On the eve of Apple’s expected announcement of a refresh of its iPad and iPad mini, Apple is selling more tablets than any other company. And yet in phones, Apple now lags behind Samsung. Why this remains the case—and it may not be for long, as Samsung catches up to Apple and Android continues to gain market share on all devices—is a lesson in how technology ecosystems are born, evolve, and retain momentum.
Presently, a tablet remains something that is nice to have, but is not a necessity for most consumers. And since early tablets were expensive, it’s no surprise that the demographics of the earliest tablet, the iPad, skew toward rich people. In addition, the overwhelming majority of the buyers of the first and even the second iPad already owned Macs or iPhones. Which means they had already bought into the Apple ecosystem, and in the case of iPhone owners, had already invested time and money into apps they could immediately start using on their iPads.
In other words, a large part of the momentum behind Apple’s later iPad sales was a product of Apple’s early lead not just in tablets but in touchscreen smartphones. That momentum is waning, not in absolute terms—Apple continues to sell more of each new model of iPhone and iPad than their previous iterations—but in terms of market share.
By far the biggest proportional growth for any computing device from 2013-2014 is projected for tablets, with people buying 80 million of them. (The number of smartphones in the world will increase more in absolute numbers, but just barely.) Here, the demographic skew of the iPad becomes a liability: Most of that growth is likely to be in the least-expensive tablets, devices in the range of $100 that are flooding markets in China.
It’s worth asking what those cheap tablets are really competing with—is it other computing devices, PCs, or televisions? In other words, the tablet market is probably fragmenting by purpose, with high-end devices replacing PCs and the most basic tablets taking the place of things like TVs or gaming consoles. When segmented like this, with high-end tablets being their own category on account of their functionality, Apple might continue to retain its lead in tablets for a while yet.