iPad’s Market Share Will Crater, but You Shouldn’t Care

on October 23, 2011

Research firm Strategy Analystics got some attention with a report that showed Android accounted for 27% of the tablet market in the quarter ended Sept. 30. The report raised a lot of eyebrows.Kevin C. Tofel of GigaOm did some digging and found two significant issues with Strategy Analytics’ methodology.

Kindle Fire photo
Amazon's Kindle Fire

First, the Android numbers are for tablets shipped into the channel, not necessarily those sold, while Apple reports only actual sell-through. Second, the firm used a very broad definition of Android tablets. In particular, it included Barnes & Noble’s Nook Color. This is technically correct, but I’m not sure that a market that stretches from the iPad to the Nook is very meaningful.

By this standard, iPad’s market share is about to get a whole lot worse. Next month, Amazon.com will begin shipping the Kindle Fire, and all indications are that sales will be strong. Like the Nook, Fire runs a customized version of Android and if it is counted among Android tablets, their sales volume and market share will likely swell in the fourth quarter and beyond.

The number will undoubtedly set off a new round of speculation about what Apple must do to defend iPad’s market share. The correct answer is nothing, other than to produce the best product at the best price it can, consistent with its business strategy.

Apple does not care about market share and never has. It cares about absolute volumes and profit margins. And this has been a phenomenally successful business model that Apple should not and will not change. The history of the tech industry is littered with the corpses of PC makers that died chasing market share. Anyone remember Packard-Bell and AST? Dell and Hewlett-Packard nearly destroyed themselves chasing share at the expense of profit and Acer seems to be pulling back from the same fruitless race.

So Apple will serenely watch its share of whatever analysts choose to define as the tablet market inevitably decline as long as iPad volumes continue to grow and profit margins stay healthy. I think that the Kindle Fire and the likely successor to the Nook Color can both do very well without having a material effect on iPad sales. And everyone should just stop fretting about the meaningless market share numbers.