Why Android Is Winning The Tablet Wars

latest android tablet took the lead from Apple AAPL -2.39%‘s iOS tables in Q1 of 2013 (source). This is a huge change from three years ago, when Apple invented the modern tablet.

Global electronic tablet market share by OS and Vendor; data via IDC and Strategy Analytics.

What is happening and where is this going? I see four driving forces:

newest tablets computing is well beyond the control of Apple’s iTunes content delivery system. In the early days of the iPod and the iPhone (ancestors of the iPad), you could hardly use the product without periodic plug-ins to iTunes to get content and configure the device. After that Apple’s App Store held hegemony on the apps that give tablets value.Data via CivicScience.com; See end notes on category definitions.dsdD23DCS

Those days are over. The chart at right shows that the biggest usage mode for tablets is communications: e-mail, web, social media, etc., where Apple has no advantage in content access. Work usage is also important, and the productivity apps for Apple and Android are fairly comparable.

The second biggest use is media and entertainment. Apple had a big advantage at the start here, but the playing field here has been leveled to a large extent. eBooks and music are equally available on Android, a wide selection of video is available from Google GOOG +1.09% Play, Netflix NFLX +1.99%, and Amazon, and there are numerous Android tablet games, although probably fewer options than iOS.

Android itself has come a long way, most recently on tablets. Android 3.0 “Honeycomb” two years ago was weak and buggy, however the current 4.2 “Jelly Bean” release is full-featured and slick. Market research suggests that Android users love their OS just as much as iOS users love theirs (more). Combined with a nice hardward platform like the Nexus7, Android delivers a very competitive Q88 Tablet .

And, Samsung is a force of nature. At CES in 2011 they had a Galaxy product targeting every Apple mobile product from the iTouch to the iPad. They experiment with many size and design variations: they were early with the now-dominant 7 inch tablet and pioneered the surprisingly successful “phablet” concept (~5″ devices that are big phones or small tablets). Consumer research showed that Samsung’s brand did not match Apple’s, and they responded with a brand marketing blitz that makes them the biggest U.S. spender in mobile electronics, including LeBron James in a Superbowl ad. Samsung is now arguably a stronger brand than Android; the two together are formidable.

Apple is holding the price point up and resisted offering a smaller tablet; it needs high prices to satiate Wall Street‘s lust for predictable earnings. Other vendors have democratized the business by with good offers at lower price points. The five most popular tablets on Amazon today (May 14, 2013) are four 7 inch Kindle and Samsung tablets selling for $179 – $229, and an 8.9 inch Kindle selling for $269. Comparably configured, these products are $100-$200 cheaper than Apple’s products. And, there is a third tier of 7 inch Android tablets in the $100-$200 price range that now takes about 30% of the tablet market: the big orange band on the first chart above.

Apple held on to over 70% market share in iPods throughout the life cycle. The iPod is a media consumption device, and the link to the iTunes content access/management platform was unbeatable. It’s clear that tablets will be a different story, more like PCs. They are becoming a diverse market with several strong brands (Samsung, Asus/Google, Amazon/Kindle), a large number of popular-price offerings, and multiple content access platforms.

This is good news for the eco-system. Apple and Google have done a great job of showing the way and creating a rational platform, but the true potential of cheapest tablet computing will emerge only if we let all the flowers bloom.