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Can Microsoft’s Low-Cost Tablets Displace iPad’s Market Share?

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New tablet looking to compete with entry-level iPad

According to a May 16 report from Apple Insider, Microsoft (MSFT) is looking to increase its penetration in the tablet market by introducing a low-cost Surface tablet to compete with Apple’s entry-level iPad, which is priced at $329.

Microsoft’s tablet is set to launch later this year with a smaller screen size than the iPad Pro’s 12.3-inch screen. Apple Insider reported, “An entry-level tablet is anticipated to cost $400, making it more expensive than Apple’s equivalent, but with standard advantages of the Surface line including a kickstand and a desktop-level OS, Windows 10 Pro.”

Apple (AAPL) once dominated the tablet market with a share of 60.3% in the second quarter of 2012. As we can see in the chart above, the product’s market share has declined from 58.1% in the first quarter of 2012 to 40.2% in the first quarter of 2013. Its market share declined to 32.7% in the first quarter of 2014. 27.2% in the first quarter of 2015, 25.9% in the first quarter of 2016, and 24.9% in the first quarter of 2017. 

These results were driven by the availability of cheaper options from Amazon (AMZN), Lenovo (LNVGY), and Samsung (SSNLF). Apple increased its market share to 28.8% in the first quarter of 2018.

iPad revenues rose 6.0% in fiscal Q2 2018

Apple’s iPad revenues increased for the fourth consecutive quarter in the fiscal second quarter, rising 6.0% YoY (year-over-year) to ~$4.1 billion. Its shipments rose 2.0% YoY to ~9.1 million units. 

According to market research firm NPD, Apple has a 53.0% share in the domestic market. The company achieved double-digit growth in Japan, Latin America, the Middle East, Africa, Central, and Eastern Europe.

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