In the months leading up to the iPad announcement, analysts would often ask Apple COO Tim Cook, during earnings conference calls, about Apple’s plans to enter or combat the emerging netbook market. Cook, described by colleagues as a straight shooter, was unabashed in his and Apple’s disinterest in creating a netbook device. During one particularly memorable exchange, Cook quipped:
When I look at netbooks, I see cramped keyboards, terrible software, junky hardware, very small screens. It’s just not a good consumer experience and not something we would put the Mac brand on. It’s a segment we would not choose to play in.
Cook would often follow up his anti-netbook sentiments with a cryptic blurb about how Apple has some interesting ideas about the netbook market. Months later, we would come to find out that Apple’s answer to the netbook was the iPad.
And now it appears that the iPad is decimating netbook sales.
Morgan Stanley analyst Katy Huberty recently released data indicating that netbook sales are trending downward, a fact attributable, she says, to the announcement and subsequent release of the iPad. As you can tell in the chart below, netbook sales began decelerating in the 3 months prior to the iPad announcement, and really began to plummet in the 3-month build up to the iPad release date.
But the iPad is a multipurpose device, and it therefore follows that its presence in the marketplace would affect the sales of other products as well. Kindle, anyone?
On that note, a Morgan Stanely sponsored survey conducted in March found that 44% of consumers planning to purchase the iPad were going to do so instead of buying a notebook – of which Apple notebooks represented 24%. And tellingly, 41% of respondents said they were planning on purchasing an iPad instead of an iPod Touch.
It’s not too surprising to see handheld videogames and eReader devices affected by the iPad launch, but we’re somewhat surprised to see that some consumers are opting for an iPad in place of a desktop.
In any event, does this spell bad news for Apple? Not necessarily. The margins on the iPad, for example, are most likely greater than they are for the iPod Touch, so that example tends to work to Apple’s advantage. Now as for the iPad potentially cannibalizing high-margin Macbook sales, Apple would much rather cannibalize its own products than experience the same result due to a third party product.
If you’re biggest problem is that your latest successful product is stealing sales away from your other successful products, well, then that’s a great problem to have.