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Analyst: iPad already eating into netbook sales

updated 07:40 am EDT, Thu May 6, 2010

Morgan Stanley says Apple tablet killing netbooks

Apple's iPad is already having a devastating effect on the netbook market, according to new research by Morgan Stanley analyst Katy Huberty. She notes that year-over-year growth in netbook sales began collapsing dramatically in January, when the iPad was announced, and were almost flat at 5 percent in April, when the iPad shipped. About 44 percent of potential iPad buyers in March were planning to get one instead of a netbook or a full-size notebook, Huberty said.

She added that the iPad had a high potential for cannibalizing several categories. Notebooks were the most likely candidates as a roughly even 44 percent mix of MacBooks and Windows notebooks were at risk, but iPod touch buyers were deemed almost as likely to switch to the iPad at 44 percent. E-readers also have significant sway as up to 28 percent of the market was vulnerable; as expected, desktops and game consoles were the least susceptible to seeing its sales taken away.

At least some of the drop in netbook sales growth in January can actually be attributed to the usual post-holiday drop-off in sales combined with a maturing market, where many of those who wanted netbooks already had them and saw little reason to upgrade. However, the decline in subsequent months, especially in March and April, was uncharacteristically steep and implied that the run-up to the iPad was enough to have many reconsider their netbook plans.

Apple's initial iPad lineup actually sits outside of the majority of the netbook category, with even its least expensive models still occupying the high end of a field where $400 and now $300 systems are more common. Its additional roles as an e-reader and game system nonetheless work to its advantage as it can be less expensive for those who wanted another handheld device at the same time as a netbook-class device.


By Electronista Staff
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  1. iphonerulez

    Dedicated MacNNer

    Joined: Nov 2008


    Ouch! What Apple is going to do is likely

    add features to the iPod Touch to make it more competitive with the iPad and make consumers want both products. For Apple, trading off sales to a higher ASP product isn't a bad thing.

    I'm thinking that netbook sales are declining because they're reaching a saturation point more than competition from Apple's iPad. Even though netbook Windows licenses are relatively low-cost, it will still impact Windows 7 sales if potential buyers are steering away from netbooks. Good news for Apple, bad news for Microsoft. Apple is sitting in a sweet position with nearly no tablet competition at all for maybe about six months.

  1. JeffHarris

    Fresh-Faced Recruit

    Joined: Oct 1999


    I have Both

    And they make good companions.

    iPod touch for out and about. iPad for hanging out at home.
    MacBook Pro to tie it all together.

    The worst part is managing different apps for each device. Somehow, I think I'll survive. ;^)

    As more universal apps appear, it may actually help iPod touch sales.

    Netbbok sales may be dropping as people discover that they ain't all that great. Word travels, fewer buy.

  1. slider

    Mac Elite

    Joined: Oct 1999


    Netbooks = Bad Idea

    Netbooks sold b/c they were cheap, not because they filled a niche. They were reactionary not revolutionary. Apple looked at the netbook market, saw it for what it was and wisely decided not to enter. It seems Apple approaches each new product by first stepping back to see the big picture:

    The iPod - Everyone was ripping their CDs to mp3s - the answer was not simply "Rip, Mix, and Burn", there was something else happening here - it was digital content.

    The iPhone - Steve Jobs nailed it when he said, "People hate their phones". It's true, almost everyone had a candybar or flip-phone with a dozen different features yet 99% of people couldn't figure out how to use them - those features were obscure and about the only feature that managed to get used besides the phone was texting. This extended to smartphone. While I know a lot of people used these to be productive, they were limited to a few elite, and I know several users who only had them b/c they were senior management and about all they could manage was getting email. The biggest issue here was the interface.

    The iPad - The internet suddenly became full of content features that even Moms and Grandmas the world started asking, "Are you on Facebook?". Netbooks were cheap, but they were designed as scaled down PCs. But it was/is not just netbooks, people were also buying Kindles and Nooks. People just want to access their email and browse the web and access their twitter accounts, etc. these folks aren't running excel or word, they aren't designing a house, or adding the final touch to a photo in photoshop. The Netbooks only stumbled upon what was happening. Digital books are digital content devices. And today, almost everyone has a computer full of personal content like photos, movies, as well as, of course, music. Apple built a device designed to be used specifically to draw upon the broad range digital content in a manner better suited to how that content was being consumed.

    Apple did not invent the mp3 player, Apple did not invent the smartphone, Apple did not invent the tablet computer. What Apple did do was step back and looked at the bigger picture and starts from the user's perspective, not the engineer's. This has always been the key to Apple's success, look at the first Apple computer - they got it into the hands of a larger group. And when the PCs began to rise, Apple came out with the Macintosh and it's GUI.

    The formula is simple - the application, apparently, is elusive.

  1. testudo

    Forum Regular

    Joined: Aug 2001



    But weren't there articles in the last couple of weeks telling us how netbook sales were down because higher powered notebook sales were up? So which is it? Or is it just the case of "We're doing a study, we found some numbers, so they must be related!"

  1. trevj

    Fresh-Faced Recruit

    Joined: Dec 1999


    re. Wait...

    Testudo, you should realize that if you put four analysts in a room that you;ll get five different opinions. This is merely one analysts theory. Simple stuff really.

  1. charlituna

    Fresh-Faced Recruit

    Joined: Sep 2009


    netbooks not notebooks

    the ipad lacks the power of a notebook. those that need a notebook are going to get that.

    it is netbooks that are at risk. because a fair number of those are bought by folks looking for portable email etc which is just fine on the ipad.

    handheld game units are also at risk. same with ereaders and those old school portable DVD players

    as for the ipod touch. not so much. a lot of ipad buyers are those that would never buy a touch because it was too small. AND a lot of apps are setting up added features that work on the touch/phone, giving peeps reason to have both. plus you can't exactly put your ipad in an armband and take it to the gym

  1. testudo

    Forum Regular

    Joined: Aug 2001


    Re: Netbooks and notebooks

    handheld game units are also at risk.

    Actually, the iPad isn't much of a competitor to that market. That's where the iPod fits in (as the handheld game market is about portability as much as hand held.

  1. canonsucks

    Fresh-Faced Recruit

    Joined: Apr 2010



    good point about drawing conclusions. these analysts are connecting dots which don't exist!

  1. facebook_Parag

    Via Facebook

    Joined: Dec 2010


    Netbook sales down

    Netbooks were selling like hotcakes before the iPad was introduced by Apple. The iPad was Apple's response to netbooks, which opened a new market between smartphones and notebooks. Apple needed to be a player in this new market. And they are.

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