Tablet Wars Picking Up
The markets for smartphones and tablets are fiercely competitive. At stake are hundreds of billions of dollars and that means riches for the market leader.
Based on my stock analysis, the king of tablets at this juncture is Apple Inc. (NASDAQ/AAPL), the global market share of which is around 69% in the second quarter and it wants to hold on to its share. (Source: ABI Research.) In a recent court ruling, Apple was awarded just over $1.0 billion from Samsung Electronics Co. Ltd. (KRX/005930), which has an eight percent market share, after claiming that Samsung’s smartphones and tablets look and feel like Apple’s “iPhone” and “iPad.”
The positive ruling was a win for Apple, even if the company doesn’t really need the money. Going forward, my stock analysis is that market rivals will be reluctant to make products similar to those of Apple.
Apple, which I still consider one of the best stocks in technology, will face increasing competition in the lucrative and surging tablet and smartphone markets, based on my stock analysis. Currently, Apple is the market leader in the booming tablet market.
The global market for tablets is estimated to rise to around $31.9 billion this year with over 100 million units delivered, according to Visiongain. IHS iSuppli estimates that about 360 million tablets will be sold by 2016. Apple knows this, which is why the company took Samsung to court; Apple wants to hold onto its market leader status.
According to my stock analysis, Apple had better keep an eye on Amazon.com, Inc. (NASDAQ/AMZN), which has the size to fight Apple. Amazon.com’s market share expanded to 22% due to its now sold-out “Kindle Fire” tablet. The company has a small four percent global market share, but this could expand based on the company’s success, according to my stock analysis.
For Amazon.com, the ability to deliver a lower cost and smaller tablet that allows for frequent applications such as reading, surfing, and e-mail, appears to be picking up steam. My stock analysis is that the company is avoiding going head-to-head with Apple in the larger tablet market (a good decision), focusing on the small tablet market instead. Apple is also challenging Amazon.com with a new small-screen tablet. There is also speculation that a new Kindle Fire tablet is in the works.
In addition, based on my stock analysis, the small tablet market is seeing competition from the seven-inch Google Inc. (NASDAQ/GOOG) “Nexus 7” tablet running on “Android,” and the “Nook” tablet from Barnes & Noble, Inc. (NYSE/BKS). Barnes & Noble received a $300-million investment from Microsoft Corporation (NASDAQ/MSFT).
The future of Microsoft lies with its new “Surface” tablet (to be released on October 26), but I again doubt it will be an iPad-killer, based on my stock analysis. Microsoft realizes this, but also understands that it needs to get its foot into the tablet market door. For Microsoft, this will be its first venture into hardware sales, so it will be interesting to monitor. According to research firm International Data Corporation (IDC), Microsoft is planning an initial production run of over three million units. This amount is small considering Apple sold about 17 million iPad units in its fiscal third quarter. For Microsoft, the initial run will be a test for market demand, and it will be interesting to see how consumers react to the Surface tablet after comparing it to the iPad and Galaxy.
I say, let the tablet wars begin.