That Apple remains in first place in the tablet market comes as no surprise. IDC’s latest research shows that in the first quarter of 2012, Amazon’s once-hot Kindle Fire is struggling. According to IDC, Amazon’s share dropped from nearly 17% of the tablet market to 4%, with fewer than 700,000 units sold compared to Apple’s 11.8 million.

The inexpensive Kindle Fire took off when it was introduced in late 2011, giving Amazon 16.8% of the tablet market with 4.8 million shipments. Amazon’s 7-inch tablet was the right product at the right price at the right time, that being the all-important holiday season. The Fire is an inexpensive tablet that offered many of the features that people want for less than half the price of an iPad. But the Fire didn’t knock people’s socks off, and many of the reviews were lukewarm, at best.

Amazon Still Trounces B&N

Apparently, the bloom is off the rose. Amazon’s Q1 sales put it behind Samsung sales of Android tablets, but still comfortably ahead of Barnes & Noble’s Nook tablets. Lenovo took the fourth slot, while B&N grabbed fifth place.

IDC predicts that Amazon will try to win back market share with the introduction of a “new larger-screened device… at a typically aggressive price point.” IDC’s Tom Mainelli, research director for IDC’s Mobile Connected Devices group, also predicts Google will debut a tablet co-branded with ASUS.

Lessons Learned: Price Matters, to a Point

The lesson that Apple’s tablet competitors should take from IDC’s research is that price does drive sales – up to a point. The drop-off from the last quarter of 2011 to the first quarter of 2012 is far steeper than is easily explained by the end of holiday shopping. IDC had predicted overall tablet sales to be 1.2 million units higher than they were this quarter, with the shortfall mostly attributed to Amazon’s slip.

Even though Apple introduced a new iPad this year, it’s continuing to sell iPad 2s at a reduced price, fending off the cheap Android tablets and defending its market share while maintaining high margins on the rest of the iPad line. Apple owned 54.7% of the market in Q4 2011, and has bumped that figure back up to 68% in Q1 2012.

Tablet sales have grown 120% from last year, but were still lower than IDC’s predictions. Whether tablet sales continue to slow in Q4 will be interesting to see.

Android Still Lags

Android vendor sales have not been able to catch up to iOS in the tablet market in the same way that they’ve been able to catch up with iOS phones. Despite two years and a slew of vendors chasing Apple’s tail, Android has been able to glom on to only 32% of tablet sales in the last quarter. Android’s fragmentation, poor customer reviews and pricing missteps have held it back.

It had looked like Amazon’s Kindle Fire would be the breakout device for Android. And it was – briefly. But even Amazon’s muscle and cut-rate pricing hasn’t been enough to overtake the iPad.