Here we go again. Another group is claiming that netbook sales are down largely because of the introduction of the Apple iPad.

Yes, the growth in netbook sales is way down this year from last, while iPad sales are clearly up quite a bit over last year — since there was no iPad last year. While we’ve seen people claim there’s a correlation in the past, I think people tend to get a bit carried away on this point. Yes, Netbook sales were up by several hundred percent in 2009 over the previous year — but that’s largely because until the summer of 2008, there was pretty much only one netbook on the market. You think it might be possible that sales in any new product category might slow down a bit the year after introduction?

On the other hand, a report from Morgan Stanley analyst Katy Huberty does carry some weight, since it doesn’t just try to tie together the facts that netbook sales are slowing while Apple is selling a pretty decent number of iPads. It also cites survey data showing that 44% of the folks planning to buy an iPad in the US said they were looking at getting an iPad instead of a notebook or netbook.

So it really is possible that the iPad is at least partially responsible for a dip in netbook sales, because there are some people who don’t need a physical keyboard and a full blown desktop operating system in their mobile devices. They simply want a tablet that allows them to surf the web, get excellent battery life, watch videos, read eBooks, and run the thousands of apps that are available for the iPad. I suspect there will still be enough people who want keyboards and Windows to keep the netbook and/or low cost thin and light laptop space afloat over the next few years, though.

What we’re seeing is that there’s room for more than one kind of mobile internet device — but we already knew that. Netbooks haven’t exactly replaced smartphones, have they?

Morgan Stanley also suggests that iPads may be eating into iPod touch, eBook reader, video game consoles, and desktop computer sales to some degree.

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23 replies on “Is the iPad eating into Netbook sales?”

  1. Yes it’s astounding that a stock analyst doesn’t know the difference between growth and sales. CEA’s research says 12% of US households already HAVE a netbook (out of 58% with laptop 86% computer). Of course sales are slowing – it’s not like you need a new netbook every year…

    Also the 44% that are going to get an iPad INSTEAD of a notebook… either don’t really need a notebook or don’t understand what an iPad does.

  2. Well I would like to keep a short reply for this post and mention one think.

    There may be 1000s of Application for the IPad but there are over millions of softwares for netbooks (be it linux or windows)

  3. Netbook industry are not filling the holes in their product lines that consumers see and WANT and NEED.

    We need:
    1- 1366×768 resolution standard HD on every netbook with higher resolution external monitor option (so can plug in at home or office and get high resolution via a “dock station” type of hook up).
    2- Pixel Qi low power screen with direct day light use
    3- Touch Screen
    4- AA battery (with 12 to 20 hours battery use per charge)
    5- backlight keys (switchable on/off) for low light (air plane) use
    6- Matte Black case that is not glossy
    7- Linux install dual booted with Windows option
    8- Free OpenOffice.org installed on every netbook sold
    9- Simm card option as well as WiFi and MESH NETWORKING options too
    10- Fast RunCore-like SSD built into the unit at purchase.

    Where are these? NONE are found anywhere? WHY? It is obvious that:
    The netbook industry is ignoring demands and NEEDs of it’s MORE EDUCATED users these days, so people are not buying stuff because the netbook industry is not providing what we all want and need.

    1. I agree! What’s wrong with these netbook makers – Until they have a 2 pound, core i3, 128 GB SSD, HD display, touch screen netbook with 20 hours of battery life for $50 they can forget it.

    2. Problem is netbooks are suppose to be cheap and quite a few of the options you listed will just increase the price.

      Mind you netbook makers are making pretty small profit margins to begin with. Unlike the iPad, which is sold for about twice the manufacturing cost. So to add all of what you listed will probably double the costs and force them to charge very un-netbook like prices.

      So I don’t entirely disagree that they could do more but there are limits.

      1. Well some professional folks I know (as an example of two women I know, one lawyer, one hospital executive in charge of several hospitals), have gotten a netbook, and do not use a normal laptop anymore…. ONLY because what they do they can not do on a phone, they need touch typing, need mobility and battery all day, and they DO NOT WANT TO CARRY A HUGE LAPTOP around with them all day. THEY love their netbooks, but after use… have seen a few things they would also want it to do…

        So – these two, as examples of many I could reference, got a netbook.

        Not because of the price, because of the size.

        Now their only complaint is things like all day battery use per charge as they hate to carry wires and extra batteries around on plane, etc as both are going to meetings all the time, they would love direct sunlight use, they want 1366×768, and wish to use it as their primary computer when at home and office while hooked up to a dock that gives them “desktop class resolution”.

        Their desires match the list above. So? Where are the netbook makers to make this? HP and Dell and others dream that folks still like the regular Laptop size.

        Oh- the reason why the netbook size computers offered before didn’t sell (small size laptops) was because you could not buy one for less than $1,500, people loved the size but could not justify the expense over a normal laptop as they did the same thing, but were 3 times more expensive. Netbooks could do less, but their is an educated market now, that would pay the same for small form factor to get that they want to use as an everyday tool.

        1. Size is desirable for mobility but they can’t make them affordable if they make them significantly more powerful than they are… To get a 1366×768 screen you need more CPU and GPU power to run it, otherwise the computer will just run slower but that also increase power usage.

          Since no significant battery improvements have been made in over a decade, it means the only two ways to improve battery life are…

          1) Reduce power usage, this takes time of course and goes against increasing the capabilities of the computer…

          2) Increase the size and weight of the battery to provide the extra capacity, but this can make the netbook larger and adds to the total weight of the computer. All of which will make it less portable.

          Meanwhile the very low powered ARM processors are being seen as a possible solution, thus all the talk about Smartbooks and tablets. Since they aren’t as powerful as even ATOM CPU’s but they can get the job done and use far less power. But even then, if you look inside the iPad for an example you’ll find that it uses two very large batteries to get it’s 10 hours and it’s one of the reasons it is still too heavy to be a very practical tablet. The iPad IPS screen being the most power hungry reason for this…

          The technology for more powerful netbooks is coming, we’ll see DDR3 and Pixel Qi screens starting to become the norm this year, but to get it all now will both raise the price and weight of netbooks and knock down the two main reasons people prefer netbooks over regular notebooks.

          Though those wanting 1366×768 screen now can check out the 1005PR… Really, it’s not like netbook makers aren’t trying at all…

  4. Umm, I don’t necessarily think that tablets are cannibalizing netbook sales on a one for one basis. I think there is a percentage of people who were looking for a third of fourth computer, who will buy a tablet instead of a netbook. I also think that there are unique tablet purchasers out there, who just WANT a tablet. That said conversely there are going to be users who WANT netbooks. So I’d predict that the two devices can largely cohabitate.

    I mean think about it. The features provided by each are not all that similar really. Tablets and netbooks have radically different use models, and software requirements. Tablets are basically touch-centric devices, and netbooks are keyboard/mouse (via the touchpad). Tablets run primarily mobile OS’s, and netbooks can run desktop OS’s… You can put a touch screen on a netbook, but that really doesn’t make it touch oriented, because it’s still easier to use the keyboard and pointer for precise work. Also it’s very unlikely that desktop applications will be reworked competely to work on a touch device any time in the near future. That’s why Mobile OS’s have the advantage on touch devices, their applications are designed for the interface model… Because of that there’s not a lot of pressure for the two device types to actually use the same applications as long as they both support common file formats and access the internet…

    The devices that I would expect iPad sales to be hurting are in fact other mobile devices that aren’t necessarily seen as computing platforms, like e-book readers, portable gaming systems, iPods, etc. When you can have one device that can do all of those tasks fairly well, it becomes harder to justify not necessarily purchasing or owning the other gadgets, but really carrying them around consistently. There may always be a market for stand alone products like e-book readers, especially for those who find the e-ink screens easier to read… But I doubt they’ll be as big a deal now that multi-function devices like the iPad and the upcoming wave of ‘me too’ product imitators/innovators are either in or starting to hit the market. It just comes down to convenience and weight why carry multiple devices if you don’t have too…

    Which brings us to where the two devices do compete, in that they are both mobile computing platforms. I think that the big thing there will come down to the needs of the user, and what kind of device do they want to carry. Tablets make a lot of sense since they are easier to carry around, and conceivably use while moving about, if all the user is looking for is a device designed primarily to consume media, and hit the internet. If the user is a journalist, student, or someone who spends more time sitting and using their mobile device, or expects to actually have to create content… A netbook makes a lot more sense.

    This brings me to my last observation. The ‘Thin and Light’ category of cheap CULV laptops are only marginally more expensive and are generally considered far more powerful devices. I think that they pose more of a direct threat to the netbook market than anything. I’ve advised people, and been advised by them, to hold out and save up another hundred bucks and get a device with a CULV over a netbook because of the general performance advantages.

    So if tablets get cheaper than netbooks, we will almost certainly see their market share deminish. It’s almost inevitable with a downward exodus of low end content consumers opting for tablets, and thin and lights taking customers from the higher end… However that’s not the market we’re looking at yet, maybe a few years from now, but not today. The only tablet on the market costs as much as the most expensive netbooks.

    So with all that said, when I go to buy my daughter a computer here in a few years… It’s probably going to be a netbook so she can learn to type and hopefully program not just tap a screen, and for that I want a device I won’t necessarily miss when she inevitably destroys it. My wife, she’s getting a tablet.

  5. I think there will always be netbook since it fills a need for small portable computer that one can touch type on. Tablets will be – IMO – great for entertainment but I do not see it as a replace for netbooks.

    I have two netbooks and two notebooks. I have no interest in the iPAD. I saw it at the store but have no interest in it. Perhaps one day buy a tablet pc but it will not replace my netbook.

  6. No, the iPad is not eating into netbook sales. Netbook sale growth has been on the decline for some time. In the beginning, nobody had a netbook, so there were a lot of sales to be made. Now, lots of people have them, and the demand may be largely satisfied. Also, people who analyze things like this for a living point to the fact that Intel hasn’t given the netbook platform a proper refresh in some time. With the switch over to DDR3, that will change. Thus, we may see a modest bump in sales again once consumers are forced to recon with the “planned obsolesce” of their devices as new, more exciting devices come out.

    Moreover, a slate and a laptop are two different form factors that have little to do with each other. Anybody who is expecting a slate computer to replace a laptop computer has obviously never used a slate computer. Obviously, if you want a netbook then you’re not buying ANYTHING from Apple to scratch that itch because Apple doesn’t sell a netbook.

    In addition, the iPad is an ensemble appliance for people who are most likely already involved in the Apple platform. I know many people who now use a netbook as their one and only computer. I expect that doing the same with an iPad is less realistic. Much like the iPhone was like the “Windows CE” experience for the Apple crowd (in that your device ships with such an inadequate operating system and standard applications that you have to buy/download/install all sorts of third party add-ons in order to make it do the same stuff that you can do on a real computer, only to have all of your time/effort/setup go obsolete when your vendor decides not to support your hardware with subsequent release of its OS, a trick that Apple is more notorious for than Microsoft is), the iPad seems like the “Microsoft Origami UMPC” experience of the Apple crowd (in that there’s going to be a lot of experimenting, exploring, proving concepts, and convincing selves that “this could be done”, “that is possible”, “I could deal with this if I had to”, only to ultimately re-discover that fact that we’ve come to learn about content creation since the invention of the printing impress). To this end, for those people who are going to have an iPad anyways, the device is probably more of a compliment to a netbook than a competitor to it.

    In the interest of full disclosure, I have never owned or wanted to own a netbook and will no longer trust Apple any of my technology purchases.

  7. I don’t think netbooks are going anywhere, but a segment of people who would have bought netbooks when all they needed was a tablet will be lost.

    On the other hand the people who NEED a netbook or a small sized full function computer are not nearly tapped. The people who could benefit from a small portable computer are …let’s see 1/6 of the ‘1st world’ population of 1.5 BILLION people.

    Netbooks aren’t going anywhere! Oh the size, shape, power and design will morph over time; but small relatively inexpensive computers are here to stay until we start wet-wiring ourselves to the World Wide Web.

  8. I have a netbook and an iPad, and the latter has replaced the former. That said, I think it’s a stretch to presume 1M sold iPads are driving all netbooks sales flat. For some, the netbook (or cheap tablet successor) will always be a better fit than an iPad.

  9. Of course it is. I know there as been many discussions about this in the past- by folks- the writing is on the wall. Netbooks are about to slip away. Tablets will become the next netbook.

    1. Tablets have been around for over a decade, just because they are finally starting to get useful doesn’t mean they are going to take over. The things that kept them from being overly popular before are still in effect and nothing is going to change that any time soon.

      Eventually reality always catches up to the hype and people start fitting such devices into their proper place in the device ecosystems we’ve developed to date.

      So at best the present trend is a stepping stone for some future, yet to be created, mobile device and we’ve yet to see what form that will take.

      1. Actually the new wave of tablets like the iPad do have a few things that set
        them apart from the tablets of yore, including an operating system that was
        designed from the ground up to be touch-friendly and relatively affordable
        price tags. Personally, I don’t see them as a *replacement* for laptops due
        to the lack of physical keyboards. But there are definitely reasons why the
        iPad is selling like hotcakes while I can’t recall another tablet hitting
        blockbuster status.

        1. There are differences but no previous tablet had ever been sold by a company with Apple’s level of marketing power or backed by an OS already developed for years on the iPhone/iTouch and given access to the number of Apps available to that OS.

          You can take the exact same tablet and have it sold by any other company and it would have tanked.

          Also unlike Tablet’s of “yore” the iPad was never an attempt to put a whole computer into a tablet form. This both benefits the iPad and limits it as the OSX Mobile can run very fast and well on very limited hardware but it is not capable of doing everything a full OS is capable of.

          The iPad is thus in its own category but despite the advantages of the company, the OS touch interface, and the App Store. The iPad still has many of the same limitations that effected previous tablets.

          Such as it still being too heavy by at leat 500 grams, not being durable enough to take falls and too hard accidental impacts, not providing effective or flexible ways to input data, lack of upgrade-ability, and the eventual need to use a real computer, or separately purchased accessories, to get work done.

          All are real limitations that tablet designers still have to deal with before they can truly start considering tablets as a viable alternative device instead of something to just add to your list of devices.

          1. I don’t think we disagree as much as you think. My point is that while tablets have been around for the better part of a decade, there are reasons why we’re all talking about the iPad right now and not the HP TM2.

            Yes, the TM2 can run full blown desktop apps, but it’s heavier and more expensive than the iPad, and the OS wasn’t designed to be operated primarily via touch input — instead, touch was thrown on top of an existing OS.

            I seriously doubt that the iPad is going to crush netbooks, notebooks, desktops, smartphones, or any other class of computing device. But I give Apple a lot of credit for creating a tablet with mass appeal.

            While Apple does have a huge marketing budget, Lenovo, HP, and a number of other top computer makers have put out Windows tablets over the years, and they aren’t exactly small companies. Those tablets have certainly appealed to a certain subset of customers — while the iPad appears to be more of a mass appeal device sort of like the iPod touch.

          2. None of those companies have a comparable Smartphone OS with touch interface that has been developed for years. And most definitely none of them have a comparable App Store.

            We’re talking about the iPad because Apple has essentially successfully marketed what boils down to a iPhone XL with some minor improvements as a new experience and managed to generate a lot of hype to help propel it.

            Not to mention we have a whole generation who grew up watching STTNG and wanting their own PAD! Who just want to believe in the hype.

            But no matter how much anyone likes their iPad they can never replace their full computer with an iPad any more than they could have done so with their iPhone.

            And again the price difference is deceptive, since the iPad can’t run full OS or even desktop Apps. So you aren’t getting as much capability for the price and there is an added investment cost with the iPad with the need to get accessories and apps to make it useful. All with no guarantee that you’ll be able to transfer them to the next iteration of the iPad and definitely no possibility of upgrading.

            Most people are still in the fever of having a new cool device in their hands and it will still be some time before we can get an unbiased view of the iPad by the people who use it and finally determine its real impact on the market and device trends.

            It may indeed have an effect like the iPhone has effected the Smartphone market. But we’re a long way from seeing how yet.

          3. Right… that’s what I was saying. Apple was the first to get that a smartphone OS might make more sense on a tablet than a full blown desktop OS — at least in terms of user interface.

            I think you might be getting a bit hung up on the need to run full desktop apps. Apple built iWorks for the iPad to show that you *can* make a decent office suite for the iPad.

            While this particular tablet can’t run all the same apps as you could run on full blown OS X or Windows 7, there’s nothing stopping developers from writing powerful apps for this platform. So I’d argue it’s not so much capability that’s missing as compatibility. If you want Photoshop, you’re still going to have to run a desktop system. But if you want to edit pictures, there are plenty of iPad apps that will let you do that.

            My point all along has been that there may very well be a place for the iPad and other tablets running iPhone OS, Android, or other touch-friendly operating systems. But I don’t think they’re replacing netbooks, notebooks, or anything else. They might be taking a little market share away from each. But just a little.

            But we could argue over semantics all day. 🙂

          4. No, I’m not getting hung up on the need to run a full OS. Just pointing out that you wouldn’t be paying for one and thus comparisons to full computer priced tablets is thus erroneous.

            Though there are limits to the hardware that will limit what can be run on it. 256MB of RAM for example will limit how much multi-tasking would be possible with OS 4.0 and what apps can do will have to be limited to work within those confines.

            It’s not entirely unheard of for an app to cause the need to reboot the system to free up memory for example. Not to say good apps can’t and haven’t been made for the iPad. Just pointing out it’s not a miracle device that can defy the laws of physics.

            I agree that iPad and other similar tablets will eventually find there place, just that place isn’t yet defined yet and a lot of these discussions seem all too often to overshoot the realistic possibilities that these tablets do offer.

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