Three years ago this week, Apple’s iPad arrived on store shelves and immediately proved a hit. Within four weeks, the 9.7-inch tablet managed to sell a million units—and that was just the beginning. The device’s success spawned legions of copycats and helped weaken the market for traditional PCs, all while securing Apple tremendous profits.
While the iPad continues to dominate the tablet space, there are signs of a paradigm shift underway: rival devices are being offered at lower price-points and with more powerful hardware, slowly but surely chipping away at the iPad’s market share. According to new data from research firm Gartner, worldwide tablet shipments will hit 197 million units in 2013, a 69.8 percent increase from last year’s 116 million units.
“Lower prices, form factor variety, cloud update and consumers’ addiction to apps will be the key drivers in the tablet market,” Ranjit Atwal, research director at Gartner, wrote in a statement. “Growth in the tablet segment will not be limited to mature markets alone. Users in emerging markets who are looking for a companion to their mobile phone will increasingly choose a tablet as their first computing device and not a PC.”
The biggest competition to the iPad comes from tablets running Google Android, most notably Amazon’s Kindle Fire, Samsung’s Galaxy tablets, and Google’s Nexus 7 and 10. But it could face a growing challenge from Microsoft, which is pushing its new Windows 8 operating system on tablets in addition to laptops and desktops; while Windows 8’s market-share is tiny and growing slowly at the moment, one underestimates Microsoft’s longer-term plays at their own risk.
In a bid to remain competitive, Apple has also given the iPad a smaller sibling: the iPad Mini, which measures 7.9 inches to the original iPad’s 9.7 inches. The existence of such a thing would have come as a surprise back in 2010, when former Apple CEO Steve Jobs appeared on an October earnings call to rail against 7-inch tablets as too small. “We think about software strategies first, as we know that software developers aren’t going to deal well with all these different-size products,” he told the assembled media.
But Jobs was also famous for his occasional attempts at public misdirection; emails sent between Apple executives in early 2011 (and made public during Apple’s high-profile intellectual-property lawsuit against Samsung) suggest that he was “receptive” to the idea of a smaller tablet. And in any case, Apple’s rivals have enjoyed success with smaller tablets that eluded them with “full sized” ones; Apple had to respond in some way. As current CEO Tim Cook likes to say during earnings calls and press events, his company would rather cannibalize from itself, rather than let some other product take away from its market-share.
So that’s where things stand now for the iPad: still profitable and dominant, but facing strong competition on a number of fronts—including Wall Street’s expectations that it will continue selling millions of units every quarter to infinity. How it weathers those challenges remains to be seen, but the whole situation just reinforces that old adage: heavy is the head that wears the crown.