Best Buy CEO backpedals on iPad cannibalization comment

Posted:
in iPad edited January 2014
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 it?s way too early to say that it?s 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.
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Comments

  • Reply 1 of 94
    Huh. Sounds like Steve Ballmer made a phone call
  • Reply 2 of 94
    addaboxaddabox Posts: 12,660member
    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.
  • Reply 3 of 94
    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.
  • Reply 4 of 94
    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.
  • Reply 5 of 94
    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
  • Reply 6 of 94
    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**!!
  • Reply 7 of 94
    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.
  • Reply 8 of 94
    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...
  • Reply 9 of 94
    mnbmnb Posts: 15member
    This Baker dude says the cannibalization is more like in the mid-teens and then goes on to say that "It?s way too early to say that it?s 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.
  • Reply 10 of 94
    dfilerdfiler Posts: 3,420member
    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.
  • Reply 11 of 94
    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.
  • Reply 12 of 94
    ltmpltmp Posts: 204member
    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 "It?s way too early to say that it?s 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.
  • Reply 13 of 94
    dfilerdfiler Posts: 3,420member
    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.
  • Reply 14 of 94
    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.
  • Reply 15 of 94
    Good CEOs are normally a little more circumspect.
  • Reply 16 of 94
    dfilerdfiler Posts: 3,420member
    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.
  • Reply 17 of 94
    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...
  • Reply 18 of 94
    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.
  • Reply 19 of 94
    dfilerdfiler Posts: 3,420member
    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?
  • Reply 20 of 94
    nceencee Posts: 836member
    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



    Skip
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