Apple Inc. (AAPL), Microsoft Corporation (MSFT): Survival of the Biggest Phablet

Apple Inc. (NASDAQ:AAPL)’s obviously not the only one that needs to figure out its strategy. Microsoft Corporation (NASDAQ:MSFT) doesn’t currently offer a smaller version of its Surface tablet, and for now that may be a good thing. Sales of the Surface have been dismal, and the company is about to release the next iteration, called the Surface 2. Even with updated specs, Microsoft is facing an uphill tablet battle. The Redmond, Wash.-based company has only 4.5% OS tablet market share right now. Adding a smaller screen would only bring in additional competition for the tablets, something Microsoft can’t handle right now.

Tech investors should keep an eye on how much phablets start creeping into future small tablet sales, and take note on how Apple Inc. (NASDAQ:AAPL) and others respond. The iMaker moves very conservatively when it comes to smartphone screen size, but with larger screens now the new normal, it may be forced to follow the pack. On top of that, I’d watch to see how Apple prices the next version of the Mini. A cheaper Mini may help initial tablet sales but would also move the device closer to its phablet competitors. With a larger iPhone nowhere near a launch, the company is leaving a size-gap open that its competitors are gladly filling.

The article Are Phablets Killing Small Tablet Growth? originally appeared on Fool.com.

Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple and owns shares of Apple and Microsoft. 

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