Android: The Next King of Tablets?

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Market research intelligence firm ABI Research’s new report claims that Android-based tablets are eating away at the iPad’s market share at a rapid rate. Though Apple (AAPL) continued to maintain its lead in the tablet market, its market share slipped to 55% in the third quarter, the lowest ever since the iPad was launched in 2010.

Apple’s failure to respond in a timely fashion to the challenge presented by Google Inc.’s (GOOG) Nexus 7 and Amazon.com Inc.’s (AMZN) Kindle Fire is the primary reason for its decline, says ABI. Though the company has ultimately introduced the lower-priced iPad Mini, it fell short of delivering an innovative product at the correct price point and increasing its availability during the critical holiday shopping season.

The bigger worry for Apple is that the Mini has failed to reclaim market share from Android-based tablets. Instead, there is a serious threat of the company losing the market share of its other products – namely the larger iPads. Meanwhile, Android’s market share has risen to 44%.

Earlier this month, International Data Corporation’s (:IDC) Worldwide Quarterly Tablet Tracker delivered an unpleasant surprise to Apple, revealing that Samsung Electronics Co Ltd and Amazon had made significant inroads into its share of the tablet market. Third quarter data revealed that the tech major’s market share had slipped from 65.5% in Q2 to 50.4% in Q3.

Other tablets cashed in on the opportunity with Samsung leading the pack, thanks to continuous expansion in its line of tablets. The Korean electronic giant’s tablet sales grew a whopping 115% over the second quarter.

Amazon, Asus and Lenovo complete the group of top 5 tablet vendors and all three experienced sales growth over the second quarter.  The new 7 inch and 8.9 inch Kindle Fire HD tablets from Amazon helped the company grow its market share from 4.8% in Q2 to 9.0% in Q3. The Google-powered Nexus fueled Asus’ growth while Lenovo gained from strong China sales.

The primary reason for Apple’s slow growth seems to have been the fact that consumers were awaiting the launch of the iPad mini. IDC said in its report that a large section of consumers were eagerly awaiting the launch of the smaller tablet. The research firm predicted that Apple would have a good fourth quarter, riding on the back of the iPad Mini and a new fourth generation full-sized iPad.

While the Surface tablet from Microsoft Corporation (MSFT) was expected to emerge as a third option, it has done poorly until now. This may partly have to do with a $500 price tag which is warding off potential customers. According to an analyst at Piper Jaffray, Microsoft’s retail store at a leading mall in Minneapolis had 47% less traffic than the Apple store on Black Friday. After observing both stores for two hours, the analyst noted that Apple had sold 11 iPads whereas not a single Microsoft Surface tablet was sold during the period.

Customers seemed to be waiting for Microsoft to release Surface tablets running the Windows OS on Intel Corporation’s (INTC) processors. The Surface models in stores now use Windows RT running on low powered ARM processors. Meanwhile, the iPad continued to dominate sales for now, with the iPad Mini being sold out at several stores.

It is Google and Amazon’s aggressive pricing that has hit Apple the hardest with the Nexus 7 being introduced at the $199 and the Kindle Fire HD being announced at the same price point. Google and Amazon are expected to grow their market share significantly over the next year. The verdict is still out on who will eat the larger chunk of Apple’s lost market share. But clearly, Android has started to beat Apple at its own game.

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