Analysts reveal iPad mini margins
The tablet market has continued its swift growth, as Apple faces increasing pressures from cheaper, Android based products.
Worldwide shipments totalled 27.8 million unit in the third quarter of 2012, according to IDC. This meant a 49.5 percent year on year growth, and 6.7 percent sequentially.
Apple saw its share of the market fall however, dropping from 59.7 percent of tablet shipments in the third quarter of 2011 to 50.4 percent at the same point this year.
Recent sales of iPad have not reached the lofty heights expected, with the company pointing towards the anticipation of new tablet products coming onto the market during the third quarter.
According to IDC, it is likely that Apple will rebound with a better fourth quarter now that the mini and the fourth generation iPad have been released.
However the higher than expected price for the mini is likely to open the door for more Android based devices.
Samsung enjoyed a strong quarter, with its Galaxy Tab and Note 10.1 devices helping it to 5.1 million unit shipments in the third quarter. That equated to a 325.0 percent increase over 2011, a figure reminiscent of the level of growth once achieved by Apple.
“Its growth to 18.4 percent of worldwide market share during the quarter represents the first time a competitor has attained this level of share since the original launch of the iPad.”
Meanwhile, Amazon’s Kindle devices let the retailer take up third spot, growing its market share to 9.0 percent after it shipped 2.5 million units.
Asus, which produces Google’s Nexus devices, saw impressive growth of 242.9 percent from 2011, with 2.4 million units. Lenovo also made the top five, buoyed by success in China, shipping 400,000 tablets.
Sales by others in the market dropped 38.9 percent, shipping 3.3 million unit in the third quarter, though it is possible that this could increase as more vendors create a viable alternative to Apple and its main competitors.
Anticipation had also been building around the launch of Microsoft’s Surface tablet, while a wide range of Windows 8 based devices were also slated for November release.
“Competitors are turning up the pressure on market leader Apple,” Reith said. “With the recent introduction of a number of Windows 8 and Windows RT tablets, consumers now have a third viable tablet platform from which to choose.
“However, price points are critical in tablets, and Microsoft and its partners will have a tough time winning a share of consumer wallet with price points starting at $500.”
Apple is also likely to feel continued pressure from cheaper Android based devices, particularly in the increasingly competitive 7-8 inch tablet space.
Apple released its iPad mini for a price that was higher than had expected, starting at $329 for the most basic version, some way above the $199 Amazon Kindle Fire HD for instance.
A teardown by IHS iSuppli showed that despite the retail price difference, the production cost of the mini is likely to be close to that of the Kindle Fire HD, costing $188 and $165 respectively.
The teardown of the iPad mini looks at the cost of components used to build the device, with analysts concluding that Apple’s hardware cost is around 57 percent of the retail price, significantly better than its competitor.
However, Amazon has conceded that it would be selling its devices with almost no margin, with revenues to be accrued through the sale of software on its website.
Microsoft’s surface meanwhile costs $271 to produce, retailing at $599, according to the Wall Street Journal.