, another notch in Samsung’s belt.
- OS improvements? While the Android OS was going through a series of technical and ease-of-use improvements in recent years, Apple decided to change the look/feel of its operating system much to the chagrin of many users, designed its own mapping/GPS product (the much-maligned and barely usable Apple Maps), plus gave us Siri, which has many Apple enthusiasts still on the gimmick/not-a-gimmick fence.
- Topping it off, with the introduction of iOS 7, Apple started blocking the use of uncertified (non-Apple) charging cables with its devices—forcing consumers to buy Apple’s pricier $20 to $40 chargers (certainly not the kind of thing that tends to endear you to consumers).
. . . but then again, perhaps not.
The top rules of marketing are to KNOW YOUR CUSTOMER and KNOW YOURSELF, and perhaps Apple knows its customers (and itself) best of all.
While I tend to believe, all things being equal, that mystique will only get you so far, Apple DOES have a certain mystique. Steve Jobs fed this mystique, and it continues after his death. It’s what put Apple on the map (that and a series of technological innovations that changed the way the whole world interacts), and it’s what allows them to call their customer service reps “Geniuses” while no other vendor could get away with it! Maybe, in Apple’s case, mystique is enough.
So before we start feeling too sorry for Apple and all that could have been had “the man in black” stuck around for a few more years, consider this:
- Apple’s cash-on-hand at the end of 2013 equaled $147 billion. That’s not the market value of the company. That’s actual money—cold, hard cash—that it has to spend.
- Google, on the other hand, had just north of $55 billion cash-on-hand at the end of 2013, while Samsung, the seeming front-runner of the tablet and smartphone wars came in with “just” $35 billion on hand. While both are flush with cash, together they have just slightly more than Apple’s cash reserves.
- A further look at the numbers reveals that Android market gains have come primarily outside the more lucrative US and Canadian markets. Plus the overall market “pie” has grown, meaning that while Apple’s percentage of the pie may be smaller, it’s still selling as much, if not more, units compared to a few years back when it was the undisputed smartphone and tablet champ.
So clearly, the sky is not falling entirely for Apple; there are just more competitors jockeying for position up there. And to some degree, Apple seems quite content to let others command the high volume, lower profit market space, while it commands higher-end, more affluent markets.
For instance, powered by Google’s ubiquitous Android operating system, which Google allows to be modified freely, Apple’s competitors are able to produce cheaper and more abundant tablets, often in the $100 to $200 price range.
On the other hand, Apple tightly controls the dissemination of its operating system and devices. It does not license its iOS for installation on non-Apple hardware, and the result is that Apple tablets cost anywhere from $500 to $800. Why? Apple can charge that much because they only way you are going to get an Apple is to buy an Apple. In addition, Apple is highly controlling about who it allows to develop apps and other accessories for its devices. As a result, all things Apple come with higher perceived value and they command (and get) higher prices.
With such complete control over its operating system and the hardware it appears on, Apple can choose its partners carefully and steer its products in any direction it desires, while Android developers have to worry about their apps performing on multiple hardware platforms developed by multiple manufacturers—no easy task.
So while it’s no surprise Apple has lost market share, you can’t help but wonder if, to some extent, it’s market share Apple was willing to lose, especially in the short term so that it could more deftly maneuver its offerings to win at whatever comes next (platform independence anyone?) in the techno-giant wars.
I know I’m not to ready give up my Apple devices (or my Apple stock) just yet.