iPad will lose market dominance to Android next year, says analyst

Apple’s 4th-generation iPad.

(Credit: Apple)

Android will finally knock the iPad off its throne next year, at least according to one analyst.

Apple’s iPad has remained the king of the tablet market for the past few years but has gradually shed market share to the onslaught of Android devices. For the third quarter of 2010, the iPad enjoyed an 87 percent cut of the market, according to IDC. For this year’s third quarter, that number had fallen to just 50.4 percent.

That trend will continue as the share collectively owned by Android tablets surpasses that of the iPad in the first half of next year, says Sameer Singh, an analyst with mergers and acquisitions consulting group Finvista Advisors.

Looking at the market trends, Singh found that growth in Android tablet shipments outpaced that of the iPad in six out of the last eight quarters.

The third quarter was an especially bad one for iPad sales given rumors of the upcoming iPad Mini and a drop in shipments due to the new iPads, Singh said. Based on past results, iPad shipments should have risen by 10 to 15 percent last quarter. Instead, they fell by 18 percent.

Android tablet shipments grew from the first quarter to the third quarter. And that growth will increase next year, according to the analyst, as more Android vendors take a cue from the low-cost Amazon Kindle.

“OEMs (original equipment manufacturers) have learnt from Amazon’s model that diversified price points would help expand the market and take share from the iPad,” Singh said. “This has resulted in far more broad-based growth, which is not only sustainable, but should result in an accelerated ramp up of sales over the next three to four quarters.”

Of course, no one need share a tear for Apple. The analyst expects both the iPad and Android tablets to see strong growth in sales volume this year and next.

The iPhone and iPad both continue to be cash cows for Apple. For the quarter ended September 29, the company took in sales of $ 36 billion and a net profit of $ 8.2 billion.

And the new iPads, certainly the iPad Mini, appear to be off to a good start. Apple reported last week that it sold 3 million iPads during the launch weekend of the new devices. The company didn’t break down the numbers, but some analysts believe the bulk of those sales were for the Mini.

However, the high cost of the new iPads and the new iPhone will trim Apple’s profit margins for the current quarter. CEO Tim Cook told analysts late last month that releasing all these new products around the same time has resulted in an uptick in manufacturing costs.

Apple is also selling its iPad Mini at a price that will yield a lower profit margin than usual. But overtime, manufacturing costs for the new devices are expected to drop, bumping up those sagging profits margins.

And what of Windows 8 and RT tablets? Singh virtually discounted them, saying they’ll have a “negligible impact” on the tablet market.

“Surface RT sales are off to a slow start and OEMs have already lost interest in the Windows RT platform,” he said. “This only leaves high-priced x86 based Windows 8 tablets to compete with Apple and Android.”