I've said it before now I'm saying it again, the iPad is indeed cannibalizing netbook sales. For proof, you don't have to ask Best Buy's boss, nor do you have to listen to the analysts, you just need to speak with Microsoft, which now admits the iPad is killing the netbook market.
Speaking to The Seattle PI, Gavriella Schuster, general manager for Windows product management engaged in a conversation as follows:
"But the success of the Apple iPad, and the impending Google Android (and Chrome OS?) tablets, are beginning to threaten Windows' hold on the "and" PC market. Real Windows-based iPad competitors aren't expected until sometime next year. So I pointed to Schuster's netbook and asked about the recent trend.
"These are definitely getting cannibalized," she said. "These are really a second device. But they are getting cannibalized.""
Sure, Microsoft continues to call these devices "and" devices, saying they aren't strictly speaking computer replacements, but instead augment a user's computer, but when it comes to that second computer, the iPad seems to be coming into its own. Indeed, if iPads were counted as PC purchases, Apple would be the leading PC vendor by sales in the US.
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The satisfaction guarantee
That's just part of the evidence. New research data from Changewave tells us that only 14 percent of PC users intend buying a netbook in the next 90 days, that's 10 percent less than the figure for June 2009.
Instead, Changewave tells us 26 percent of consumers intend purchasing a tablet in the future, and 80 per cent of that 26 per cent (so just over 20 percent of all consumers asked in a 3,108 person sample group) intend purchasing an iPad.
The RIM PlayBook, Galaxy Tab, HP Slate and tablets from Archos, Dell and Sony together tempted 13 percent of the sample group between them.
That small factoid confirms what I've been saying for some time which is that competing makers will be fighting for scraps in this market, as the Apple innovation machine continues to keep the company's offering one step ahead.
It isn't just about what you buy, it is also about how happy you are with a product once you do acquire it. Here Apple's satisfaction levels are a word of mouth promise to any consumer as the Christmas season looms.
Of those that currently own an Apple iPad, 72 percent claim they're 'very satisfied' with their device while nearly a quarter (23 percent) are 'somewhat satisfied' (see table below).
Shock of the new
Next week will see Apple introduce iOS 4.2 for iPad (already at Golden Master).
This will add over one hundred additional features to the existing product, including multitasking, folders, printing and the much-looked-forward-too AirPlay support.
This is likely to transform the experience of the device for many users. Meanwhile the faster, more powerful second-generation iPad's are just waiting in the wings.
Apple's winning over key influencers, too. Take a look at Wall Street Journal's Walt Mossberg, who yesterday advised his legion of consumer readers,
"Many owners of iPads, including me, are finding it handily replaces a laptop for numerous tasks, such as Web browsing, email, social-networking, photos, video and music. It has superior battery life, lighter weight, and it starts instantly."
This drive toward the device is gathering its own momentum, with Apple establishing new credentials within the enterprise.
Beyond consumer
Indeed, a Gartner report this morning is urging enterprise users to deploy at the very least basic levels of iPad support within their businesses, warning the iPad has the power to completely disrupt many traditional industries.
"While there are no certainties, the iPad looks set to become a market-disrupting device, like the iPod before it. Even if you think it is just a passing fad, the cost of early action is low, while the price of delay may well be extremely high," warns Stephen Prentice, Gartner Fellow and vice-president.
Gartner notes the iPad is already impacting numerous industries, consumer markets, book and magazine publishing, architects offices, estate agents/realtors, education, financial markets, sales, healthcare, retail, hospitality, air travel and many more.
"While some IT departments will say they are a 'Windows shop', and Apple does not support the enterprise. Organisations need to recognise that there are soft benefits in a device of this type in the quest to improve recruitment and retention. Technology is not always about productivity."
Know the enemy
Of course, I'm not living in a bubble and I'm well aware of the lure of alternative devices.
The Galaxy Tab seems to be emerging as the biggest challenge to the iPad. It runs a similar processor, is made by Apple supplier, Samsung, and runs former ally Google's Android OS (which Google itself says isn't right for tablets -- can you hear the yells of disappointment once consumers learn this after purchasing a Tab?).
Perhaps the biggest compliment to Apple's offering is in Samsung's hoped-for sales figures for its recently-introduced attempt at a 'me-too' tablet device. Samsung hopes to sell one million Tabs by the end of the year. Apple sold one million iPads in 28 days.
At that time, "One million iPads in 28 daysthat's less than half of the 74 days it took to achieve this milestone with iPhone," said Steve Jobs, Apple's CEO. "Demand continues to exceed supply and we're working hard to get this magical product into the hands of even more customers."
This critical level of demand -- in which a consumer electronics product has now emerged to be the biggest selling new CE segment since the DVD player -- has created whole new challenges in terms of supply.
We haven't seen an electrical product achieve this level of demand so quickly ever before, at least, not outside of the mobile phone markets.
The troubles of success
With the iPhone and other smartphones devouring components in the mobile space, and with this explosion of the tablet market and continued moves into minituarization for notebooks, we're looking at significant demand on already hard-pressed component makers.
This means something is likely to give in the supply chain. At the very least, it would be deeply unsurprising to see quality control problems afflict some key components, as suppliers struggle to ramp up production too quickly.
Meanwhile, the focus remains on tablets, rather than netbooks, where we see interest dwindling to a point at which netbook manufacturers will have no option but to produce incredibly cheap, low-specified devices which offer online access, spreadsheet and document support.
Microsoft has been alleged to be preparing to charge royalty fees to prevent Acer, Asustek from using Android in netbooks, say Taiwan makers.
Sales in the netbook segment will continue to dwindle, and as mobile solutions continue to innovate and expand their market, eventually low-tier tablet devices will debut which will more than replace the remnants of the netbook market.
Apple holds 95 percent of the tablet market.