Tablet Wars: Apple vs. MSFT

It's a neat juxtaposition for sure: earlier in the week Apple's fourth-quarter 2014 results showed that iPad sales sliding: 12.3 million sold, down from 14.1 million from the same period a year ago and in $5.3bn in revenue, down from $6.2bn — a decline of 13 and 14 percent respectively year-on-year.

And then, a few days later Microsoft's first-quarter 2015 results (which actually cover roughly the same period) told a slightly different story. Sales of Microsoft's Surface 'tablet PC' more than doubled over the same quarter a year ago, hitting $908m, which the company said was driven by students, professionals and enterprises.

Microsoft CFO Amy Hood said that the new Surface Pro 3 sales were "pacing at twice the rate of what we saw with Pro 2" and that gross margin for Surface "was positive" as businesses replaced tablets and laptops with the hybrid device.  

Add to this the unexpected resurgence of the PC market (in the US and Europe PC shipments are up year on year according to Gartner) and the increasing evidence that tablets are being squeezed between phablets and hybrid devices, and you have a very different scenario to the one a year or two back, when it looked like tablets were running rampant and the PC was doomed.

In reality, of course, it's a little bit more complicated than that: Microsoft may have come up with a compelling product with the third generation of its Surface Pro, but it's still growing from a very small base and it's not clear how profitable the device is.

Meanwhile, Apple CEO Tim Cook points to the 237 million iPads the company has sold over the last four years and describes the drop in iPad sales as "a speed bump". His argument is that there's still plenty of growth left for the tablet — especially in the enterprise, where Apple's alliance with IBM could be a significant factor.

What these numbers really represent is a snapshot of a turbulent device market. When the iPad arrived (and the other tablets that followed), it shook up the PC market so much that it's only now recovering some sort of equilibrium.