Apple's share of the tablet market slumped from 64 per cent to 57 per cent in the last three months of 2011, according to figures released on Thursday.
Research firm iSuppli attributes the fall to the Amazon Kindle Fire tablet, which it says sold 3.9 million devices in the six weeks leading up to Christmas following its November launch.
The popularity of the $200 Android tablet saw Amazon gain an impressive 14 per cent of the entire tablet market at this very early stage of its lifespan.
The Kindle Fire easily eclipsed the next placed Samsung Galaxy Tab (8 per cent) and the Barnes and Noble Nook (7 per cent).
Not necessarily bad news for Apple
Despite the rise of the Kindle Fire, it appears that it's a case of more people adopting lower-priced tablets rather than less people buying iPads.
Apple posted record sales figures of 15.4m during Q4 of 2011, so while the Kindle Fire is cutting into its overall share of the market, those ever-rising sales figures are all that will concern Tim Cook for the time being.
Should Amazon launch a larger 10-inch tablet, with a more premium price-point and feature set, then we may get a legitimate competition between Amazon and Apple.
Until that point, both companies seem to be doing just fine within their own markets.