Financial analysts at Morgan Stanley are suggesting that Apple's iPad may already be having a negative impact on portable PC sales. According to a recent Morgan Stanley/Alphawise survey, 44 percent of U.S. consumers looking to buy an iPad have indicated that they would be foregoing the purchase of a netbook or notebook because of the decision.
Tablets in particular, may prove a headwind to notebook growth, wrote Morgan Stanley analysts Katy Huberty and Mathew Schneider in recent report. Given the versatility of the iPad in particular, they noted, cannibalization is a threat.
"The notebook (44 percent), iPod Touch (41 percent) and eReader (28 percent) markets are the most at risk," Huberty and Schneider wrote. "Consumers see broad iPad use cases including browsing and email (90 percent), multimedia consumption (67 percent), print media consumption (60 percent), gaming (57 percent), and other apps."
Too Soon To Say
Apple recently said it has already sold more than one million iPads, including those coming from pre-orders. "Assuming that rate continues in May -- and because even Apple Stores keep running out of stock, that seems likely -- we'll see Apple having sold about 1.5 million units by the end of May," wrote Yankee Group Analyst Carl Howe in a blog.
Still, it is too early to reach any conclusions concerning the iPad's potential impact on portable PC sales, according to Stephen Baker, vice president of market research firm the NPD Group.
"One month of sales is not a trend on anything -- especially for Apple," Baker said. "One of the things which Apple is great about is building momentum -- and [that] tends to manifest itself very aggressively at the launch of a new product. But whether this is evidence of a long term trend remains to be seen."
According to a recent NPD Group survey, consumer awareness about the iPad was highest among Apple owners (82 percent), mainly because it is an Apple product. This info suggests to Baker that the device will have a minimal impact on the purchasing decisions of consumers that favor Windows-based machines, at least right now.
Eventually, however, Baker believes that iPads will become more competitive -- especially when clamshell covers featuring wireless keyboards become available for the device. "It helps the iPad to become competitive against a netbook" by boosting "the level of productivity functions that people want," Baker said.
Gartner has not yet finalized its estimates for first quarter 2010 netbook shipments, but expects "growth to range between 70 to 80 percent compared to a year ago -- which was very close to year-on-year growth in the fourth quarter of 2009," noted Mika Kitagawa, a principal analyst at the research firm. However, netbook growth will be far less substantial for the year overall, according to iSuppli, which is predicting a 30 percent year-over-year rise.
IDC analysts attribute the slowdown to rising consumer expectations. "Intel's new Core processors and AMD's new Athlon processors are ramping [up], and at a time when, IDC believes, consumers and corporations will be anticipating a much healthier 2010 and looking for more value than just low price in their PCs," said Shane Rau, semiconductor research director at IDC. "Intel's low-end Atom processor for netbooks represented 20 percent of the chipmaker's mobile PC processor mix in the first quarter, down from 24 percent in the fourth quarter of 2009."
Netbook makers are missing out on recent business growth since their products predominantly appeal to consumers. According to Kitagawa, over 80 percent of the shipments of what Gartner calls mini-notebooks have gone to consumers to date.
"We have not seen any apparent pick up of mini-notebook growth in the professional market," Kitagawa said. "As we expect more professional replacements later this year, the mini-notebook share will shrink."
While the iPad may not prove to be an ultimate netbook-killer in the business world, it is clearly having an impact on sales where consumers have to decide between spending on this device or that.