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Apple Loses Tablet Market Share in Second Quarter (Update 1)

Tickers in this article: AAPL GOOG
Updated from 10:51 a.m. EST to provide analyst comments in the fourth paragraph.

NEW YORK (TheStreet) -- One glaring weakness in Apple's earnings report a few weeks ago was the very low number of iPads sold. As such, Apple continued to lose ground in the tablet market, with Samsung reaping the majority of the benefit.

Research firm IDC, in its tablet shipment survey, noted that tablet sales rose 59.6% year over year to 45.1 million tablets in total, thanks in part to more devices sold using Google's Android operating system.

Apple shipped only 14.6 million iPads during the quarter, due in large part to no new iPad in March. Apple's market share in the quarter was 32.4%, down sharply from 60.3% in the year-ago period. That caused the sequential decline seen in overall tablet sales, as the tablet market saw volume fall 9.7% from the first quarter. In the past, Apple has released a new tablet in March but the company is expected to do so later this year and early 2014, along with the release of a new iPhone and several other new products and services.

The slowdown in iPad sales seen last quarter caused UBS analyst Steve Milunovich to cut his earnings for fiscal 2014, cutting his earnings estimates to $46.29 per share. Although iPad take-up has been at a record rate, we are concerned about recent stalling and discuss possible reasons, such as longer upgrade cycles and encroachment by phablets," Milunovich wrote in the report. Milunovich rates shares "buy" with a $500 price target.

Apple is expected to unveil both a new larger iPad, as well as an iPad mini with Retina Display. The previous version of the iPad mini does not have Retina Display, Apple's high-resolution screen.

Samsung also saw a sequential decline, IDC noted, as it shipped 8.1 million units in the second quarter, down from 8.6 million in the first quarter, but year-over-year growth was exceptional, clocking in at 277%. That's good enough for 18% of the market, up from 7.6% in the year-ago quarter. The other top vendors, including ASUS saw a sequential decline as well.

"A new iPad launch always piques consumer interest in the tablet category and traditionally that has helped both Apple and its competitors," said Tom Mainelli, research director, tablets at IDC, in a press release. "With no new iPads, the market slowed for many vendors, and that's likely to continue into the third quarter. However, by the fourth quarter we expect new products from Apple, Amazon, and others to drive impressive growth in the market."