Apples iPad is in Trouble, but Samsungs Tablets are Doing Even Worse

By Markets Fool.com

Apple's iPad is struggling.

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The tablet, which remains the fastest-selling consumer electronic in history, has certainly seen better days. For most of the last year, Apple's quarterly results have been marked by declining tablet sales: Last quarter, for example, iPad unit sales fell 18% on an annual basis; revenue declined 22%.

But despite a weak market for Apple's tablets, its chief mobile rival Samsung is doing even worse.

Unlike Apple, Samsung relies on Google for its tablet software, and the competition from other Android tablet vendors may be taking a toll on Samsung's business.

The trend reverses
According to IDC, iPad shipments fell 17.8% last quarter -- Samsung tablet shipments contracted 18.4%. That might not seem particularly notable, but Samsung has never sold as many tablets as Apple. The Cupertino tech giant remains the world's largest tablet vendor by a healthy margin: iPads represented about one out of every three tablets sold last quarter. Samsung's tablet market share, in contrast, was only 17.2%.

It's also a sharp reversal in fortune. Last year, Samsung appeared unstoppable: In the fourth quarter of 2013, Samsung's tablet business saw its annual shipments explode, posting unit growth of nearly 86% -- Apple's iPad, in contrast, grew, but only 13.5%. Had those growth rates persisted, Samsung would've eventually overtaken Apple in tablet sales.

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Samsung may have more room to fall
But obviously that isn't the case. Indeed, Samsung may have further room to fall. According to IDC, of the top five tablet vendors, only one -- Lenovo -- saw its unit shipments increase from last year (9.1%). The other two,Asus and Amazon, were hit even harder, with their tablet shipments falling 24.9% and 69.9%, respectively.

Yet, tablet shipments as a whole fell a modest 3.2%. Why the discrepancy?

Rather than a few key players dominating the market, the tablet industry is seeing competition intensify, with many vendors taking a healthy share of tablet sales. IDC's "Others" category, which represents all other tablet vendors not in the top five, saw its shipments grow 36.2% on an annual basis, up from growth of 19.5% in the same period last year.

In the fourth quarter of 2013, the top five tablet vendors accounted for almost 70% of the world's tablets. That fell to just 54% in the fourth quarter of 2014.

For the most part, those smaller vendors use Google's Android operating system. That's an issue for Samsung, as fans of its Galaxy handsets can easily access all their apps and media from any Android tablet, regardless of its manufacturer. In contrast, fans of iOS must buy one of Apple's tablets to gain access to iTunes purchases.

Samsung has attempted to differentiate its tablets, bundling its exclusive smart stylus -- the S-Pen -- with its Note devices, and allowing Galaxy tablets to pair with Galaxy handsets. Yet, these moves have apparently done little to protect Samsung from rising competition.

Handsets remain more important
Samsung and Apple's tablet businesses remain important to both companies, but their handset sales still vastly overshadow their tablets: Last quarter, Apple's iPhone generated nearly 70% of the company's revenue; for its part, Samsung sells roughly seven times more handsets than tablets.

For that reason, the health of their tablet businesses is not of the utmost importance to shareholders. Still, as large, secondary contributors, the trends in unit shipments are worth following.

The article Apples iPad is in Trouble, but Samsungs Tablets are Doing Even Worse originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.