iPad to Grow Market Share Over Android Tablets: IDC

New features in the iPad 3 and Apple’s decision to reduce the price on iPad 2 will drive gains in market share at the expense of Android tablets, IDC analysts say.

Apple€™s iPad will grow its share of the booming tablet market over its Android-based rivals this year, thanks in large part to new features introduced with the iPad 3 and the company€™s decision to reduce the prices further on the iPad 2, according to market research firm IDC.

The prediction comes as IDC analysts, citing the expected strong demand for media tablets in the second half of the year, increased their forecasts for the market overall, calling for 107.4 million tablets to be sold this year, up from the previous expectation of 106.1 million.

And the momentum will only continue, the analysts said in a report June 14. For 2013, they increased their forecast from 137.4 million units to 142.8 million, with sales jumping to 222.1 million by 2016. Those numbers could increase after the upcoming release of Microsoft€™s Windows 8 operating system, which will offer not only touch-screen capabilities but also run on non-x86 systems, such as tablets powered by system-on-a-chip (SoC) architectures like ARM Holdings.

Tablets also are getting more looks from businesses, according to Tom Mainelli, research director for mobile connected devices at IDC.

"Demand for media tablets remains robust, and we see an increasing interest in the category from the commercial side," Mainelli said in a statement. "We expect pending new products from major players, increasingly affordable mainstream devices, and a huge marketing blitz from Microsoft around Windows 8 to drive increased consumer interest in the category through the end of the year."

Apple and its iPad are going to be the primary beneficiary of the market growth, according to IDC. In 2011, the iPad and its iOS operating system held 58.2 percent of the market. This year, that share will grow to 62.5 percent. That will come at the expense of tablets running Google€™s Android operating system, which will see its share slip from 38.7 percent last year to 36.5 percent in 2012, the analysts said.

Struggling BlackBerry-maker Research In Motion, with its PlayBook tablet, will see its already anemic market share drop even farther, from 1.7 percent in 2011 to 1 percent this year.

Mainelli attributed Apple€™s market share growth to the addition of several key features in the iPad 3, which launched earlier this year, including Retina Display and 4G capabilities. Smart pricing moves also will help Apple, he said.

"After a very strong launch of new products in March, Apple's iPad shows few signs of slowing down," Mainelli said. "Apple's decision to keep two iPad 2s in the market at lower prices€”moving the entry-level price down to $399€”seems to be paying off as well. If Apple launches a sub-$300, 7-inch product into the market later this year as rumored, we expect the company€™s grip on this market to become even stronger."

Other analysts also have cited Apple€™s decision to lower the prices on its iPad 2 as having an impact on the tablet market. In a report June 8, IMS Research noted that the average selling price for a tablet fell 21 percent this year, to $386, with the drop in the iPad 2 price being the significant factor. The move put greater price pressure on rivals.

€œThere are few innovations from vendors to differentiate their tablets; low price seems to be the major factor to attract consumers to buy tablets other than iPads,€ report author Gerry Xu said in a statement. €œMore vendors are expected to focus on the low-end tablet market. However, to balance performance and profitability with a low price remains challenging for most tablet vendors.€

IDC€™s Mainelli said his firm has not yet factored in the impact of Windows 8 or Windows RT (the OS for ARM-based systems) into the tablet numbers yet. That will come later this year.

"Our current thinking, based upon early pricing expectations for these products, is that Windows-based tablets will be largely additive to our existing media tablet market forecast,€ he said. €œWe don't expect Windows-based tablets to necessarily take share from Apple and Android, but will grow the overall tablet market."

With the growing demand for tablets€”and the falling prices€”IDC also revised its 2012 forecasts for e-readers, noting that sales in the first quarter were disappointing. The analyst firm now expects shipments this year to come in at about 28 million units, a slight drop from the 28.2 million units that shipped in 2011.