There's a huge selection of tablets to choose from this holiday season. Apple 's iPad casts a long shadow over the market, but consumers shouldn't overlook two other notable devices -- HTC / Google 's Nexus 9 and Samsung 's Galaxy Tab S.
HTC recently launched the Google Nexus 9, its first tablet in three years after the Flyer and Jetstream tablets flopped in 2011. Google's two previous Nexus tablets, the Nexus 7 and Nexus 10, were respectively manufactured by Asus and Samsung.
Samsung launched itsflagship Galaxy Tab S (in 8.4 and 10.5 inch versions) back in July. Unlike HTC, Samsung has remained active in the tablet market since 2010.
Let's take a closer look at these two high-end Android tablets, and what they can teach investors about HTC and Samsung's mobile businesses.
First, let's see how the Nexus 9 and Galaxy Tab S 8.4 fare in a head-to-head technical comparison.
Fingerprint sensor / MicroSD
Starting price (16GB)
8.9", 288 ppi, IPS
Tegra K1 64-bit dual-core 2.3 GHz, 2GB
No / No
Galaxy Tab S (8.4)
8.4", 359 ppi, AMOLED
Exynos 5 Octa 32-bit octa-core 1.9 Ghz + 1.3 Ghz, 3GB
Yes / Yes
Source: Company and industry websites.
For the same price, the Nexus 9's only standout features are a slightly larger, lower quality screen, a 64-bit processor (albeit with fewer cores), a bigger battery, and Android 5.0 pre-installed. The Galaxy Tab S tops the Nexus 9 in all other categories, weighs less, and has a microSD slot for extra storage.
What the Nexus 9 means for HTC
For HTC, the Nexus 9 is a chance to diversify away from its slumping smartphone business, which has been marginalized by Samsung and cheaper Chinese competitors.
HTC's global market share in smartphones dropped from 9.3% to 2.5% over the past three years, according to Gartner. Between fiscal 2011 and 2013, its annual revenue fell 56% from NT$465.8 billion ($15.45 billion) to NT$203.4 billion ($6.75 billion). HTC is now experimenting with new products -- like smartwatches and action cameras -- but tablets would be a more natural extension of its smartphone business.
Google rotates the Nexus brand around hardware manufacturers to prevent single manufacturers -- like Samsung -- from conquering the Android market. More importantly, it allows the company to launch Google-branded devices without shouldering the margin-crushing burden of hardware production.
Although HTC won't retain the Nexus brand indefinitely, the Google brand could help HTC sell many more tablets than it did three years ago. That could reestablish the HTC brand among tablet users, paving the way for the company to launch its own branded tablets in the future.
What the Galaxy Tab S means for Samsung
Like HTC, Samsung hopes other devices -- like tablets, smartwatches, and even VR headsets -- can diversify its sales away from smartphones.
In the third quarter of 2014, Samsung controlled 23.8% of the global smartphone market, down from 32.5% a year earlier, according to IDC. That decline caused operating profit at its mobile division, its biggest business unit, to plummet 74% year-over-year last quarter. Samsung's high-end devices are losing ground against Apple's iPhones, while its mid-range ones are being undercut by cheaper comparable devices from Xiaomi , Lenovo, and other Chinese companies.
Samsung controlled 18.3% of the global tablet market in the third quarter, down from 19.3% a year earlier, according to IDC. But Samsung wasn't the only one to lose ground -- Apple's share slipped from 29.2% to 22.8%, and Asus' share declined from 7.4% to 6.5%. But Lenovo, RCA, and "other" companies all gained market share, further fragmenting the crowded market.
The silver lining is that Samsung's tablet market share is declining at a slower rate than its share of smartphones. Moreover, its tablet shipments actually rose 6.5% year-over-year (but lost market share due to a larger overall market), while its smartphone shipments tumbled 8.1%. This means that for Samsung, tablets could be a more promising avenue of growth than smartphones.
The upcoming paradigm shift
Although the Nexus 9 and Galaxy Tab S respectively represent new opportunities for HTC and Samsung, investors shouldn't expect them to be game changers in the tablet market.
Gartner forecasts that tablet sales will only rise 11% year-over-year to 229 million units at the end of 2014. That's down from 55% year-over-year growth in 2013. That slowdown was attributed to longer upgrade cycles and the replacement of tablets with 2-in-1 devices like Microsoft's Surface Pro 3 and Lenovo's Yoga 3 Pro . This means that we might see HTC, Samsung, and other Android tablet makers shift away from stand-alone tablets and launch more convertible devices in the near future.
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The article HTC's Google Nexus 9 vs. Samsung's Galaxy Tab S: Which Company Needs A Bigger Tablet Hit? originally appeared on Fool.com.
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