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As iPad’s Market Share Falls, Must Profits Follow? – ReadWrite

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Apple’s share of the tablet market has plummeted from 90% to 38.8% in just three years, and it’s certain to continue to fall. It has to. Apple’s business model demands it.

In early 2011 I wrote:

Apple is fantastic at fostering growth in new markets. It is terrible at maintaining market share. Why? Because Apple is not a market-share leader, with very few exceptions (e.g., the digital music market). Indeed, Apple’s high-margin, premium-pricing business model demands that the company cede market share as it hoards the high end of a market.

Some criticized me for that post, arguing that this time things would be different! This time Apple would be able to command a premium price and premium market share! This time Apple would defy gravity!

But it didn’t. It couldn’t. That’s just not how free markets operate.

The Implications of Losing Market Share

In the past year Apple’s share of the tablet market has dropped nearly 20 points, from 56.8% to 38.8%, with Samsung and Amazon gobbling up Apple’s market share, according to a new report from Citi. Perhaps not surprisingly, the market has seen a “particular slowdown” in 10-inch tablets, caused in part by Apple’s very successful iPad Mini. Speaking of the Mini, Citi warns that “innovation of this nature is insufficient to reverse share loss.” —–> read the full article here

via As iPad’s Market Share Falls, Must Profits Follow? – ReadWrite.

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