First quarter numbers from IDC showed that Android tablet shipments declined in Q1-12 from Q4-11, while Apple cruised ahead, reasserting dominance of the tablet market. Looking a bit deeper, we see that Amazon’s Kindle Fire tablet, a deviation from Google Android, is becoming dominant, and all the tablets from Samsung, Moto/Google, and other mainstream CE and PC manufacturers are losing share. This looks like a disaster for Android.
It is a disaster for Google’s Android tablet strategy, which seems to boil down to producing a better product with much the same value proposition as Apple’s iPad. The high-end Android tablets that are positioned right against the iPad (Moto Xoom, Samsung GalaxyTablet) are losing ground. Asus, Acer, and Toshiba, which have more of a value strategy, are hanging on. The others have failed to make a mark.
However, Amazon has created a whole new market with the Kindle: defined by simpler hardware and software, $200 price point, and linkage to the Amazon content platform and brand.
There’s more to this market than the Comscore numbers show, because Comscore does not consider Barnes Noble’s Nook to be a tablet, although it’s functionality is similar to the Kindle. Other sources indicate that Nook sales are a large fraction of Kindle sales.
And, the lower-priced market is seasonal (more of a gift market) than the iPad. Analysts expected a Q1 dip in sales; it does not indicate that the category is going away.
Most important, there is a wave of competing tablets coming at the sub-$200 price point. Amazon has shown that there is demand for this class of product. The open source code for Android 4.x (Ice Cream Sandwich) was released in late 2011. OEMs are working hard to launch new sub-$200 products based on the new OS. This produced a pause in Q1 and Q2 but will bring forth a surge of new offerings in the summer. A new wave of Chinese ODMs and CPU chip companies are entering the market with cost structures that are lower than the Taiwanese and Korean OEMs and ODMs who produce the bulk of products in the market today. They will offer products that retailers can sell well below $200 with a normal margin.
And, Amazon has created an app store and content services that many of these products will use. Amazon is, after all, primarily a content company; the Kindle is a platform for selling content. Google/Android has limited access to its content platform (“GMS” = Google Mobile Services) to a select few OEMs, the ones losing share in the chart above, in its attempt to raise the quality of Android products and directly attack Apple. This held the second tier Android OEMs back, until now.
I’m disappointed that Android tablets are not having more success in the enterprise. I expected that the highly functional and open Android OS would attract developers to build enterprise applications. This has not happened yet, and Apple has done a great job in this segment.
But, don’t count Android tablets out. A wave of new, lower-priced products are coming for the fall selling season, and the game in the enterprise is far from over.