At September’s iPad event, Apple (AAPL) CEO Tim Cook seemed unconcerned about the iPad’s slipping marketshare. But the reality is that last year, Apple had a 40.2% share of worldwide tablet sales. That number has since dropped to 29.6% as tablets running Google’s (GOOG) Android have come to dominate the market.
But instead of panicking, Cook pointed to the iPad as the tablet that’s actually being used by consumers. If Black Friday online shopping stats are any indicator, he’s got a point. Data from Adobe (ADBE) and IBM (IBM), tracking millions of transactions at U.S. websites, shows Apple’s iPad dominates online shopping.
The numbers also show the growing importance of mobile web usage as compared to traditional PC access. With Apple’s iOS in the driver’s seat — despite the overall dominance of Android smartphones and tablets — maybe Cook has a reason for staying the course with a premium pricing model instead of chasing market share with cheaper products.
One of Cook’s takeaway quotes in the preamble to introducing the news iPads: “Does a unit of market share matter if it’s not being used?”
That’s as close as Apple got to addressing eroding market share. There have been calls for a cheap iPhone and a cheap iPad to appeal to mobile holdouts in the U.S. and the hundreds of millions of potential customers in emerging markets. Apple’s response was the $549 iPhone 5C and a new iPad Mini with Retina Display that cost $70 more than the previous year’s model.
Looking at the numbers from IBM and Adobe, which were published in Business Insider, the gap between Apple’s iOS and Google’s Android activity is dramatic. Despite Android’s lead in the number of mobile devices being sold, iOS accounted for 28.2% of U.S. online traffic on Thanksgiving and Black Friday, while Android held 11.4%.
But the big picture here is the issue of mobile Internet use over the traditional PC. IBM’s figures say that nearly 40% of the traffic it was tracking originated from a mobile device. Is it any wonder why PC shipments are now being projected to drop by more than 10% by the time 2013 sales are tallied?
Android tablets have a definite cost advantage compared to Apple’s iPad. Google’s Nexus 7 is incredibly popular and starts at just $229, where Apple’s iPad Mini with Retina Display (the cheapest of the new 2013 iPads) has a sticker price starting at $399.
But that price differential might just be the difference between a true casual-use tablet and a primary computing device.
The Adobe numbers say that in the 400 million visits to 2,000 U.S. retailer websites it tracked, iPads generated $417 million in sales, while Android tablet users spent just $42 million.
If you take this data and extrapolate how it might reflect global trends, it’s easy to see a future where a tablet becomes the preferred computing device in emerging markets as well as U.S. homes. The device is compact, mobile, unrestricted to a power outlet and inexpensive compared to a PC, monitor and software. And the iPad seems to be on top when it comes to actually getting things done.
Naysayers might reasonably point out that the long weekend numbers could simply show that iPad users have more disposable income, therefore they are more predisposed to be shopping.
However, there’s significant data that suggests the trend toward iOS use is much more pervasive than that. Chikita Insights’ latest North American web traffic analysis reports that 81% of all tablet-based web traffic comes from the iPad. Even globally, where Apple is being dramatically outsold by Android (capturing less than one-third of tablet sales in Q3), Adfonic says Apple’s iPad accounted for 63% of global tablet-generated ad impressions, significantly increasing its lead from 2012, despite the slide in iPad marketshare during that period.
BlackBerry (BBRY) enterprise competitor Good Technology says that in its client base (which includes 50 of the Fortune 100 companies), iOS is the dominant mobile platform and the iPad makes up 90% of tablets in use. Apple also claims a 94% tablet share in the education market.
The conclusion from all this?
Mobile continues to make gains against the PC, and tablets in particular are proving to be an adequate replacement for a laptop computer for a growing number of people. Despite its shrinking overall mobile marketshare, Apple continues to sell a boatload of iPads at a premium price with margins that are the envy of the industry.
And based on web, business and education usage — where iOS still dominates despite being outsold by Android — Apple seems to be in a good position to continue charging those high prices. Those iPhones and iPads are being used, and that makes them worth the premium.
It also puts AAPL in a very good place for when tablets become the first choice for a business or home user over a laptop.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
