Apple's biggest iPad rival: the iPhone 4S

Research firm IHS says money that would have normally been devoted to the iPad during the holiday quarter actually went to the newly released iPhone 4S.

Apple

Apple was its own worst enemy in the fourth quarter.

The biggest competitor to the iPad 2 was the iPhone 4S, market researcher IHS said today in a report on tablet sales in the fourth quarter. The firm concluded that despite other tablet options, what curtailed sales of the iPad 2 the most was customers committing their dollars to the iPhone 4S, which was released in October.

Clearly, the competition didn't hurt Apple too much. The company reported selling 15.4 million iPads in the fourth quarter, although that was overshadowed by the whopping 37 million iPhones it sold in the same period. Despite a raft of new entrants in the tablet business, Apple is still the clear leader.

Its leadership position, however, did erode slightly in the fourth quarter. Its market share slipped a bit to 57 percent in the fourth quarter, down from 64 percent in the third quarter.

Apple's iPad sales, while strong, fell below IHS's estimates. But don't blame the outside competitors like the Kindle Fire.

"The primary alternative wasn't the Kindle Fire--which debuted to solid sales in the fourth quarter--but Apple's own iPhone 4S smartphone," said Rhoda Alexander, an analyst at IHS. "The rollout of the iPhone 4S in October generated intense competition for Apple purchasers' disposable income, doing more to limit iPad shipment growth than competition from the Kindle Fire and other media tablets."

The Kindle Fire from Amazon did respectable business in its own right. Amazon shipped 3.9 million Fire tablets in the fourth quarter, allowing the company to take 14.3 percent of the market, or enough to be the second largest tablet player in the world. In just one quarter, Amazon surpassed Samsung Electronics, which has flooded the market with tablets of varying sizes--with varying degrees of success.

For the year, Apple had 62 percent of the market for tablets, down from 87 percent in 2010, when it was virtually the only game in town. Samsung with its Galaxy Tab line was second with 9.4 percent of the market, while Amazon snagged 6 percent despite the late availability of the Fire.

Beyond propelling Amazon into the top ranks of tablet vendors, the $200 Fire also put a lot of pressure on rivals to slash their prices or to include their products as part of a bundle, IHS said. Barnes & Noble's Nook, which normally retails with an affordable $250 price tag, also applied pressure to other tablets, which were selling closer to the iPad's $500 entry-level price. That trend should continue with competitive and affordable products from the likes of Asus.

Apple could regain some of its market share once the next iteration of the iPad comes out, which is expected early next month.

 

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