Apple's iPad Seen Cannibalizing Netbook Sales

[kas23]

Why is everyone talking about the chart and ignoring this:

"Huberty also cites data from March showing that 44% of surveyed consumers who were planning to purchase an iPad were doing so instead of purchasing a notebook or netbook computer, the largest category of cannibalized products."

Hate to quote myself:

However, the most interesting comment comes from 40% of people saying they are considering an iPad instead of a notebook. Apple should be pretty worried about this comment as it indicates the iPad may cannibalize their own MacBook sales.

 

[jacobj]

I love the fact that people actually seem to be members of this forum only to put bias arguments that criticise Apple and their users. I can only wonder what is missing from their lives so that they need to bulster their ego by posting here.

Anyway, to the point of this post: I can believe that people who were planning to but netbooks have held off for an ipad. When the main reason for it is to act as a portable web browser, email client, etc, then why buy a cheap looking laptop when you can instead buy a well made ipad with access to 1000's of cheap, yet funtional applcations?

As for the argument that netbooks had reached Market sauturation; I don't believe that that holds much water. Markets don't drop off like that when they reach saturation: they tend to peter out. When one sees such a decline it is usually sensible to look for a change in the Market conditions and of course the ipad is the only obvious candidate.

So Apple may well have hit one out of the park. I have to be honest, I was skeptical in January, but having used one and having seen the numbers, then I have to believe that the ipad is more of an iPhone that it is an apple tv.

 

[jacobj]

Hate to quote myself:

The net effect will almost certainly be higher revenues. It matters not where that revenue is generated as long as the GP margin is the same. This may actually drive up desktop sales as people consider replacing high end laptops with a desktop and ipad.

 

[Mirice]

iPad didn't provide any role in this. People are just realizing netbooks are crappy laptops. The only reason that they sold is because they were cheap. Now people have realized how garbage they are, they are being dumped.m

Thanks for the info, I though my netbook worked great while sitting on my lanai in Maui editing raw photos from my d60 in Photoshop. I wish I could have spent 300 dollars more for an ipad which would not have let me edit the in the raw format, or check beach condition because they are in flash, or back up my photos to an external drive....😉

 

[deconstruct60]

Please cite when Apple has done this? From what I've seen Apple has said the iPad is not a netbook. Sure, it's said the iPad is better (more usable) than a netbook, consistent with Steve Jobs' statements that netbooks suck and wants nothing to do with them. I don't think that qualifies as trying to hook on to the netbook's coattails. Apple is saying it has a better, different coat.

What?????????? If Apple says " buys this instead of that" your assertion is that they are not linking them as a substitutable good? It is not a matter of riding coatails. It is a matter of filling a market segment for which there is demand. Customer want a sub $500-600 , lightweight, limited computing device with a large (relative to phone) screen. That is the need that netbooks fill. So does the iPad. So they are linked.

Apple is late to the game. They have a different take on how to fill the need but the need was being filled for last couple of years by netbooks. It was a giant gaping hole in Apple's line up. Not sure why lots of folks are shocked that the iPad is selling so well. Same reason why netbooks sold so well over last two years.

 

[MikhailT]

I think the memory limitation is the biggest negative of the iPad (to me at least).

Looking at the size of the 80 gig classic iPod i feel like they coudl've slipped a HDD in at that size.

But who knows, i could be wrong i'm not an engineer. Or maybe the iPhone OS simply wasn't made to interact with a HDD.

You don't want a spinning HD. It sips power more than the SSD itself and SSD can be much faster than the HD as well especially when you consider the speed of iPad, a 4200RPM HD is going to be very slow. Its a portable device that's going to be moved constantly, no spinning part needs be in it.

Well I figure that Apple really wants cheaper flash for the iPhone product line, so buy slapping it in yet another product line (I just noticed you can get 512 gb of flash on the macbook pro now?!)

The popularity of the iPad will help bring the price down of flash memory in the future . . i hope

Nope, that's not how it works. The popularity of both iPad and iPhone actually increases the price then stabilizes it for a long period of time. It's the law of supply and demand. The fabs do not make extra flash for those devices, they're already at the full production that they can afford at this moment and they'll sell those flash to Apple at bulk because it ensure a stable profit to the fabs, something they don't get often in a volatile market. With the supply running low, the price goes up and now everybody will be paying high prices for that.

The only way the price goes down is when they switch to smaller process technology which a few fab is playing with right now. Intel is heading for 22nm by the end of the year which could double the size while keeping the same price.

As everyone else points out, this is a growth chart, not a sales chart. Netbook growth was not going to continue forever and growth began to fade last October. This slowing of growth has nothing to do with the iPad. It has everything to do with the maturation of the market. And it also says that Apple was about 1 year too late to the party.

However, the most interesting comment comes from 40% of people saying they are considering an iPad instead of a notebook. Apple should be pretty worried about this comment as it indicates the iPad may cannibalize their own MacBook sales.

Why is everyone talking about the chart and ignoring this:

"Huberty also cites data from March showing that 44% of surveyed consumers who were planning to purchase an iPad were doing so instead of purchasing a notebook or netbook computer, the largest category of cannibalized products."

They said notebook or netbook, which makes no sense to group them together like that. Netbook != notebook. The question is how many of those people were thinking of iPad instead of an actual notebook? Far lower than 40% of sure. The question is moot since the question has to be specific.

 

[lilo777]

I love the fact that people actually seem to be members of this forum only to put bias arguments that criticise Apple and their users. I can only wonder what is missing from their lives so that they need to bulster their ego by posting here.

Anyway, to the point of this post: I can believe that people who were planning to but netbooks have held off for an ipad. When the main reason for it is to act as a portable web browser, email client, etc, then why buy a cheap looking laptop when you can instead buy a well made ipad with access to 1000's of cheap, yet funtional applcations?

As for the argument that netbooks had reached Market sauturation; I don't believe that that holds much water. Markets don't drop off like that when they reach saturation: they tend to peter out. When one sees such a decline it is usually sensible to look for a change in the Market conditions and of course the ipad is the only obvious candidate.

So Apple may well have hit one out of the park. I have to be honest, I was skeptical in January, but having used one and having seen the numbers, then I have to believe that the ipad is more of an iPhone that it is an apple tv.

If you look at the chart again you might notice that the netbook market did not drop at all. It is still growing albeit at a slower pace.

 

[jacobj]

If you look at the chart again you might notice that the netbook market did not drop at all. It is still growing albeit at a slower pace.

Thanks for pointing out the obvious. However the growth has dropped off markedly and that it to what I was referring.

 

[deconstruct60]

I love the fact that people actually seem to be members of this forum only to put bias arguments that criticise Apple and their users.

Of course your post can't be biased. There are as many detached from reality Apple fan postings here as there are those from the opposite extreme. No more surprising to see extremist on one side as it is to see extremist on the other.

As for the argument that netbooks had reached Market sauturation; I don't believe that that holds much water. Markets don't drop off like that when they reach saturation: they tend to peter out. When one sees such a decline it is usually sensible to look for a change in the Market conditions and of course the ipad is the only obvious candidate.

The faster the ramp up, the faster saturation. Something that grows at 800% will saturate faster than something that hits a peak of 500%. The drop off can be just as extreme as the ramp up. Secondly, one aspect to netbooks was price. In the two years or so that netbooks have taken off, the price of the "non netbook" has come down. Similarly some netbook form factor offerings have gone up in price ( faster processors, biggest in class screens as opposed to smallest , better materials , etc. ). That much more a factor than the notion that iPad (or rumors of iPad) is killing them off. Even at the reduced growth rate in April around 5% means that more folks bought a netbook this year than last year. More. How is iPad killing it off when more are sold ?

Additionally, if you look at the graph the penetration rate is stabilizing at around 12%. Netbooks were not going to subsume all laptop sales. 12% is huge. It is 3 times bigger than total Mac sales in same market (Apple has around 4% of the personal computer market.)


Nevermind, that Intel just release a substantially better Atom processors (N4xx and more recently Z6xx series). Word has to have gotten out that substantially better offerings are coming in the Summer. Last couple of months were the wrong time to buy a netbook if wanted to catch the newer CPU line up coming out. Or that the Core-i laptops are now out in quantity ( further tweaking the price/performance gap on the older Atom offerings.)


iPad is killing off netbooks? More so a kiss Apple butt move by the analyst so folks at Apple will take phone calls and drop hints when want to contact them. Plus it is a lazy, don't do anything but read headlines excuse for an analysis.

 

[jpmack]

Admittedly I am a small sample size of one, but I was ready to buy a Dell Mini 10v and install OS X when the iPad was announced. Held off for an iPad and glad I did.

Does the iPad do everything a netbook can? Of course not, but it does what I wanted a netbook for way better than a netbook!

 

[Marx55]

Apple should make also a smaller MacBook Air:

http://macbookair10.net

 

[jimmyjoemccrow]

I love the fact that people actually seem to be members of this forum only to put bias arguments that criticise Apple and their users. I can only wonder what is missing from their lives so that they need to bulster their ego by posting here.

If a poster makes a comment that doesn't support Apple it's biased but if it does support Apple that's not biased at all? Surely all the uninformed anti-flash sentiment needs to be tempered with some facts? The people who describe netbooks as unresponsive need to be given a good kick in the balls by actual benchmarks that show them to be faster than the iPad for websurfing.

 

[deconstruct60]

Why is everyone talking about the chart and ignoring this:

"Huberty also cites data from March showing that 44% of surveyed consumers who were planning to purchase an iPad were doing so instead of purchasing a notebook or netbook computer, the largest category of cannibalized products."

When was the survey taken. After all of those people had tried out an iPad at the Apple store or before the release of the iPad when all they had to go on was "keynote demo" and video commercials ? There is a "newness" effect that isn't sustainable. Some folks will buy just because that is where the herd is rushing toward. Until reach a steady state no way to tell if that 44% is a temporary blip or a sustainable rate. It is likely not a sustainable rate. Once folks become familiar with the warts of using a iPad ( complicated file transfer, limited software (iWork not the same and limited. Mail limited, ) , etc. some of that euphoria will drop off. 8 months from now will not likely get the same result.


Nor it is clear who was surveyed. Folks who buy a 2nd/3rd laptop so have something to surf off of in the living room or general consumers. Or folks who have a high buy rate of an iPhone ? There are several demographics that will skew that result off from what is true of the general population.

 

[ericinboston]

The faster the ramp up, the faster saturation. Something that grows at 800% will saturate faster than something that hits a peak of 500%. The drop off can be just as extreme as the ramp up. Secondly, one aspect to netbooks was price. In the two years or so that netbooks have taken off, the price of the "non netbook" has come down. Similarly some netbook form factor offerings have gone up in price ( faster processors, biggest in class screens as opposed to smallest , better materials , etc. ). That much more a factor than the notion that iPad (or rumors of iPad) is killing them off. Even at the reduced growth rate in April around 5% means that more folks bought a netbook this year than last year. More. How is iPad killing it off when more are sold ? ...

I compare "growth" of any product to this simple situation:

You begin to sell chocolate bars in your neighborhood that has never heard of chocolate before. Out of you 100 homes, you sell 5 bars in year 1. Year 2 you sell 15 bars. That's 300% growth! Although that is very nice, it's still only 15 bars. As time goes on, you *may* sell 25 bars on Year3, 40 bars on Year4, and 80 bars on Year5 (of course keeping into consideration that after Year3 your bars are still desired, competitors aren't selling the same or similar for cheaper, the economy doesn't die, people don't move, people don't become uninterested, and a bunch of other reasons). Sooner or later your "growth" will plateau and/or dip...again, for a number of reasons...one simply being mathematics.

-Eric

 

[justinfreid]

This is not "cannibalizing"

This is not "cannibalizing" since Apple does not make a netbook. The iPad could cannibalize iPhone sales, though.

 

[carmenodie]

I will always have my macbook unibody(well it is the macbook pro now). And will get the high end ipad 3G on its next iteration.
I'm also going to start brainstorming for a new app to help with tutoring. The ipad is revolutionary. I'm NO SHEEP mind you but this ipad tech is really awesome!!!!
Sorry Sony, you were once the big daddy.....

 

[justinfreid]

Admittedly I am a small sample size of one, but I was ready to buy a Dell Mini 10v and install OS X when the iPad was announced. Held off for an iPad and glad I did.

Does the iPad do everything a netbook can? Of course not, but it does what I wanted a netbook for way better than a netbook!

Your reasoning is exactly why I'd go for an iPad over a netbook: quick access to the web, sending brief emails and tweets, watching online video, it does those essential tasks better than any netbook, which outweighs its flaws.

 

[qjk]

interpretation of second chart is suspect

"Huberty also cites data from March showing that 44% of surveyed consumers who were planning to purchase an iPad were doing so instead of purchasing a notebook or netbook computer, the largest category of cannibalized products."

This interpretation of the second chart seems highly suspect given that the total of the percentages is well over %100, and there is no indication of how many respondents were not considering any alternatives to the iPad.

Perhaps this chart indicates what respondents were *considering* buying? Perhaps only those considering other products were included in the chart?

 

[MikhailT]

"There are three kinds of lies: lies, damned lies, and statistics."

Those numbers are horribly misused to meet the author's "OMG iPAD IS CANNIBALIZING, BRAINSSSSS" news story. sighs.

 

[wovel]

The graph is clearly showing that the drop in YoY sales started to occur in October 2009. The only reason why it picked up in November and January is the holiday season. Without the holiday season, we would probably something similar to the following set of data:

September: 568%
October: 180%
November: 90%
December: 45%
January: 23%
February: 10%
March: 5%

Or thereabouts...

It's absolutely clear that the graph is showing a saturation of the market - I can't help but think that any correlation back to the iPad is a bit far-fetched
...

Fabian

Those holidays occur every year....I agree the market became saturated when it was redefined by the growth of the iPad.The dips prior to the January announcement were all fairly linear and probably easily explainable by previous year market pushes for new products. The decline in you growth after announcement of the iPad is exponential. You can ignore it if you want. I gurantee you that the netbook manufacturers are not ignoring it or writing it off as easily as you do.

Is this really a direct relationship or a coincidence? I'm thinking the latter b/c the netbook and iPad really don't have a lot of shared features. It seems to me the netbook market is fizzling b/c it's really a niche market that is now over-saturated. I don't think iPad buyers are the same ones that were previously considering netbooks.

When the iPad was announced, netbook proponents were loud in their rejection of the iPad b/c it didn't have Flash, external ports, was a closed system, etc. However, early iPad adopters dismissed all those points as being unessential to the iPad's utility.

The iPad will likely continue to grow, not on hype, but on the quality of apps. The app market is still young, but should be significantly more mature by holiday season. What is there to keep the netbook market growing, especially when an i3 laptop can be had for nearly the same price as a decent netbook?



Please cite when Apple has done this? From what I've seen Apple has said the iPad is not a netbook. Sure, it's said the iPad is better (more usable) than a netbook, consistent with Steve Jobs' statements that netbooks suck and wants nothing to do with them. I don't think that qualifies as trying to hook on to the netbook's coattails. Apple is saying it has a better, different coat.

True, but many, many, many people brought netbooks who did not really need a netbook. They purchased a netbook to browse the web and check their email. It is very,very,very likely that the iPad would have an impact on netbook sales. I know at least 30 people who own netbooks and I can only think of two of them who use it for anything other than basic web browsing and checking email. (Yes I know it is anecdotal, that does not make it irrelevant)

Ughhh. I hate these comparisons.

Netbook sales are dying down because more people who want them now have them, as time goes by. This is a natural progression of sales - same thing is happening with the iPhone.

I won't buy an iPad, because it doesn't have what I need/want. I don't want a closed system, I want to install, run, what I want. I also want a very portable form factor. Speed and power are not that important, since this is a secondary machine - used mainly for browsing, email, youtube, etc.

What I want, like may others, is a Mac netbook, running OS X.

...So I got one 🙂 Picked up a Dell mini 10v, and an hour later I had a mini macbook - everything works flawlessly. And, it cost $250.

In a sense you are right if we take your entire comment..Netbook sales are done because the market for them has become more niche. The iPad is a better device for many people who want web browsing and email. It is more portable and faster at doing those things with better battery life.

The netbook market was redefined by the iPad. It is now a very niche market for people that want a device more portable than a laptop that does those few things that an iPad can't. I personally believe that market is fairly small. It will get even smaller when there are eventually some more iPad like tablets on the market.

this is a GROWTH CHART, not a SALES CHART.

i mean, come on...

Did you look at April? If that trend continues it would say a lot.

I disagree with the title the graph clearly shows that netbook sales were dropping since november and thats only because there was an increase from october (which could be from university students buying netbooks after starting uni in september/october)

also nobody thought that netbook sales were going to stay that high forever after last summer pretty much everyone who wanted a netbook had already got one so they wouldnt be wanting another one.

and there is no proof that it is specifically the ipad that is the reason that netbook sales have been decreasing since NOBODY knew that the ipad was coming out in november to january

It is not month over month, it is year over year. They use year over year because events like that happen every year. You are correct that there is no proof it was the iPad specifically..(However the purchase of laptops/netbooks is the largest category that the purchase replaced in the survey).

If there is anyone who does not look at April, and see the potential for sales to start to fall off in the netbook market, they are simply delusional anti-apple haters. The story is fairly abusive of the data we have, but there is a real trend there and 6 months from now we will know more. Some of the other dips may have been caused by new product releases in previous years. Sales growth nearly stopped with the introduction of the iPad.

Haters may not think it means anything. The people at Asus and Dell picked up on this a while ago. There have been financial analysts watching this happen for months now and there is a lot of very detailed information floating around out there comparing the yoy markets that suggest the iPad is a significant factor in the decline in netbook sales.


This is where someone gasps something about flash and kind of proves my point..

 

[wovel]

If a poster makes a comment that doesn't support Apple it's biased but if it does support Apple that's not biased at all? Surely all the uninformed anti-flash sentiment needs to be tempered with some facts? The people who describe netbooks as unresponsive need to be given a good kick in the balls by actual benchmarks that show them to be faster than the iPad for websurfing.

You missed his point entirely.. He did not say Apple supporters were not biased. He said there must be something wrong with people that would become members of a site about Apple products with the sole purpose of being critical. For example, I am not a big fan of Android devices or Dells. I do not hang out on related forums and criticize everyone there. I just don't care.

Now lets see your "actual benchmarks". The only benchmark I have ever seen indicating better performance on a netbook was a couple of Sun Spider things people have latched onto. Intensive Javascript like that is so unbelievably rare, I would guess people that care about would be in the niche I previously described.

 

[Ubuntu]

iPad didn't provide any role in this. People are just realizing netbooks are crappy laptops. The only reason that they sold is because they were cheap. Now people have realized how garbage they are, they are being dumped.m

I disagree. I use my netbook alot and can't imagine life without it. I couldn't replace it with an iPad - ever.

And if I do decide to buy an iMac I'll depend on the netbook even more. Fact is, you might think netbooks are garbage but at the end of the day they can do alot more than the iPad can, for less.

 

[Jim-Ratliff]

It's not "cannibalizing" when you take share from someone else!

Cannibalizing refers to one of your new products taking sales away from one of your older products. Here, the iPad is taking sales away from competitors, not taking sales away from other Apple products. Thus, it's not cannibalizing.

 

[theBB]

This interpretation of the second chart seems highly suspect given that the total of the percentages is well over %100, and there is no indication of how many respondents were not considering any alternatives to the iPad.

If we are to evaluate these numbers as he indicates, iPad is cannibalizing more than one product for a lot of people. 🙂 An e-reader and a desktop or a notebook and an iPod Touch. We should see a noticeable drop in sales of electronic goods in April. 🙂

 

[fabian9]

Those holidays occur every year....I agree the market became saturated when it was redefined by the growth of the iPad.The dips prior to the January announcement were all fairly linear and probably easily explainable by previous year market pushes for new products. The decline in you growth after announcement of the iPad is exponential. You can ignore it if you want. I gurantee you that the netbook manufacturers are not ignoring it or writing it off as easily as you do.

...

68% to 53% to 25% is hardly an exponential decline...

The netbook industry can read as much into this as they want, but I'm fairly sure they have done their share of market sizing and have long been aware that they would hit saturation at some point.

Fabian