According to Strategy Analytics, 40.7 million branded tablets were shipping in the first quarter 2013, up 118% year over year. So what does this mean for the major players?
Won the sales war for the quarter
Despite a lot of the negative attention Apple Inc. (NASDAQ:AAPL) receives for selling old, boring, tired products, the numbers can speak for themselves: iOS devices account for 48% led by sales of 19.4 million iPads. Quarter over quarter sales were flat, but were down 64% from 1Q12.
Some investors can consider the numbers to be a negative for the company, but the rumor mill is heating up significantly regarding a redesigned 9.7 inch iPad and a new iPad mini, which should ship in Q3. The specs as reported by Digitimes include a thinner, lighter, iPad mini-like body with narrower bezels. Investors have been waiting patiently for a new line of devices to come out from Apple Inc. (NASDAQ:AAPL), and it looks like everyone’s wishes has been answered.
Close, but still in second
My main concern with the numbers is the fact that Samsung devices accounted for 23% of total sales during the quarter. Normally this would be great for what many consider to be the best Android devices, but there is a serious possibility that Samsung Electronics Co., Ltd. (KRX:005930) will plan to ditch the Android platform and utilize their own open-source platform, Tizen. Samsung has plans to begin releasing the platform before the end of the year. Samsung Electronics Co., Ltd. (KRX:005930) has plans to turn their Tizen platform into the new “Asian Android,” and this will be a serious loss to the Android portfolio.
Very distant third place, but tons of potential
With Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) devices accounting for 91% of shipments in the quarter, there are a few other players left to discuss. Microsoft Corporation (NASDAQ:MSFT) shipped only 900,000 due to a lack of any meaningful apps, and what many consider to be a complete failure of their new operating system, Windows 8, to provide an edge to gain market share.
Microsoft Corporation (NASDAQ:MSFT) recently took the opportunity at the second largest computer show to showcase a much needed update to the Windows operating system. Dubbed Windows 8.1, the updated platform will take into account input from consumers on the Windows 8 system. Microsoft Corporation (NASDAQ:MSFT)’s chief market officer was quoted as saying “Windows 8.1 furthers the bold vision of Windows 8 by responding to customer feedback and adding new features and functionality that advance the touch experience and mobile computing’s potential.”
Also important to note is Microsoft Corporation (NASDAQ:MSFT)’s announcement that the extremely popular franchise Halo will be available on Windows 8 devices (phones, tablets, PC) a move that will solidify the device as “the” gaming tablet. Microsoft has some big plans to really integrate all Windows devices, which can prove to be lucrative. As an example, a user can start playing a game on one device, pause the game and continue on another device, making Windows the only true cross-platform device. In another move to gain market share, Microsoft Corporation (NASDAQ:MSFT) recently announced that their 7 and 8 inch Windows 8 tablets will get Office for free.
Closing remarks
According to IDC, tablets will outsell notebooks in 2013 and projected to outsell all PCs in 2015. Buying the current leader (Apple) is a no brainer as the company has demonstrated a commitment to revamping their iPad line with new releases, and having an extraordinary collection of apps in their repertoire. Aside from the tablets, Apple Inc. (NASDAQ:AAPL) remains a strong buy based on their renewed commitment to returning shareholder value, and a renewed focus on new devices.
Google Inc (NASDAQ:GOOG) is certainly not a wise choice to buy, as they face the possibility of seeing Samsung Electronics Co., Ltd. (KRX:005930) part ways. I can’t imagine any scenario in which Google Inc (NASDAQ:GOOG) can win the tablet war without their star player. To demonstrate how important Samsung is to the Android umbrella, Samsung Electronics Co., Ltd. (KRX:005930) makes up to 95% of Android’s overall device profit. In fact, Samsung Electronics Co., Ltd. (KRX:005930) earns more revenue and profit from Android than Google Inc (NASDAQ:GOOG) does.
The smallest player in the game (Microsoft Corporation (NASDAQ:MSFT)) seems to have the most potential for upside. I love the fact that both Office and gaming will be coming to the tablet very shortly along with Windows 8.1. Investors need to familiarize themselves with the information I have provided to understand the upside potential. However, I wouldn’t rush to invest yet, I would recommend sitting on the sidelines waiting for the next set of data to come out. If the data is positive, investors will obviously pay a premium compared to today’s price but this seems to be the safe bet and strategy.
Note: Data from Strategy Analytics
Jayson Derrick has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Jayson is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Tablet Roundup: One Stock to Buy, One to Avoid, and One to Watch originally appeared on Fool.com is written by Jayson Derrick.
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