When a company saturates its home market with a once-hot product, expect it to pump up its presence in foreign lands to keep the momentum going.
That old-time tactic is proving tough in tablet computers, where leaders Apple and Samsung are under heavy pressure in emerging markets from China’s Lenovo, Taiwan’s ASUS, and other tablet upstarts.
Apple iPad shipments took a dive in the last quarter ended in June, down 9.3%. South Korea’s Samsung recently reported a quarterly tablet shipment increase of only 1.6%. Lenovo and ASUS, meantime, were up 64.7% and 13.1%.
Both companies continue to dominate the global tablet market – heading toward $85 billion this year, according to ABIresearch – but their position is under threat. “We’re seeing a lot of new entrants,” IDC Analyst Jean Philippe Bouchard told The Times. New tablet demand is gaining strength in regions where consumers want cheap devices, he said – not the kinds of products Apple and Samsung make. "It's low margin and high volume and not the game they want to play," he said.
It’s not just low-cost competitors. Other forces are weighing on Apple and Samsung. The tablet market is growing but slower than in 2013, Bouchard said; large-screen smartphones eating into tablet sales, and consumers are slow to replace older tablets. "You’re looking at people keeping their tablets three or four years,” he said. “It's a longer replacement cycle.”
Rather than take the low road toward skinny profit margins, Apple is pushing its iPads to big corporations in the U.S. and around the world – the “enterprise” market. Earlier this month, Apple and IBM announced a teamup to build business-centric apps for the iPad and iPhone.
“For the first time ever we’re putting IBM’s renowned big data analytics at iOS users’ fingertips, which opens up a large market opportunity for Apple,” Apple CEO Tim Cook said when the IBM partnership was announced. “This is a radical step for enterprise and something that only Apple and IBM can deliver.”
Twitter: @sal19Copyright © 2014, Los Angeles Times