Don't Panic, Apple Fans

The latest tablet market share data out of industry tracker IDC isn't very encouraging.

Apple's (NAS: AAPL) slice of the booming tablet pie is shrinking. The world's most valuable company accounted for just 50.4% of the industry shipments this past quarter according to IDC's research. It's still a big number, but it's a sharp drop from the 65.5% stronghold that it commanded during this year's second quarter or the 59.7% share it owned during last year's third quarter.

The good news is that Apple's tablet shipments continue to grow on a year-over-year basis. Apple went from moving 11.1 million iPads a year earlier to 14 million tablets this time around. That's a respectable 26% improvement over the past year. The rub is that its four closest competitors -- Samsung, Amazon.com (NAS: AMZN) , Asus, and Lenovo -- saw their volumes more than double.


Before the panic attack kicks in, let's take a good look at the numbers.

Company 

Q3 Shipments

Q3 2012 Share

Q3 2011 Share

Apple

14.0 million

50.4%

59.7%

Samsung

5.1 million

18.4%

6.5%

Amazon

2.5 million

9.0%

N/A

Asus

2.4 million

8.6%

3.8%

Lenovo

0.4 million

1.4%

1.1%

Others

3.3 million

12.2%

28.9%

Source: IDC. N/A = not applicable; Amazon hadn't released its tablet yet.

The Android invasion
Now, it's easy to be frightened by the force of the competition, especially if the rivals are combined. Stacked up, Samsung, Amazon, Asus, and Lenovo have gone from 11.4% of the tablet realm a year ago to 37.4% today.

Apple is still bigger, of course. It continues to command more than half of the market. However, it just can't ignore the distant rivals closing the gap.

It isn't a surprise to see the gainers all championing Android. Samsung's calling out Apple in its ads, and it's apparently working as it moves Galaxy Tab and Note devices. Amazon wasn't even in the tablet market a year ago, and now it's benefiting from the second generation of the recently refreshed Kindle Fire entry-level gadgets. Asus is the company behind the Nexus 7 that Google (NAS: GOOG) was even briefly promoting on its home page this summer.

At least Apple isn't lumped into the fading "Others" category. If it seems odd to see any tablet category in retreat, keep in mind that this catchall group includes the webOS and Research In Motion (NAS: RIMM) tablets that were being cleared out at a loss a year ago. It's actually good for the market that those fire sales are over. Consumers don't need reminders of the crash-and-burn PlayBook.

Silver lining beyond the gold medal
Is Apple about to fall below 50%? The trend may suggest as such, and it will inevitably happen. The open-source allure of Android is too great for anyone not named Apple to get behind.

It's just not going to happen this quarter.

There's a reason why Apple is updating its iPad and cranking out iPad Mini devices. Just as refreshing its tablet paid off with a big boost earlier this year, Apple knows that early adopters love to get their iGadgetry while it's still hot. Heck, Apple sold more tablets this past weekend than anyone outside of Samsung sold all of last quarter.

The competition should also die down a bit. Android tabs will sell well, but it was a perfect storm this past quarter with the new Amazon, Nexus, and Samsung wares going on sale.

There will always be new tablets. Microsoft's (NAS: MSFT) Surface is going to move a few units, obviously. However, this is still shaping up to be another Apple holiday season, despite the proliferation of cheaper tablets.

It's a pretty safe bet that Apple will dip below 50% of the market at some point next year. When it happens, it won't be the end of the world. There are far more Android smartphones sold than iPhones around the world, yet that hasn't gotten in the way of Apple's dominating market capitalization.

If things ever get to the point where Apple feels that it needs to slash prices -- sacrificing near-term margins for market share -- that would be the time to worry. A quarterly dip that will likely be remedied during the current quarter is not a cause for concern.

Mobile madness
If you want to stay on top of the world's leading online retailer, a new premium report explores the Amazon's upside and downside. Our Amazon research report also includes a year's worth of updates, so click here to check it out now.

The article Don't Panic, Apple Fans originally appeared on Fool.com.

Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Apple, Amazon.com, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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