iPad's Biggest Competitor Is Apple iPhone 4S: Report

Apple's iPad competes with the Samsung Galaxy Tab and Amazon Kindle Fire, for sure. However, holiday shoppers were actually pulled between the iPad and the iPhone, leaving Apple to compete against itself.

Tablet sales in 2011 exceeded analyst estimates, but the Apple iPad still took a hit during the fourth quarter, usually a strong sales period due to holiday shopping. The culprit? It wasn't the Samsung Galaxy Tab or even the Amazon Kindle Fire that took the biggest bite out of iPad sales. It was Apple's iPhone 4S, according to a Feb. 16 report from IHS iSuppli

"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,€ IHS analyst Rhoda Alexander wrote in the report.

Apple iPad shipments rose 39 percent during the fourth quarter of 2011, up from 11.1 million in the third quarter to 15.4 million. Still, Apple's share of the tablet market fell to 57 percent from 64 percent during the quarter.

In addition to the highly anticipated new iPhone, the Kindle Fire did also nibble at shares. Amazon shipped 3.9 million Kindle Fire devices during the quarter, for a 14.3 percent share of the market€”a significant achievement, considering the device only arrived in November.

Alexander called it a "respectable start," qualifying Amazon's success by noting, "The long-term viability of the product will hinge on the success of Amazon€™s business gamble, which depends on tablet sales driving substantial new online merchandise sales at Amazon.com in order to attain profitability.€

More impressed, the Pew Internet Project called holiday tablets sales "striking," finding that tablet and ebook ownership among adults in the United States nearly doubled in the few weeks from mid-December to early January.

For the full year 2011, Apple shipped 40.5 million iPads, which represented just a 62 percent share of the market. Despite the 168 percent growth over the 15.1 million units it shipped in 2010, its portion of the much smaller tablet pie that year was 87 percent.

Samsung, despite the holiday challenge from Amazon, held onto the No. 2 spot for the year, claiming 9.4 percent of the market on shipments of 6.1 million units. Amazon, not far behind, claimed a 6 percent share of the market for the year.

IHS notes that sales of Android tablets during the fourth quarter were "achieved at considerable financial cost," as vendors felt forced to slash prices and host promotions to compete with new, lower-priced devices, including the Kindle Fire and the Barnes & Noble Nook.

Microsoft, it added, may offer some relief.

"In the wake of the new low bar for pricing set by the Fire and the Nook and the looming Google acquisition of Motorola Mobility, manufacturers and branded vendors are looking to Windows 8 tablets as a more profitable alternative," stated the report. "Watch for a surge of Windows 8 and ARM microprocessor-based tablets in late 2012 and early 2013."

Watch, too, for Apple to reassert itself with the expected introduction of an iPad 3€”or whatever Apple chooses to call its next tablet€”which is expected to feature a QXGA retina display and Siri, the voice-prompted assistant Apple introduced on the iPhone 4S.

"IHS iSuppli anticipates strong sales for the next iPad refresh, with demand expected to outstrip supply for several months," said the report.