As you can see from the table above Apple’s share of the tablet market slipped from 64% in Q3 to 57% in Q4, losing share mostly to Amazon’s Kindle Fire, and to a lesser extent to Barnes and Noble’s Nook. That said, the overall market is so hot (growing 94% quarter on quarter) that iPad shipments still grew 39%.
There are a lot of different ways to read this data, and it will be a couple more quarters before we know how the market is shaping up, but my gut is that the tablet market is beginning to play out like the smart phone market and low cost Android based devices will continue to grow their market share for some time to come.
The pro-Apple reading of this information (a view held by iSuppli who conducted the research) is that Apple fans shifted their budgets to iPhone4S’s in Q4 and that now the new iPhone is old news they will come back to buying tablets, particularly when the iPad3 comes out. There is truth in that, but I think the more powerful trend here is lower cost devices growing the size of the market. A search for cheap Android tablets reveals that there are many devices available that aren’t making much of a dent in the market yet, but I think they will do as they improve.
Another important pro-Apple angle is that the Kindle Fire and Nook are more reading devices than all-purpose tablets and hence shouldn’t really be lumped together in the same market like this.
The final interesting angle here is that the Kindle Fire and Nook run forked versions of Android and arguably should be thought of as third and fourth OSs. If they stay proprietary and become significantly different to other Android tabs for developers then the iPad’s status as the app platform of choice will be less under threat, and its overall market position will be more secure.
We will learn a lot more about how people use their Nooks and Kindle Fires in the coming months and hence whether the tablet market will come to look like the smartphone market or like the iPod market. I hope it is the smartphone market.