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Topic: Tablets

Report: Apple iPad devouring netbook sales; iPod touch next?

Summary: The netbook market is being devoured by the Apple iPad, according to a new report.

Andrew Nusca

By for The ToyBox |

The netbook market is being devoured by the Apple iPad, according to a new report.

A new chart issued Thursday by Morgan Stanley's Katy Huberty in a report to clients shows the impact of the iPad and other tablets on the broader gadget market -- and it looks like the netbook growth curve is falling off into oblivion.

According to the chart, sales growth of low-cost, low-powered netbooks peaked last summer, with an amazing 641 percent year-over-year growth rate.

But after January -- the end of the holiday shopping season and the beginning of the march of new products, courtesy of the Consumer Electronics Show -- growth dropped, big time.

It dropped again in April.

Yes, as you might have been guessing as you read this: the iPad was announced in January (albeit the 27th) and launched in April.

Philip Elmer-DeWitt notes on Fortune's Apple 2.0 blog that the theory isn't all that far-fetched.

He writes:

In support of her theory, she offers a Morgan Stanley/Alphawise survey conducted in March that found that 44% of U.S. consumers who were planning to buy an iPad said that they were buying it instead of a netbook or notebook computer.

What other devices did that survey suggest might get cannibalized by the iPad? According to Exhibit 2, below, the iPod touch is next in line.

The diagram in question:

I certainly buy into the theory that slate tablet-style devices are relegating netbooks back to a niche audience, though I'm not sure if consumers have simply had enough of the devices (i.e. the fad has run its course) versus the iPad actually taking away interest.

The iPod touch theory is also fair, but it won't completely cannibalize those sales, since the iPod touch is a web browser to some and a music player to others. For example, I use my iPod touch for both features, so it's unlikely that I won't buy a replacement iPod touch just because I may buy an iPad.

(Plugging headphones into the iPad? Possible, but not convenient for listening on the morning commute.)

Apple iPad: netbook killer, iPod cannibalizer or both?

Topics: Tablets, Apple, Enterprise Software, Hardware, iPad, Laptops, Mobility

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45 comments
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  • Disagree with your conclusion

    The netbook market looked saturated long before the iPad was available, much less announced. It is highly likely that the iPad has stolen some netbook sales but it is far from the major reason for the decelerating growth in netbook sales.
    RickyF
    Reply Vote

    • RE: RE: Report: Apple iPad devouring netbook sales; iPod touch next?

      @RickyF Just to be clear, Ricky: that conclusion is Katy Huberty's, not mine.<br><br>My take: "...though I'm not sure if consumers have simply had enough of the devices versus the iPad actually taking away interest."
      andrew.nusca
      Reply Vote

    • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

      @RickyF
      While this may be the viewpoint of Katy Huberty's, I have to agree with you.
      I see this more of a cannabilization of netbook sales due to the explosion of UL devices and the significant decrease in notebook prices.

      The iPad and other future devices may futher erode the netbook market, but more from a prepsective of "eating dead prey".

      Good thought.
      rhonin
      Reply Vote

    • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

      @RickyF Agreed, the graph shows netbook sales dropping off significantly in January, after the Christmas buying season. This was well before Apple confirmed the iPad and months ahead of its release. The author is confusing correlation with causality.
      chefp
      Reply Vote

    • good idea messed with

      the net book was small light and good on power usage, then they messed with it! Hard drives, bigger screens, operating systems that were cumbersome, I bought a net book because it was small, low on power usage and had lots of software the Ipad comes pretty close to that so I will get that next. Its not rocket science!
      Macapen
      Reply Vote

    • Your in deep deep denial......very deep

      @RickyF dude, the 1 Million units sold in the USA to date must have come out of somebodies sales ........ever heard of thr ostrich story? It goes something like this......
      masterurmind
      Reply Vote

  • As an Apple fanboy

    I think this conclusion is silly.
    Netbooks cost less.
    Netbooks are complete computers.
    The USA is not the ROW.
    davebarnes
    Reply Vote

  • Cost?

    Isn't the point of the Netbook for people who are always on the go and need something small, light and cheap for basic web and document stuff? Isn't the iPad still way overpriced compared to a netbook? I'm sure people with money to blow would get it, but I don't think it's going to destroy the Netbook market.

    More Apple hype here, what a surprise.
    wayne62682
    Reply Vote

    • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

      @wayne62682
      In the inception phase for netbooks, I think you are absolutely dead on.
      However, with the introduction of UL, the UL is now the "traveler device" especially with battery life expanding into the 10 hour range.
      rhonin
      Reply Vote

    • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

      @wayne62682
      This may have been true in the inception phase, but with the introduction of Ultra Light notebooks and a 10 plus hour battery life, the focus for the traveler has shifted.
      rhonin
      Reply Vote

    • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

      @wayne62682: Why pay for a $600 device when you can get one at half the price. Even ultra light lapotops, they are bigger. Some do want the smaller screen still.
      Gis Bun
      Reply Vote

  • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

    I agree with RickyF, the netbook market is simply saturated. The iPad is simply too bulky and delicate to carry around.
    nothingness
    Reply Vote

    • It sounds like you have never actually held an iPad

      @nothingness Are you suggesting that an iPad is bulky compared to a netbook? I would think the iPad's bulkiness (or lack thereof) would be a plus compared to a netbook. And as far as sturdiness, the iPad is a solid little machine. I did buy a folding case to avoid scratches, but it is definitely less delicate than a plastic netbook.

      As far as the decline in sales, I think that both factors were are work. Most people who really needed something to do light browsing, email and word processing already bought a netbook. But I also think that for those who remain, a large portion are going to be drawn to the iPad. So, maybe netbooks were already on the way down, but the iPad has certainly added some serious momentum to the decline.
      jgpeters
      Reply Vote

  • I just bought one.... It literally just arrived

    An ASUS Eee PC T101MT w/ Windows 7 Pro.

    I had an Eee PC 901HA before, and I ended up giving that away for a full featured laptop, but from what I've seen, the new ASUS Eee I just ordered looks great.
    The one and only, Cylon Centurion
    Reply Vote

  • Netbooks killing themselves...

    Think it's too soon to tell whether or not iPad is truly killing Netbook sales. I'm sure it will happen but netbook momentum was on the downslide anyway, before the iPad's announcement and released. People were largely dissatisfied with Netbooks. Companies selling netbooks had no place to go but down. Any company selling netbook with higher specs, higher resolution, larger screen will suddenly find themselves competing in the more powerful small laptop category. Which would be the better buy for consumers at roughly the same price (small more powerful laptop or netbook)? There were nowhere to go but downward for netbooks. But it served it's purpose during the recession.

    Now unlike Netbooks, the iPad will provide for Apple tremendous growth/value in its unique category. The sky is the limit.
    dave95.
    Reply Vote

  • RE: Sorry, not buying it

    This has nothing to do with the iPad. The decline in netbook growth coincided with the explosive growth of <i>Android devices</i>. What some people don't seem to realize is that, for the ordinary individual, smartphones are fast becoming the defacto means to access Internet content on the go.
    eMJayy
    Reply Vote

  • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

    I've bought a netbook and an iPad within the past couple months. I got the netbook primarily because it was a small cheap laptop that could run Windows and would work with the portable USB scanner I had. I got the iPad for everything else: web, email, games, whatever.

    I think netbooks will continue to fill a niche and be the cheap option as will non-Apple slates but for those that aren't looking for ultra-cheap or specific Windows apps I think the iPad is a good option that will be very popular. If anything I think it'll hurt the low end laptop market.

    I don't see it hurting iPod/iPhone sales a lot as those are far more portable but not so much of a PC replacement. I see them frequently being used together as part of the new ecosystem.
    MikeFM
    Reply Vote

  • Laptops are next

    As I've been preaching for fifteen years or so... the 'form factor' of a laptop and netbook is not the best for portability. They are similar to an open-and-close suitcase which a person takes to their hotel room, but not around to the coffeeshops and restaurants. On the other hand, we all traditionally carry our writing pads and scratchpads many places we go to.

    The iPad's form is much more user friendly and portable than a netbook... and especially a laptop. Microsoft was quite aware of this, some ten years ago. Their only mistake was using an OS which had been developed for desktop computers and simply customized over to laptops and their 'tablet'. Though Apple owns the superb Mac OS, they wisely chose not to use it in their iPad. They went far beyond Microsoft's misguided tablet attempt, and it appears it's paying off for them.

    I predict that we will see more and more such devices, either from Apple or from other manufacturers. It just makes sense.

    The next stats which come in (either in '10 or in '11) are going to show a decline in larger laptops as well. Welcome to the 21st century... at last!
    camcost@...
    Reply Vote

  • RE: Report: Apple iPad devouring netbook sales; iPod touch next?

    Interesting.
    It all depends on one's use case I suppose. There are times that what I want to do can be done with iPad, sometimes I need the desktop. If I treated the iPad as a browser/reader, I'd be fine. But when I want to encode video or create spreadsheets, that's not the right tool to use.
    I was using the Touch for many things the iPad does better. I was even using it to control the desktop Macs in another room via VNC. Of course the iPad has a beautiful screen, and plays audio, but when I want to play audio and walk around (or run), the Touch is a better thing to use. The pocket factor kicks in.
    As an aside, I see a market for a device right in between in size. Whatever size is the limit on a woman's purse or man's suit coat pocket. Closer to paperback book size.
    joetaxpayer
    Reply Vote

  • 1 Month isn't going to ever set a trend!

    First of all, all actual recorded iPad sales that included tax revenues are the number we're really looking for and none of those are something Apple is going to release anytime soon. The reality is no company to day reports actual sales to the customer. They report SHIPPED as SOLD and they aren't. Even replacements are included in these numbers as well as freebies to the industry for review and their own hand outs themselves for promotional tax write offs that never get to tax paid consumers.

    Those are the screwiest looking charts I've ever seen and sounds like she's been hired by Apple as a Mouth Piece to get things rolling. How in the world can a giant iPod touch honestly out sell all other slate devices along with iPad sales when fiscal year tax time won't be out till the end of next march? Apple just getting that desperate to equate a WiFi only launch model with success, before everyone finds out half of them are still setting in warehouses! haha....

    Oh yeah another "hurry hurry I will stand upon my head to beat all deals" Cal Worthington push with empty slots on the front lot and 1000's of inventory out on the back lot!

    Or.... Sony the PS3 is going to be the next PS2! ....create lines and mega back-ordered sales to push stock out the door. Publish and promote PS3 thefts, fights in line and "Come On" tactics. Get those numbers you count as Shipped promoted as actual sales to the tax paying public. Only problem was for them, is that when real numbers did show up end of March 2007 it wasn't near what they were hyping!

    So I'll admit..... Apple was a little smarter launching after April 1st! ;)
    i2fun@...
    Reply Vote
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