Citi analysts Glen Yeung, Walter H Pritchard and Jim Suva
think that Apple (NASDAQ:
) has reached the end of the line for tablet growth. "Apple has
again lost tablet market share (despite the introduction of the
Mini), holding a still dominant 38.8%, but down from its 56.8%
2Q12 peak," they wrote in a report this week.
Citi said that Samsung and Amazon (NASDAQ:
) were the beneficiaries of Apple's decline. Samsung's market
share rose 13.1 percent while Amazon rose 15.5 percent,
indicating that the Kindle Fire is still a very popular item.
Beyond the "overall share loss," Citi said that the data
reveals a "particular slowdown" in 10-inch iPad sales within
This assessment corresponds with
, which argued that Apple was forced to release the
fourth-generation iPad last fall because the existing model had
become a stale product.
"After analyzing the data, we have new concerns about the
health of the 10-inch tablet market and, absent any material
innovations (we do not count a Retina Mini or lighter/thinner
iPad 5 among these), we remain concerned about Apple's ability to
maintain market share," Citi added. "While we ultimately envision
a larger overall tablet market than third-party forecasters, we
view these tablet trends as supportive of our contrarian neutral
stance on AAPL."
Citi believes that the iPad Mini did cannibalize the full-size
model in the United States and Japan. The Mini was not the only
problem, however. The rise of smaller, cheaper and lighter
tablets -- including those from the manufacturers listed above --
is becoming a big problem for Apple.
"We believe Apple will launch an iPad Mini Retina and a
thinner/lighter iPad 5 (both likely sporting newer processors) in
3Q13," Citi affirmed, echoing the estimates of
. Citi added that while the iPad is evolving, "innovation of this
nature is insufficient to reverse share loss."
The analysts are also concerned about Apple's future in the
smartphone business. "With iPhone 5 failing to drive market share
gain within smartphones, our concerns about Apple's once dominant
market position in portable, connected, compute devices are
stoked," Citi wrote in its report.
Finally, Citi said that if Intel (NASDAQ:
) is able to sell its new Haswell-based Ultrabooks for as low as
$599, that could create additional competition for the 10-inch
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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