(AAPL) Apple Leads Tablet Market

Apple Inc. (AAPL) continues its success story with the iPad 2, as it has emerged as the leading tablet maker in the second quarter of 2011 in terms of global shipments. Research firm IDC confirmed that 9.3 million units of Apple’s iPad 2 being shipped during the quarter, netting a 68.3% market share worldwide, up from 65.7% in the previous quarter.

Meanwhile, with an estimated market share of 26.8%, Google Inc.’s (GOOG) Android-based tablets were down from 34.0% in the previous quarter. The remaining 4.9% of market share went to the new entrant in the tablet market, Playbook, a Research In Motion Limited (RIMM) product.

IDC expects the market share of Android-based tablets to decline further in the third quarter (dropping to an estimated 23.0%) before it witnesses any reversal in the fourth quarter (increasing to 25.9%).

Total tablet shipments rose by 88.9% on a sequential basis and 303.8% year over year in the second quarter of 2011 to 13.6 million units. Based on the robust growth, IDC increased its shipment forecast for 2011 to 62.5 million units, up from the previously forecasted estimate of 53.5 million units. Analysts expect the trend to continue in the remaining two quarters of 2011.

In the recently concluded quarter, Apple had launched iPad 2 in 36 additional countries. Spurred by strong iPad 2 demand, revenues from sales of iPad and iPad accessories during the quarter shot up 179% on a year-over-year basis and 113% on a sequential basis to $6.0 billion.

Apple has already established itself as the leading smartphone maker in the second quarter 2011. Research firm, Strategy Analytics, confirmed Apple’s iPhones to have grabbed an estimated 18.5% market share, compared with the 13.5% share a year earlier.

Revenues from iPhone handset sales, accessory sales and carrier payments totaled $13.3 billion, compared with $5.33 billion in the year-ago quarter, a significant increase of 150.0%. The company had iPhone distribution agreements with 228 carriers in 105 countries at the end of the quarter.

Apple’s primary smartphone and tablet markets are very crowded, with the likes of Research In Motion Ltd., Hewlett-Packard Co. (HPQ), Dell Inc. (DELL), Samsung, Cisco Systems Inc. (CSCO), Toshiba and Acer gaining popularity in several international markets. Moreover, Amazon.com Inc. (AMZN) is speculated to be coming out with a new device that has the features of a tablet and is likely to be a potent rival for the iPad.

However, so far Apple has managed to maintain its leadership position in the tablet market, and it enjoys a very strong position in the smartphone market as well.

Apple’s ability to spur the popularity of the products in developing nations, where it is less successful, will help dictate the company’s fortunes in future.

We maintain our Neutral rating over the long term (6-12 months). Currently, Apple has a Zacks #2 Rank, which implies a Buy rating in the near term.

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