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Best Buy CEO backpedals on iPad cannibalization comment

post #1 of 95
Thread Starter 
Brian Dunn, CEO of Best Buy, issued a statement Friday clarifying his earlier comment that the iPad had cannibalized sales of some notebook and netbook models by as much as 50 percent.

"The reports of the demise of these devices are grossly exaggerated," Dunn said, in a play on Mark Twain's famous quote.

"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. In fact, we see some shifts in consumption patterns, with tablet sales being an incremental opportunity. And as we said during our recent earnings call, we believe that computers will remain a very popular gift this holiday because of the very distinct and desirable benefits they offer consumers. That's why we intend to carry a broad selection of computing products and accessories, to address the demand we anticipate this season."

Best Buy had posted strong quarterly earnings this week and remained optimistic as it announced that the iPad would be coming to all of its retail stores. Dunn predicted that tablet devices would be "big for [Best Buy] during the holidays."

Dunn's original comment has been quickly disputed by analysts.

Katy Huberty with Morgan Stanley used NPD sales figures to place potential cannibalization at a much lower 25 percent.

Stephen Baker, a retail analyst with NPD, remained even more skeptical. An unreleased survey by NPD pegs the iPad's cannibalization of PC sales "in the mid-teens," according to a Computerworld report by Gregg Keizer.

Clearly, the iPad is a great product, but its way too early to say that its putting a significant hurt on the PC market, said Baker. In the future, in 2011, assuming that other tablets appear and the trend [in tablets] continues, cannibalization is likely.

According to Baker, the principal reason for the decline in notebook sales, which are down 4 percent year-over-year, is that last year's numbers were extraordinary and are difficult to match. At some point, the gravy train [of PC sales] has to wind down, Baker said. The end of the Windows 7 "bubble" and less aggressive back to school sales were also to blame, Baker noted.

Technology Business Research analyst Ezra Gottheil believes that cannibalization is definitely occurring, but consumers are buying the iPad "to replace a second or third PC." "Almost no one is giving up their main PC for an iPad," said Gottheil.

TBR's iPad & Web Tablet Buyer Study surveyed 500 U.S.-based iPad owners and future buyers. The survey found that a third of those surveyed replaced or will replace their PC with the iPad and almost half of buyers use their iPad as their primary computing device.
post #2 of 95
Huh. Sounds like Steve Ballmer made a phone call

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post #3 of 95
Actually, it sounds like the usual "analyst" hand waving. They know two things for sure: Apple is selling a ton of iPads, and netbook/notebook/PC sales have declined somewhat (or their rate of growth has slowed, it doesn't really matter).

But they're obliged to know something, so they make a bunch of dubious connections between phenomena, complete with spurious percentages to make it sound like it was based on something other than wild speculation.
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post #4 of 95
While I admit to spending more time on my iPad than my Mac, I would not consider the iPad my main computer. The iPad is more of an extension. I'm surprised anyone would consider it their main machine.
post #5 of 95
Tablets are the future of non-work computing. Most of the things I do with my computers are related to my personal entertainment. I do create one spread sheet for personal finance and a few times per week I compose documents using Open Office. The rest of the time I'm using my computers to surf the web and compose e-mail messages.

When I'm doing research for work all I need is a web browser. Still, there will be plenty of spread sheet programs and document programs for all of the tablet devices that come out. As it is I could use an iPad to do all of the work I do now.

In a few weeks I'll be back to designing web sites so the iPad or other tablets won't be able to do that type of job -yet.

Am I a typical personal computer user? I don't know. The people I know, and none of my neighbors ever talk about using their computers for more than personal entertainment or e-mail. I don't know any geeks. I'm the only one in my social circle that does work on the web or on web sites.

So many people say the iPad can't replace a laptop. I disagree just because the iPad does do all of the basic things that people do on their PCs. There's nothing wrong with iPad owners having a spare keyboard around just for when they need to type more than short messages. For all of the rest of the time they can just use the touch screen.

With a ten hour or more battery life and light weight, the iPad seems to be a really good small screen computer. Such tablets will continue to erode overall laptop sales. When the iPad or other tablets have removable storage, cameras, and USB3 or Lightpeak connections they will decimate laptop sales in their price range. If inexpensive netbooks continue to be made they won't go away just because they're much less expensive. There will always be a market for things based on price alone.
post #6 of 95
Quote:
Originally Posted by Applecation View Post

While I admit to spending more time on my iPad than my Mac, I would not consider the iPad my main computer. The iPad is more of an extension. I'm surprised anyone would consider it their main machine.

When I want to enjoy tea on the patio, surf or read while lying in bed, or take notes in class, I opt for my iPad now. My MacBook Air, once my machine of choice when mobile, has taken a backseat to the iPad. In fact, I rarely fire up the Air anymore. Same is true for my iMac.

The iPad is reserved for everything fun:

- Games
- Surfing
- Music
- Movies
- iBooks
- USA Today
- Email
post #7 of 95
What the hell are they saying about the iPad replacing a 3rd or 4th pc? LOL!
I've never heard such bull****.
here is the scoop, the iPad has started some sh** and the competition has to answer. If they don't they are dead in the water. Look, the iPad concentrates everything the average person does on a pc like movies, netsurfing ect. Now those folks don't need a full fledge pc and the rest of the industry is mad as hell!
And trust me I'm getting the 21.5 inch iMac for the holidays. Apple done raised hell up in this bit**!!
post #8 of 95
Ha ha ha ... Somebody important that makes netbooks made a phone call to Best Buy dude and was all like WTF mate then Best Buy dude was OMG LOL.
post #9 of 95
Hmm...the guy said the iPad has cannibalized sales of some notebook and netbook models, and the other guy says potential cannibalization is teens, or 25 percent.

Um, the two are not necessarily mutually exclusive...
post #10 of 95
This Baker dude says the cannibalization is more like in the mid-teens and then goes on to say that "Its way too early to say that its putting a significant hurt on the PC market

16% is in the middle of the teens, so lets use that for the sake of this statement...


Mr. Baker, I have two questions for you:

In what industry is a 16% decline in sales not considered significant?

At what school were you educated? I'd like to make sure my kids don't go there.
post #11 of 95
I think tablets will supplement rather than replace desktop and laptop computers. As we become more reliant on computers or have them mixed into more aspects of everyday life, the result will be people using more numerous computing forms instead of a single type. We will all use what is optimal for each task or scenario rather than relying on just one type.

And this isn't coming fro, someone who discounts tablets. I own an iPad and use it more than my 27" iMac. This post was written on an iPad. So yet, while loving this iPad, I wont be giving up my other computers.
post #12 of 95
Quote:
Originally Posted by dfiler;

I think tablets will supplement rather than replace desktop and laptop computers. As we become more reliant on computers or have them mixed into more aspects of everyday life, the result will be people using more numerous computing forms instead of a single type. We will all use what is optimal for each task or scenario rather than relying on just one type.

And this isn't coming fro, someone who discounts tablets. I own an iPad and use it more than my 27" iMac. This post was written on an iPad. So yet, while loving this iPad, I wont be giving up my other computers.

But many people that were thinking of netbooks in addition to their desktop PC or something would be considering an iPad now.

So iPad and all the other wannabe tablets will start nibbling at the netbook/ low end laptop market.
post #13 of 95
Quote:
Originally Posted by mnb View Post

This Baker dude says the cannibalization is more like in the mid-teens and then goes on to say that "Its way too early to say that its putting a significant hurt on the PC market

16% is in the middle of the teens, so lets use that for the sake of this statement...:

In what industry is a 16% decline in sales not considered significant?

My thought exactly. Even 10% is huge, especially after the launch of Windows 7.

If we go by Balmer's statement that the iPad is a PC, then in a few short months, Apple has just taken over another huge piece of the US PC market.

I can't wait to hear the actual sales figures at the next AAPL earnings call.
post #14 of 95
I'm still skeptical that iPads have much to do with this sales trend.

It would be interesting to find out how many iPad owner were actually in the market for a windows laptop.
post #15 of 95
Quote:
Originally Posted by Applecation View Post

While I admit to spending more time on my iPad than my Mac, I would not consider the iPad my main computer. The iPad is more of an extension. I'm surprised anyone would consider it their main machine.

Many ppl don't need huge processors and all other specification that makes a REAL computer. Now a days, Computer is becoming synonymous to Internet.
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post #16 of 95
Good CEOs are normally a little more circumspect.
post #17 of 95
Quote:
Originally Posted by striker_kk View Post

Many ppl don't need huge processors and all other specification that makes a REAL computer. Now a days, Computer is becoming synonymous to Internet.

An honest question: have you tried using an iPad as your only computer?

I have yet to see many reports of anyone doing that. I can't remember having read even one. That isn't to say it isn't happening. But it must be quite rare.
post #18 of 95
Quote:
Originally Posted by striker_kk;

Many ppl don't need huge processors and all other specification that makes a REAL computer. Now a days, Computer is becoming synonymous to Internet.

And Internet synonymous to Facebook...
post #19 of 95
Quote:
Originally Posted by Postulant;

When I want to enjoy tea on the patio, surf or read while lying in bed, or take notes in class, I opt for my iPad now. My MacBook Air, once my machine of choice when mobile, has taken a backseat to the iPad. In fact, I rarely fire up the Air anymore. Same is true for my iMac.

The iPad is reserved for everything fun:

- Games
- Surfing
- Music
- Movies
- iBooks
- USA Today
- Email

Quote:
Originally Posted by dfiler;

An honest question: have you tried using an iPad as your only computer?

I have yet to see many reports of anyone doing that. I can't remember having read even one. That isn't to say it isn't happening. But it must be quite rare.

What Postulant said.
post #20 of 95
Quote:
Originally Posted by nvidia2008 View Post

What Postulant said.

It sounds like the iPad is his machine of choice now "when mobile". Is that what you're referring to?
post #21 of 95
With the right ad campaign - Apple WILL be able to record sales of the iPad (compared to last year).

The economy isn't that string and folks will likely cut back on their Holiday spending. This will lead, more and more folks to get the iPad for the kids, and if things get better next year, their then purchase the imac for them.

The iPad WILL be the hottest Xmas gift under $500.00! It will be this generations Cabbage Patch Doll, Elmo or Teddy Ruxpin .

Kids will have it First on the Christmas list, Pay attention Santa's of the world. Go out and get it now, before there aren't any left, and you have kids sitting down under the Christmas tree crying because they didn't get the #1 Christmas gift this year listen to me, go out and buy it NOW!

With our help, we (Apple Junkies) can make this happen. Spread the word, tell your friends, neighbor, co-workers. Go into stores that don't even carry it, and ask them if they have that damn "iPad" that everyone is talking about. When they say no, ask if they know where you can find one.

Hey, let's have fun with this

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post #22 of 95
Quote:
Originally Posted by Applecation View Post

While I admit to spending more time on my iPad than my Mac, I would not consider the iPad my main computer. The iPad is more of an extension. I'm surprised anyone would consider it their main machine.

I would call it my "preferred" device (over an iP4 or an iMac). When I can use the iPad, I will-- it is more enjoyable and I am more productive.

.
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post #23 of 95
Too late. Cat's outta the bag. Any attempt at retraction now just seems like lame damage control. While Steve is just laughing. Apple totally got what they wanted, probably without even expecting it. Just adding to the iPad mindshare.
post #24 of 95
Quote:
Originally Posted by dfiler View Post

It sounds like the iPad is his machine of choice now "when mobile". Is that what you're referring to?

Not necessarily just "when mobile". I use mine in the house a lot. It's kind of, everything, "when you don't really need a computer".
post #25 of 95
Quote:
Originally Posted by AppleInsider View Post

"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.

Yes, but you DID say it didn't you.

Don't you just love the way CEOs murder language? This is the most perfect example of 1984-type doublespeak that you are ever likely to encounter. This guy must have trained to be a lawyer.
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post #26 of 95
Sounds like you think Steve is the Antichrist (meaning a false messiah)

Quote:
Originally Posted by umrk View Post

Autumn 2010 : Apple announces quarterly results which show a 50 Billion Dollar revenue / 20 Billion Dollar profits trajectory. The analysts revise their expectations ..

Spring 2011 : after the iPad, the iPhone (now 5) is introduced in China, and generates hysteria, as well as a specific Verizon CDMA model for the US. The competitors announce models "soon to come", but fail to materialize ... Analysts revise their expectations again..

Apple reinvents the watch: iWatch (human skin surface currents being used to transmit information to earphones)


Summer 2011 : Steve Jobs announces that a few billion Dollar out of Apple's cash will be used to launch Apple's largest private satellite constellation (this representing a tiny proportion of Apple's total cash). TV broadscasters feel uncomfortable ..

Spring 2012 : Apple reinvents the TV

Autumn 2012 : Apple reinvents the credit card : Steve announces that the iPhone now fully possesses credit card capabilities (with of course sophisticated authentication capabilities, and added value services for budget management, etc ...), and announces the creation of the Apple iBank. Banking companies start getting worried ..


The analysts start to realize that instead of the iPad (now sold at more than three million per month) cannibalizing the Macs, each product or service of the Apple ecosystem strengthens each other, and that Apple is eating up every year a percentage of the huge PC market share. They revise their expectations accordingly ..


Apple competitors feel increasingly worried, and find no way to navigate safely through the mine fields of Apple patents (the Lawyers department of Apple has grown up to ten thousand of people, becoming the first department of the company). Sadly for them, they have no hope to expect from the antitrust authorities, since Apple is not the dominant player in any of its markets.


Spring 2013 : Apple chief financial Officer manages to convince Steve that the only way to reduce Apple's enormous cash would be to distribute a dividend to the shareholders. The Apple share skyrockets again ..


End of 2013 : Apple acquires Intel


Summer 2014 : following IBM's example, PC suppliers quit one by one the PC market, into which they have no hope to make any decent profit (especially since the competition on prices has become even tougher, as the Windows market share shrinks ..).


Microsoft is in trouble.. (Especially since Steve's pitbull buddy Larry Ellison has successfully sued several companies about Java, and has aggressively and successfully promoted Open Office against Microsoft Office). Steve Ballmer is fired. Apple uses the old Microsoft video of the "iPhone4 funerals" to celebrate the news. Dell runs out of business (and distributes the money to its shareholders (who immediately buy Apple shares with it).


Autumn 2014 : the Apple profits have now jumped to the incredible amount of 40 Billion Dollar a year, turning Apple shares into the largest stock among any companies in the world (beyond Exxon Mobil or Petrochina). Analysts again revise their expectations ..


Spring 2015 : Steve annouces that from now on, the Apple enormous cash + the revenues driven from immaterial content (advertising, music, films, newspapers ..) enable the company to distribute its electronic consumer products for free


Autumn 2016 : Apple reinvents the car : iCar (yes, it is a mobile device, too ...)


Summer 2019 : the «*water party*» candidate to the US Presidency (tea party follow up, even more aggressive republican sect) announces Apple's dismantling in case he/she is elected. Steve Jobs is successfully (without any campaign) designated as Democrat candidate to the election.

2020 : Apple reinvents the President of the United Staes :Steve Jobs is elected president of the United States (but insists for its salary to be one dollar / year only (first iPresident of the United States).

At that time, Steve's popularity is so great that most American people convert to Zen Buddhism, (which becomes the first religion in the US), and are no longer interested in profit. Apple stores throughout the world (even China agrees) are converted (with little modifications) to Zen Buddhist temples.

2030 : after a carreer as a business man & a politician, Steve Jobs now reveals his true nature : being a religious leader. He preaches successfully Zen Buddhism, and manages to convert unlikely disciples (such as Arnold Swarzenegger & Larry Ellison (who decides to give his entire fortue to charity funds)).
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post #27 of 95
When a consumer is faced with the decision between a netbook's small form and "almost a laptop" shortcomings or an exciting, light weight, touch screen gadget with the support of a deep and wide app store for the same amount of money.... which would you choose, the past or the future?

Apple is the first company to bring a GUI that actually benefits from touching a screen to manipulate and interact with a computer in a slick, affordable and actual shipped product. The other's can only follow Apple's lead yet I doubt will ever offer a product that's more than a "me to" contender. Apple's ability to bring products to market that have an ecosystem already in place to support said product is not seen in a world that depends on Microsoft and now Google to build. Apple creates software so integrated with hardware that the consumer sees the two elements as one and not two distinctive parts. Okay rant is over now.
post #28 of 95
It's not cannibalization unless the iPad is eating into Apples notebook sales, which hasn't been the case.
post #29 of 95
Quote:
Originally Posted by kohelet View Post

Sounds like you think Steve is the Antichrist (meaning a false messiah)

I thought it was kinda funny . . . regardless of what might have motivated it.
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post #30 of 95
Quote:
Originally Posted by AppleInsider View Post

Brian Dunn, CEO of Best Buy, issued a statement Friday clarifying his earlier comment that the iPad had cannibalized sales of some notebook and netbook models by as much as 50 percent.
...
"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. In fact, we see some shifts in consumption patterns, with tablet sales being an incremental opportunity. And as we said during our recent earnings call, we believe that computers will remain a very popular gift this holiday because of the very distinct and desirable benefits they offer consumers. That's why we intend to carry a broad selection of computing products and accessories, to address the demand we anticipate this season."

Translation
We make a much higher percentage off the sale of these other products (than Apple products) and if my comments slow down sales of these products even further, that would be a bad thing.
Also, someone "anonymously" called me and "straightened out my thinking", which was previously incorrect.
post #31 of 95
Quote:
It's not cannibalization unless the iPad is eating into Apples notebook sales, which hasn't been the case.

Another possibility: It eats into the Mac notebook sales for existing users, but at the same time attracting so many more new converts that it doesn't matter. The end result is good for the Mac world anyway.
post #32 of 95
Quote:
Originally Posted by dfiler View Post

I'm still skeptical that iPads have much to do with this sales trend.

It would be interesting to find out how many iPad owner were actually in the market for a windows laptop.


Good point.
post #33 of 95
What he should have said was, "Look, we all know that everyone knows you'd have to be a moron to buy a Mac at Best Buy and really hardly anyone does, and honestly the only people who vaguely consider buying any computer at Best Buy are not informed consumers and certainly not even moderately experienced computer users. We sell a bunch of stuff but I haven't seen enough computers sold at Best Buy since I've been here to have any idea of the market."
post #34 of 95
Quote:
Originally Posted by dfiler View Post

An honest question: have you tried using an iPad as your only computer?

I have yet to see many reports of anyone doing that. I can't remember having read even one. That isn't to say it isn't happening. But it must be quite rare.

Exactly... it's not designed for that. It would be like needing a truck and using a smart car instead. It was designed to be a secondary device to a computer. Sure you can use it beyond that intention, but it isn't going to work that smoothly in most cases. Apple doesn't want the computer to go away, they want it to be a hub, even though it's not fashionable to talk about that anymore.

What I've never understood is those crappy netbook things. Miserable form factor, useless keyboard, cheap construction, pathetic performance for a computer, and a screen that is too small to effectively use conventional software. Using one makes me feel like I'm crunching up into a little ball and trying to squeeze myself into it's little L-shaped space. They are horrid!

The iPad, on the other hand, has an open free feeling to it, access is casual, software is purpose built for it, you interact directly with the screen or the whole device, and it feels fast. It is a brilliant device and the insight of the designers shows through in every aspect. People that have issue with it typically do so because they (a) try to use it as a truck, (b) try to fit it into their preconceived mould for a device, or (c) just detest Apple. Guess what? The market of people that don't fall into those groups is rather large.
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post #35 of 95
Yeah, I'm sure it is killing the cheap netbook market. The higher-end sub-notebooks shouldn't be affected as much. I've made-up my mind that my Macbook replacement will be an iPad but I just bought an iMac and wouldn't dare replace that with an iPad.

I saw that Kindle commercial and I would agree about its ability to be able to be read in sunlight. Hence the need for both devices unfortunately.
post #36 of 95
Quote:
Originally Posted by umrk View Post


2030 : after a carreer as a business man & a politician, Steve Jobs now reveals his true nature : being a religious leader. He preaches successfully Zen Buddhism, and manages to convert unlikely disciples (such as Arnold Swarzenegger & Larry Ellison (who decides to give his entire fortue to charity funds)).


This is seriously funny stuff - you have missed your calling as a true satirist - keep up the good stuff.

You missed a great opportunity to cap it off - a suggestion:

Jobs has now become the first iProphet, with devine insight, and later morphs into the first iGod. The benefits of such a god are profound. Now that iPrayer devices are embedded at birth, and while invoking the name of the iGod Steve (blessed be his name), you are rewarded with instantaneous answers to your prayers (and searches, as a side benefit), all downloaded directly to your brain. However, Flash is STILL not supported, except immediately after death.
post #37 of 95
Quote:
Originally Posted by Applecation View Post

While I admit to spending more time on my iPad than my Mac, I would not consider the iPad my main computer. The iPad is more of an extension. I'm surprised anyone would consider it their main machine.

I think it's just a matter of semantics. A "main" computer might be interpreted by some as being the most expensive, powerful, etc. . ..... while others may consider it to be the one that they use most. There's no wrong answer here ... whatever works for you is ok.

I'll give you an example of "language problems" ... all with humorous results:

''See, in my line of work you got to keep repeating things over and over and over again for the truth to sink in, to kind of catapult the propaganda.''
President George W. Bush, Greece, N.Y., May 24, 2005

''I'll be long gone before some smart person ever figures out what happened inside this Oval Office.''
President George W. Bush, in an interview with the Jerusalem Post, Washington, D.C., May 12, 2008

''Then you wake up at the high school level and find out that the illiteracy level of our children are appalling.''
President George W. Bush, Washington, D.C., Jan. 23, 2004

I still miss his "unintended" humor......
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post #38 of 95
Somebody got a spankin' from the notebook boys!

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post #39 of 95
Quote:
Originally Posted by dfiler View Post

I'm still skeptical that iPads have much to do with this sales trend.

Tell me, if a new device is introduced into a defined market ... (portable computing devices) ... and, following that, the sales of previous similar devices shrink while the market share of the new device rockets upward ..... can you not see the "cause and effect" here/ .... seriously?
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post #40 of 95
Quote:
Originally Posted by kerryb View Post

Apple creates software so integrated with hardware that the consumer sees the two elements as one and not two distinctive parts.

Finally, .... the real reason for Apple's success. .... Now, let's hope the other manufacturers don't read ypur post. ......
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