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Why does Qualcomm lag behind Apple in the tablet processor space?

Why did investors punish Qualcomm's stock after its earnings? (Part 5 of 18)

(Continued from Part 4)

Qualcomm lags behind Apple and Intel in tablet application processor market

Earlier in this series, we discussed how Qualcomm (QCOM) manages to claim a clear leadership position in the overall mobile application processor market. However, it’s lagging behind Apple (AAPL) in the tablet application processor market. In fact, it’s also behind Intel (INTC) in this market. According to a report from Strategy Analytics, as of 2Q14 and as the chart below shows, Apple’s share in this market was 26%, with Intel at 19% and Qualcomm at 17%.

So why is Qualcomm behind Apple and Intel in this market? Let’s find out.

Apple benefits from its leadership position in the tablet market

Apple’s leadership position in the tablet application processor market stems from its leadership position in the tablet market. It uses its own developed A8 processor. However, although Apple and Samsung (SSNLF) are the top two players in the tablet market, their market shares have been declining.

According to a report from IDC as of 2Q14, Apple’s share in the tablet market declined from 33% in 2Q13 to 27% in 2Q14. We discussed Apple’s declining position in the tablet market in a Market Realist article titled Why iPhone and Mac drove Apple’s growth, but iPad disappointed .

However, the main beneficiary of this loss has been low-end tablet manufacturers based on Google’s (GOOG)(GOOGL) Android operating system. This is where Intel comes into the picture. It has successfully managed to tap into the low-end tablet chipset market.

Earlier this year, Intel entered into a partnership with Rockchip to design cheaper tablets based on the Android operating system. Rockchip is a Chinese chip maker that competes with Qualcomm and other low-cost tablet chipset players, like MediaTek. We discussed this space in a Market Realist article titled Why did Intel’s mobile division decline so much in Q2 2014? .

Continue to Part 6

Browse this series on Market Realist:

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