2-in-1s dominate Windows tablets, and what that implies

As expected, according to IDC, iPad sales declined 13% year-over-year while the tablet market grew 7%. That’s bad for Apple. Part of it is the longer replacement cycle; another is that iPads are not competitive with “good enough” Android tablets that cost substantially less. But this is a story we’ve explored before on the Cornerplay.

What’s more interesting is Windows 2-in-1 hybrid devices, which IDC reports at 4% of the market while pure Windows tablets are just 0.6%. That means 2-in-1s are 87% of all Windows tablets.

While those are tiny numbers, Windows tablets grew 67% in an environment where iPads actually declined. IDC expects this forward momentum to continue, and for Windows to achieve 11% market share by 2018.

What do we think? Predicting technology is like trying to thread a needle on top of a speeding train, but we’re up for the challenge.

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The iPad’s value proposition is the best premium tablet. And by best, I mean hardware construction and extensive app library. However, unless Apple does something different, iPad share will continue to decline. The best customers will continue to buy iPads but I expect iPads to eventually have iPhone-like market share. That share may still be large enough for app developers to continue targeting iPads first.

Windows’ value proposition is tablets that can replace laptops. Yes, I’m aware that’s the Surface tagline, but it’s also Microsoft’s larger tablet strategy. 2-in-1s are already 87% of all Windows tablets and undoubtedly what are driving the 67% growth rate. Hybrid Windows devices appeal to productivity workers who want to save money and carry fewer devices — from the highest end (Surface Pro) to the lowest (cheap Chinese devices).

The rumored iPad Pro will try to spoil Microsoft’s party, but it’s impossible to judge how successful Apple will be without seeing the device first.

Android will dominate pure tablets meant for consumption. That’s because for tablet purposes, a Windows device has no meaningful advantage — in fact, you can argue that Android is better due to its app library and smaller footprint. Android tablets will also always have a price advantage; a big factor in emerging markets.

For Microsoft to compete, they have no choice but to focus on productivity because Android will ultimately win on consumption. That assumes Windows devices really are the best for productivity. With Office available for iOS and Android, that’s increasingly less obvious.

Google is already exploring the productivity market for tablets with the Nexus 9 and its Surface-like keyboard cover. Unfortunately, it missed on execution.

Let’s not over-complicate things and assume that if you want a tablet that can do work, you would choose Windows over Android. Predicting overall market share then boils down to what you think will be bigger: tablets meant purely for consumption, or converged devices that can do both work and play?

If it’s the former, Windows will continue to be a bit player with the majority belonging to Android, and iPad filling in the premium niche. I can see Android at 75%, iPad at 20% and Windows at 5% by 2018.

If it’s the latter, Windows will continue its explosive growth. Yet, even if they kept growing at its current 67% pace — unrealistic, and very impressive if achieved — in four years they would merely have 20% market share. At best, roughly in line with the iPad. That’s how much catching up Windows has to do. So perhaps, by 2018, it’ll be Android at 60%, Apple at 20% and Windows at 20%.

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