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Apple iPad Sellouts, TI Shortfall Raise Stakes for Android in the Tablet Game


Apple's new iPad is doing gangbusters business, while a shortfall at Texas Instruments could indicate weakness in Android.

Last Wednesday, Apple (AAPL) delivered the latest iteration of its iconic iPad tablet, and while impressive, it offered almost nothing in the way of surprise.

Let's give some credit to the tech blogosphere -- it pretty much nailed the specs across the board, from the 2,048 x 1,536 Retina display to the 4G LTE wireless capabilities.

Nonetheless, the fact that the new iPad was virtually 100% in line with expectations hasn't stopped consumers from going gaga over the device.

As of this morning, is reporting a two- to three-week wait time for every single new iPad model -- all colors, all carriers, and all storage sizes.

If you want the near-term bull case for Apple, you can see it here in one little 'ol screen grab:

Bizarrely enough, given that we seem to be in a market in which the S&P 500 (^GSPC) can't be broken without taking Apple down, the new iPad is actually holding up the equity markets!

Of course, time will tell if the fact that I made that declaration in public marked the top in the Apple bubble....

But let's move on.

Now, it's not exactly shocking that a new Apple product has sold out.

However, the fact that it is happening just a few days after Texas Instruments (TXN) guided down due to significant weakness in its OMAP smartphone/tablet processor line could support my negative view of the Google (GOOG) Android tablet market. (See: Why the Google Android Tablet Market Is Far Weaker Than It Seems.)

Now, let's outline TI's problems:

1. Competition on the Processor Side

TI has to deal with a bevy of tough competitors, including Qualcomm (QCOM) and NVIDIA (NVDA) for design wins.

2. Weakness in Its Smartphone Customer Base

TI is heavily reliant upon smartphone market-share losers Research In Motion (RIMM) and Nokia (NOK) as customers, and that ain't a good thing in an Apple/Samsung world. (See: Samsung and Apple Now Account for 86% of Smartphone Industry Growth.)

If you doubt the importance of selling into Apple and Samsung, just check out this chart detailing fourth-quarter smartphone industry unit sales growth:

(Source: Strategy Analytics)

3. Weakness in Its Tablet Customer Base

Now this is where things get interesting.

Multiple analysts are pointing to possible weakness in Amazon's (AMZN) OMAP-powered Kindle Fire tablet as a prime reason for TI's guide down last week.

If you've been following my work, then you know that the bargain-priced Kindle Fire, along with the Barnes & Noble (BKS) Nook tablet, is dominating the Android tablet market, taking 40% of it in short order:

(Source: Strategy Analytics)

If you're confused by the math: Android is 39% of the tablet market (23% + 16%), and 40% of that is 16%, as represented by the black Kindle Fire/Nook slice.

I've been pointing out that Android's market share has been significantly boosted by the money-losing Kindle Fire and Nook Tablet.

Therefore, if 1) the Kindle Fire is in fact fizzling out and 2) the new iPad is selling out, then we can very reasonably conclude that Apple's tablet market share will increase this quarter.

And that would mean Google Android tablet makers would have to come up with something better than a cheaper price if they're to make a real run at the iPad.

Twitter: @MichaelComeau

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