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Analyst: iPad not main reason for weak laptop sales
By Suzanne Choney
More backlash on reports that the iPad is eating into netbook and notebook sales: A prominent research analyst says it just ain't so, and "to say so represents the height of hysteria and speculation."
Stephen Baker, NPD Group's vice president, industry analysis, wrote in a blog post Monday that sales of Windows notebooks "have been much weaker than in the past few months." But, he said, that likely has "as much to do with the ebbing of the Windows 7 tidal wave and consumer reaction to the lack of price deals in the market this year as it has to do with iPads or back-to-school."
Comments by Best Buy's CEO Brian Dunn, reported in the Sept. 14 Wall Street Journal, were that the retailer's internal estimates showed that the iPad has eaten into sales from laptop PCs by as much as 50 percent. Late Friday, Dunn issued a statement saying his remarks were "grossly exaggerated."
"While they were fueled in part by a comment in the Wall Street Journal that was attributed to me, they are not an accurate depiction of what we're currently seeing," Dunn said. "In fact, we see some shifts in consumption patterns, with tablet sales being an incremental opportunity."
Baker, in his report, said that first-quarter notebook sales "were up 28 percent but fell to 8 percent" in the second quarter (the iPad was launched last April) "as Windows notebook growth fell from 30 percent to 4 percent." Windows 7, Microsoft's current operating system, was introduced last fall. (Msnbc.com is a joint venture of Microsoft and NBC Universal.)
Baker also said that notebook sales in July and August — "the heart the heart of back-to-school" — "were not great." Sales were down 1 percent for the two-month-period over last year.
Sales of Macs were up 15 percent, "and Windows notebooks (including netbooks) were down 5 percent. Certainly this is not what the industry had hoped (and maybe planned) for after the optimism generated by the holiday 2009 period’s 50 and 60 percent growth rates."
But, he said, the back-to-school season "has posted unit growth rates of 56 percent, 37 percent, 15 percent, and 30 percent over the last four years and sales were most likely to plateau at some point. So while it is apparent that growth is slowing, the fact that this slowdown coincides with the release of the iPad (well sort of) is hardly proof of cause and effect."
Baker also noted that "No one expected netbook sales to stay at the atmospheric levels of 2009 and in fact netbooks, as a percentage of U.S. consumer sales, have been very steady all year in the mid-teens. Netbooks sales are actually up for July and August 2010 versus the prior year period by 6 percent.
"In Q2, when the iPad launched and sold 3.3 million, according to Apple’s financial statements, netbook sales were down around 8 percent but no one was forecasting the demise of the PC market at that time. Only in the last two months as reality has met expectations in the U.S. consumer market has this alleged cannibalization been cited."
"In light of the sales facts it is, in my view, a mistaken and absolutely untenable position to claim that PC sales are under pressure because of the iPad when there are so many other factors that are contributing to the poor results," Baker wrote.
"And even if iPads will cannibalize netbook sales and some notebook sales as well, a position I don’t disagree with, I don’t believe it is happening now. It is hard to imagine that a flood of mass market consumers are switching from a product that has an average price of under $300 during (back-to-school season) to one that had (an average selling price) of over $600 in Q2, according to Apple’s financial statements. That is not how mass market consumers’ act, trading from a low-cost price segment to a high-cost one."
Baker also said the iPad's "high pricing" — the least expensive model is $499; the top-of-the-line version, $829 — makes "difficult to believe that iPad has moved much beyond early adopters. It is much more likely that we are seeing the normal wave of early adopters, well-off technology hobbyists, and the curious buying iPads as an incremental technology purchase. In fact, NPD’s upcoming report Apple’s iPad Owner Study found that 13 percent of consumers who bought iPads said it replaced a PC purchase they planned to make."
He added: "To be fair, we are seeing slowing sales in some segments of the U.S. consumer notebook market. Again, it is not in the low-cost segment of the market, however, where the biggest concern seems to be. We have already shown that netbooks are performing acceptably, and we are seeing last year’s hottest segment, the under-$500 full-size Windows notebook, post flat year-on-year results ... Where we have seen slowing sales is precisely the place we have seen sales slow for the past few years, the mid-priced $500-$1,000 segment. In 2010 that segment dropped 11 percent vs. 2009, perhaps an indication that iPads, instead of cannibalizing low-end PCs, are actually taking sales from the mid-range."
Baker says his comments are not meant to disparage the iPad. "None of this should be construed to make a case that NPD does not believe the iPad is a great product or doing extraordinarily well in the market. The tablet/pad market will likely be strong in 2011 and impact different segments of PC sales at that time."
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