518 - Trending in Tablets and Smart Phone

When the first iPads were shipped in 2010, Apple’s Steve Jobs famously announced the “end of the PC era.” Jobs was somewhat premature. While mobile devices (tablets and smart phones) have become a vital part of our private and business lives, there are a lot of things a tablets or smart phone just don’t do as well as a PC. Smaller screens, finger poke interface, dinky keypads, battery limitations, low power CPUs and limited data storage make mobile devices inappropriate for many business and home applications. Mobile devices have revolutionized the way we communicate but they just don’t cut the mustard when it comes to replacing PC functions. 2014 saw a growth spurt in PC sales that is expected to continue through 2015. 

Tablet sales are beginning to slacken. The new lightweight but full function notebook PCs are eating tablet sales from the top end while “phablets” are chewing at them from the bottom. “Phablets” are the new large screen (5 to 7 inch diagonal) smart phones like the Samsung Galaxy Note. They have all the functions of a smart phone with a screen large enough to enjoy streaming video, reading and web browsing.  

In the competition for smart phone OS (operating system/s), Android (Google) and IOS (Apple) have succeeded in replacing early industry leaders Blackberry (RIM), Symbian (Nokia) and Palm (Access) and now own 96% of the smart phone market. Newcomer Microsoft with its Windows mobile OS is the only serious competition with about 3%. 

Many of our customers are surprised to learn that Android (Google) smart phones outsell IOS (Apple) smart phones by a margin of more than five to one worldwide. Only in the USA do iPhones even come close to competing for market share with Androids. In the USA Android smart phones outsell iPhones by a 3 to 2 margin. Outside the USA Androids outsell iPhones ten to one. Apple boasts of making major inroads in China, the world’s largest smart phone market, but even in China, Apple has only a 15% share and China’s smart phone sales are actually shrinking.   

Although tablets have been around since the 1980s, that market didn’t take off until 2010 when Apple shipped its first iPad. By 2011 there were several Android based tablet brands, but only iPads used the IOS operating system and iPads made up 80% of tablet sales. Tablet sales grew by over 40% each year as Apple, Google, and Microsoft fought for market share. In 2013 “Android” tablets surged past the iPads to become the leading OS. Today, the first quarter of 2015, Apple’s iPad has fallen to a 24% market share while Android at 70% and Microsoft Windows tablets at 6% are both gaining ground. 

Apple is losing market share to Google (Android) and Microsoft in all of its mainstream product lines and Apple’s new product, the iWatch, does not look like a winner. Much of their technology has been licensed or purchased from their own competition and they are a “marketing” company, not a “technology” company. They don’t even manufacture their own products.

It sounds like a recipe for disaster but Apple keeps piling up record profits each quarter. They are the most valuable company in America and perhaps the world, they have nearly 150 billion dollars in their mostly offshore piggy banks and their stock makes new millionaires every month. How do they do it and can they keep it up? Tune in next week as we attempt to uncover Apple’s secrets.