iPad Cannibalising Netbook Sales? Please Put Down the Kool-Aid.

If you didn’t spend 5 minutes talking to me about Apple you’d probably assume I was one of their fan boys. Whilst I don’t have many of their products I can count quite a few of them littering my house with a shiny MacBook Pro scheduled to be delivered sometime soon. Long time readers of the blog will know that I’ve launched my share of both vitriol and praise in their general direction over the past couple years with most of it tending towards the former, almost wholly due to them rubbing the caged libertarian in my head the wrong way. I’d say that the other part is from the more fanatical parts of their fan base who seem to do more work than Apple’s own PR department.

Today’s rant comes to you courtesy of the latter who have recently taken to stating that the iPad, in all its wondrous “magical” glory, has begun chomping away at netbook sales as demonstrated by some recent sales figures:

Look at the figures, things seemed to be on the rise over the previous eight months with only two monthly declines that are explained by the drop off after holiday sales (Dec to Jan decline) and the drop off after back-to-school sales (Sep to Oct decline). The moment consumers were able to put down the money for an iPad, the number of notebook sales started to fall.

Best Buy CEO Brian Dunn also backed up this data telling the Wall Street Journal that Best Buy is seeing iPad sales taking as much as 50% away from notebook computer sales!

Indeed the way the data is presented it would make you think that even the mere mention of a computing product from Apple would be enough to scare people into not buying a netbook. However this is one of those times when you need to understand that correlation does not mean causation, I.E. whilst there’s data that shows these two variables interacting this does not imply that one has affected the other. In fact I’d argue that to say so ignores a wealth of data that was pointing to netbook sales stagnating a long time ago with a plunge to follow soon after.

2007 was the first year we saw a significant amount of traction with the netbook market with around 400,000 units being sold. The year that followed saw a stratospheric rise in sales, to the tune of almost 30000% with 11.4 million units sold. Whilst I can’t find a hard figure on sales for 2009 most articles around the time pegged an increase of around 100% or 22.8 million units moved. That kind of growth as any economist will tell you is completely and utterly unsustainable and it was inevitable that the netbooks would finally reach a point where their sales growth would hit a ceiling. It appears that the time is now which just so happens to coincide with a release from Apple. Whilst I’ll admit that there may be some influence from people not refreshing their netbook in lieu of an iPad I’d hazard a guess that that number is vanishingly small.

The trouble with using such figures as a tell for the iPad’s influence is that these are comparative figures (growth is compared to the year previous). If you take a look at that graph above you’ll see that the previous year’s growth was quite massive, hovering around the 30% region for all of the months that are showing decline. I wouldn’t be surprised if next year when we’re able to do the same comparison that we see a much more sustainable growth rate in the single figures. Growing at double digit rates for extended periods of time just isn’t doable, especially in an industry where hardware is usually expected to have a useful life of 3 years or more. The drop in sales is likely a combination of the market reaching saturation, netbooks falling out of favour (to be replaced with games consoles, new cameras and 3D TVs apparently) and an overall reduction in discretionary spending thanks to a bleak economic outlook in the USA. Somewhere in the midst of all those factors are those few people who were looking to buy a netbook but decided to go for an iPad instead, but those few do not swing as much power as the other factors that have had a downward pressure on netbook sales this past year.

Look I get it, Apple made a product that a lot of people think is pretty darn spiffy and anything that could be classed as a competitor obviously will be decimated by it. We’ve still yet to see the media revolution that it was meant to spawn (amongst other things) it seems rather premature that a device that hasn’t achieved its other goals is already decimating a market that it’s only casually related to. The stories then come from those who are towing the Jobs’ party line that netbooks are nothing more than cheap laptops, with little regard for the actual facts. Luckily it appears that not all of them are getting sucked into the easy pageviews and hopefully the fud will eventually be drowned out, leaving only the deluded fan boys holding onto dubious claims and long debunked statements.

6 Comments

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  1. Interesting take on the situation Mr. Dave. 😛
    This is one the more emotive blogs you’ve done in a while. I tend to agree with you on pretty much every point, except one – “The stories then come from those who are towing the Jobs’ party line that netbooks are nothing more than cheap laptops, with little regard for the actual facts.”
    I had nothing but painful experience with my netbook. The thing had Win7 loaded on it, and not only did it run like a dogs breakfast, I couldn’t do anything that I really wanted to do, predominately because the keyboard was tiny, and the screen was incredibly low res and widescreen, eliminating usefulness of viewing webpages nicely, or editing documents. Granted, they’ve improved in the year or so since I got it, I think there is some significant improvement in them before I’d replace my laptop with one.
    However on the other hand, I know quite a few people now who are running with a tablet as a complete replacement of their laptops. Which I must admit came as a surprise because I also was not convinced on the iPad (see previous posts on your blog).
    For me to change, there would still have to be some significant improvements to be made on the iPad front (or any other tablet for that matter). Which begs the question, where the hell is the competition??? I can’t believe we’re not even going to see the Samsung Tab until next month(?!) Its been over 6 months since Apple released the iPad. Anyway, I’m sure Android will come in and blitz them, like they’re doing to the phone market.
    Oh and I’m not a deluded fan boy 😛

  2. I can anecdotally counter your experience with mine as my little Gigabyte Tablet netbook has been quite good since I got it. Granted I made sure I had a larger keyboard and screen to avoid the things you mentioned (as that’s what my complaints were when using a friends Asus EEE). Realistically I saw netbooks simply becoming part of the normal laptop line up as the distinctions between them are realistically quite minimal.

    I’ve noticed that many people that try to full on replace a laptop with an iPad (or similar) usually end up going back to their laptops after a while. It’s mostly because whilst you can do 90% of the tasks on a tablet device its usually not as easy as they thought it would be. Granted though the same people find a use for the iPad in other respects, but I’ve found it quite rare for anyone to call the iPad a laptop replacement.

    The competition is out there (Archos, OpenTablet, HP Slate) but they just don’t get as much press as the iconic Apple brand. This is partly due to the fact that they don’t have the same backing being unknown companies but they’re none the less present. It’s funny that you mentioned Android as Google never intended it to be an operating system for tablets. That was reserved for their as of yet unreleased Chrome OS which focuses much more on web services and the end user experience, with any phone features coming in a far second place. Still we’re seeing a plethora of Android tablets being announced so I’m sure there will be optimisations made to gear the experience more towards what Chrome OS had envisioned, but these are likely to be vendor specific as Google still doesn’t think Android is appropriate for tablets.

    I saw a similar post to the one you linked and whilst he states it was greatly exaggerated he didn’t outright deny it either. I left it out of this post because it didn’t add anything to either side of the argument but it does make for an interesting thought experiment as to why he made that statement (the netbook manufacturers not liking that statement perhaps?).

  3. Yes I must admit, my first (and only real first hand) experience with a netbook was disappointing. And yes, you’re right about the distinction between netbook and notebooks being really only price. And screen size in theory.

    I’ll come back to you on the iPad as a replacement (if I see others going back to their laptops!). The only difference between a tablet and a fully fledged laptop is the keyboard (stating the obvious). Once they figure out a decent solution to that, I may be sold.

    The HP Slate isn’t out yet, infact who knows if it’ll come out in the form that was demoed (Since the buyout of Palm). I do know about Archos and others, but they mostly seem to use Win7, which despite all of Microsofts wishes is not the greatest on a tablet.

    And yeah I did read about how Google “didnt intend” Android as a OS for tablets. I think thats an incredibly bad business decision. Why would Google make two touch-screen OS systems? To me it just doesn’t make sense. Why not build on the existing base of Android users who utilise “apps” etc in the same sense as Apple do, because in my thinking, Googles best option would be to create an “eco-system” in the same way Apple has, so people use their products across the board.

    I understand that people have different uses between a tablet and a phone, but to have a cohesive, standard UI makes more sense to me, with the features being tweaked between the two products.

    On a different note, in the long run why do MOST (excluding power users) people want a fully fledged OS? I think thats ultimately the reason why Apple and Google have succeeded. I have long suspected that Apple will somehow bring iOS to their lines of Mac’s, considering OS X is nearing 10years old (been around since XP!).
     

  4. Well the differences between a tablet (in the Apple sense) and a fully fledged laptop is actually quite large. The former is a rather locked down device in that it can’t run arbitrary code and is, for better or worse, a closed system. Even the Android tablets are still not just laptops missing their keyboards they’re more consumer oriented devices. There are some tablets coming out that I’d agree with that definition though.

    The HP Slate will be coming out it just won’t be a consumer device as I wrote about over a month ago. Many of the other devices do use Windows 7 and honestly I think it’s perfectly fine to use on tablets as it works quite well on my little Gigabyte. Sure it’s not designed specifically for a tablet so that many things that you’d expect (like multi-touch gestures) aren’t there, but it’s still perfectly usable.

    Take a look at it from an engineer’s perspective: a tablet and a mobile phone are two completely different use cases. Sure there’s some overlap in terms of requirements but there are optimisations to be made in each scenario that don’t necessarily translate well into the other. Google might very well drop the idea of Chrome OS in favour of tablet specific optimisations for Android should the market tip that way (which it appears to be doing) but they’re still towing the party line of “Android is not for tablets”. It could quite possibly be that they’re working on their own tablet at the moment, which would validate most of their rhetoric on the whole Chrome OS situation.

    As for your last point I’d have to wager that it’s usually because whilst these kinds of devices are great for their designed use cases they just simply can not replace a fully fledged PC. Simple things like downloading your photos off your digital camera and storing them is quite a woeful experience as these devices come with limited storage and gimped input options. Thus whilst they make a great coffee table device they’re just not as capable as their bigger brethren when it comes to the tasks people are accustomed to doing. This is changing with ramp up in cloud services we’re seeing but it’s still a long way away from those being able to replace your PC.

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