Fears of iPad cannibalization drive PC estimates downward
Slowing shipments of PCs have prompted some analysts to revise their 2011 PC shipment estimates downward over concerns that Apple's iPad is eating into sales of PCs.
In a note issued to clients Thursday, Morgan Stanley analyst Katy Huberty revised her 2011 PC shipment growth forecast to two percent, down from seven percent, citing weakened demand caused by tablets. Huberty also attributed the decline to considerable slowing in commercial and emerging market consumer demand for PCs.
In light of the revised estimates, Huberty lowered her revenue forecasts for HP, Dell and Seagate by one to two percent, while maintaining her estimates for Apple due to "strong Mac share gains and unit upside" in the first quarter of calendar 2011.
According to Huberty, Dell is exposed to "the greatest risk" due to decelerating commercial demand and margin risk from component costs.
Huberty lowered her consumer PC shipment estimate from 2 percent growth to a 1 percent decline and dropped commercial PC unit growth projections for 2011 from 13 percent to 5 percent.
Morgan Stanley's tablet forecast remained unchanged at 55 million units in 2011 and 85 million units in 2012. Huberty estimates a tablet cannibalization rate of 29 percent in 2011, noting that when PCs and tablets are considered together, total shipments are expected to grow by 13 percent in 2011, in-line with historical PC growth trends.
Also on Thursday, analyst Brian White of Ticonderoga Seurities warned of slowdown in the Electronics Manufacturing Services industry, as Printed Circuit Board book-to-bill ratios have flatlined at their lowest level in over two years. "Our stance remains that the PCB book-to-bill ratio is in a bottoming phase, and we do not expect a meaningful downtick from current levels; however, we also do not expect a meaningful rebound as in past recoveries," said White.
Microsoft's struggles are also seen as an indication of slowing PC sales. For the first time in recent memory, Apple beat Microsoft in both revenue and profit for the just finished quarter.
Though the Redmond, Wash., software giant's profits grew past Wall Street expectations year over year, analysts quickly seized on the news that sales of netbooks fell 40 percent last quarter and Windows revenue declined year over year for the second-straight quarter as indicators of slowing PC growth.
The dramatic drop in netbook sales may indicate that the iPad has substantially eaten into the profits of low-end laptops. Given that Apple is having trouble meeting demand for the iPad 2, analysts worry that sales of PCs, especially netbooks, will decline further as Apple ramps up production of the iPad.
Earlier this month, research group IDC released first quarter sales figures for the PC market that suggest the PC market dropped 10.7 percent while U.S. Mac sales grew 9.6 percent.
Netbook maker Acer appears to have been hit especially hard by the rise of the iPad. According to IDC, Acer PC shipments declined 42 percent year over year in the first quarter.
Gartner also sees U.S. PC sales declining, though the research group's estimate of a 6.1 percent contraction is less of a loss than IDC's 10.7 percent figure. Also of note, Gartner sees Apple's iPad continuing to dominate the tablet market through at least 2015.
In a note issued to clients Thursday, Morgan Stanley analyst Katy Huberty revised her 2011 PC shipment growth forecast to two percent, down from seven percent, citing weakened demand caused by tablets. Huberty also attributed the decline to considerable slowing in commercial and emerging market consumer demand for PCs.
In light of the revised estimates, Huberty lowered her revenue forecasts for HP, Dell and Seagate by one to two percent, while maintaining her estimates for Apple due to "strong Mac share gains and unit upside" in the first quarter of calendar 2011.
According to Huberty, Dell is exposed to "the greatest risk" due to decelerating commercial demand and margin risk from component costs.
Huberty lowered her consumer PC shipment estimate from 2 percent growth to a 1 percent decline and dropped commercial PC unit growth projections for 2011 from 13 percent to 5 percent.
Morgan Stanley's tablet forecast remained unchanged at 55 million units in 2011 and 85 million units in 2012. Huberty estimates a tablet cannibalization rate of 29 percent in 2011, noting that when PCs and tablets are considered together, total shipments are expected to grow by 13 percent in 2011, in-line with historical PC growth trends.
Also on Thursday, analyst Brian White of Ticonderoga Seurities warned of slowdown in the Electronics Manufacturing Services industry, as Printed Circuit Board book-to-bill ratios have flatlined at their lowest level in over two years. "Our stance remains that the PCB book-to-bill ratio is in a bottoming phase, and we do not expect a meaningful downtick from current levels; however, we also do not expect a meaningful rebound as in past recoveries," said White.
Microsoft's struggles are also seen as an indication of slowing PC sales. For the first time in recent memory, Apple beat Microsoft in both revenue and profit for the just finished quarter.
Though the Redmond, Wash., software giant's profits grew past Wall Street expectations year over year, analysts quickly seized on the news that sales of netbooks fell 40 percent last quarter and Windows revenue declined year over year for the second-straight quarter as indicators of slowing PC growth.
The dramatic drop in netbook sales may indicate that the iPad has substantially eaten into the profits of low-end laptops. Given that Apple is having trouble meeting demand for the iPad 2, analysts worry that sales of PCs, especially netbooks, will decline further as Apple ramps up production of the iPad.
Earlier this month, research group IDC released first quarter sales figures for the PC market that suggest the PC market dropped 10.7 percent while U.S. Mac sales grew 9.6 percent.
Netbook maker Acer appears to have been hit especially hard by the rise of the iPad. According to IDC, Acer PC shipments declined 42 percent year over year in the first quarter.
Gartner also sees U.S. PC sales declining, though the research group's estimate of a 6.1 percent contraction is less of a loss than IDC's 10.7 percent figure. Also of note, Gartner sees Apple's iPad continuing to dominate the tablet market through at least 2015.
Comments
Maybe someday... but it's just not quite ready yet - IMO.
...it'll never truly be able to serve completely as a 'Post-PC? device.
Don?t confuse post PC with sans PC.
Interesting report, and though the popularity of the iPad is certainly admirable, until iOS actually incorporates a user accessible file system, and absolutely zero dependance upon other computers in order to activate/sync/backup, etc it'll never truly be able to serve completely as a 'Post-PC' device.
Maybe someday... but it's just not quite ready yet - IMO.
Nice to see you back, my friend.
Don’t confuse post PC with sans PC.
Correct.
The iPad isn't kicking all PCs back to the curb. However, it's replacing the second, third, fourth PC.
It may only be capable of doing 75-85% of what a conventional PC does, but you may be using the media tablet for 75% of the time, until you need to get "serious work" done.
Cloud systems (Dropbox, Box.net, etc.) are already making the traditional PC hierarchical data storage paradigm irrelevant.
I hope the iPad 2 changes the face of consumer computing by making it much more simpler for consumers to manage a home computing device. Windows isn't going away any time soon, but I'm happy to see numbers decreasing even if slowly. If Apple is fortunate, the iPad halo effect might increase Mac desktop sales to some degree. Every little bit helps.
Correct.
The iPad isn't kicking all PCs back to the curb. However, it's replacing the second, third, fourth PC.
It may only be capable of doing 75-85% of what a conventional PC does, but you may be using the media tablet for 75% of the time, until you need to get "serious work" done.
Cloud systems (Dropbox, Box.net, etc.) are already making the traditional PC hierarchical data storage paradigm irrelevant.
Although I doubted it when he said it, steve jobs was dead right last year when speaking about netbooks. They do nothing well. They were just cheap laptops for people who basically read a little news, browsed through facebook and sent a couple of emails.
The iPad is cheap but while not capable of making toast, performs a vast majority of basic tasks even better than the pc. Plus it gives you ridiculous portability. This is why the netbook market is falling off the cliff vs expectations.
Interesting report, and though the popularity of the iPad is certainly admirable, until iOS actually incorporates a user accessible file system, and absolutely zero dependance upon other computers in order to activate/sync/backup, etc it'll never truly be able to serve completely as a 'Post-PC' device.
Maybe someday... but it's just not quite ready yet - IMO.
That is an interesting perspective. So why was iOS designed without such a file system and the ability to mount external volumes? I'm sure there must be a simple reason, but right now I can't think of it.
That is an interesting perspective. So why was iOS designed without such a file system and the ability to mount external volumes? I'm sure there must be a simple reason, but right now I can't think of it.
The filesystem is a terrible way to organize data. It was brilliant at the time it was created, considering the hardware, software, and educational constraints people faced at the time, but it is well beyond its prime now.
Even MS realizes this, which is why they made the huge push towards WinFS (which was more of a relational database, than a FS). Unfortunately, they could not achieve this lofty goal. Apple has tried it marginally on the Mac, through the APIs they have provided for media libraries, which 3rd parties can tap into, and handled the organization of the data through multiple apps (iphoto for photos, and itunes for music). Unfortunately, these are all handled in separate apps, and there is no single app to browse all the data in a browser form.
With iOS they have a fresh start. They can build exactly such a "file system" which would be a huge improvement over our folder based hierarchal filesystem.
That is an interesting perspective. So why was iOS designed without such a file system and the ability to mount external volumes? I'm sure there must be a simple reason, but right now I can't think of it.
Easy... file systems and their structures for many joe-consumers was just too much to deal with, and a concept they could still not grasp even when compared to a desk and file cabinet. By removing the filesystem schema from visibility to the user, Apple wanted to take a simpler approach so users don't necessarily have to deal with where their file was located, the OS simply took care of it for them.
It sounds perhaps like it's dumbing down to the user, and perhaps in some ways it is. Considering that most PC users fall into this category methink, it's no wonder why the iPad is such a hit with many folks that like having the PC-paradigm component taken out of the picture.
I'm sure this infuriates many tech-heads like DaHarder that feels they should have absolute control of every aspect of their system, even if it means removing the simplicity and introducing back into the field the very same problems that plagues the PC industry.
The "other" players literally had decades to get their act together and come up with something way before Apple got into the picture. They failed miserably, and are certainly scratching their heads wondering what happened.
The way the iPad simplified the many mundane tasks is refreshing for a change and the purists will kick and scream in trying to fight it. I think it was long overdue. Tech-heads, geeks, and nerds will always think that they know what's best for everyone else and no matter how many times the market proves them wrong (as Apple certainly has) they will be in denial and long for the days they can continue to design job-security into their jobs.
Don’t confuse post PC with sans PC.
post- (pōst)
1. after in time, later (than), following: postnatal, post-obit
2. after in space, behind: postcava
3. coming after in time, often as a rejection of or in reaction to: postmodernism
Therefore 'Post-PC' would mean coming after the time/replacement of the PC.
post- (pōst)
1. after in time, later (than), following: postnatal, post-obit
2. after in space, behind: postcava
3. coming after in time, often as a rejection of or in reaction to: postmodernism
Therefore 'Post-PC' would mean coming after the time of the PC i.e. 'After-PC'.
PC — rounded to 1980.
iPad — 2010
Which one came after the other in time? What one appeared later? Where does the definition state or even imply that previous one must end for the new one to come into existence? Hence, post PC, not sans PC.
edit: You changed your post to add the word “replacement” yet the definition you supply make no mention of a replacement being required. Either you’re not understanding English as well as you think you do or you’re purposely creating a fallacious argument.
For school and work macbook is still my go to device. Think more content creation over 2 typed pages or 10 slides. While it is technically still possible, heavy duty presentations and essays are still better on a laptop. Video editing alas is not supported on my first gen iPad, so I cant comment on that.
Interesting report, and though the popularity of the iPad is certainly admirable, until iOS actually incorporates a user accessible file system, and absolutely zero dependance upon other computers in order to activate/sync/backup, etc it'll never truly be able to serve completely as a 'Post-PC' device.
Maybe someday... but it's just not quite ready yet - IMO.
You're correct about the activate/sync/backup; the iPad in its current form is very much a PC-centric device.
I'm not sure what you mean by a "user accessible" file system though.
It's already "user accessible" isn't it? I save stuff on my iPad all the time... so if I'm not mistaken that is a user accessing the file system.
If you mean we need a hierarchical file system then I don't think that is the case at all. It needs to be shared between apps (kind of like the pictures library is already) and definitely needs to be cloud sync'd... but I don’t' see why going back to the old hierarchical file structure is a requirement of 'Post-PC'.
The iMac stores all of my media music/movies/tv shows and is used for world of Warcraft and my personal email.
The laptop is used for exchange email and remote support when I'm in the office.
All in the iPad gets way more usage throughout the day than either of my other systems.
I also have an iPhone 4 which is pretty much used just for calls, it's just so wee.
Apple needs a consumer-friendly Home Media Server.
A device that fuses AppleTV and a MacMini into one device, and can use extendable storage via Thunderbolt.
• a web-based configuration/access utility
• software app that allows any iDevice to be the input/sync/config HUD
• built in MobelMe or iCloud sync for items or folders with a check box (for example)
• due to the Thunderbolt and or MiniDV connect: HDMI, DVI, VGA(?), etc. for any "big screen" scenario
I could see such a device, lets call it iHub(?) going for say 300,- with a 128gb SD. Multi-TB storage from your vendor of choice, whether WD-Books, or even a NAS.
I think its also time to think of a different name for iTunes, and make it into an all encompassing database engine for any and all files.... or fork/split it into more efficient modules.
Individual file Metadata should be put to better use as well. Maybe something like Yep, Leap, etc. from IronicSoftware. No I don't work for them, and while I like their innovative approach towards finding things, their UIs could use some Apple-simplification.
...just dreamin'....
PS: this is in response to those calling for a hierarchical file system ON the iPad.
Interesting report, and though the popularity of the iPad is certainly admirable, until iOS actually incorporates a user accessible file system, and absolutely zero dependance upon other computers in order to activate/sync/backup, etc it'll never truly be able to serve completely as a 'Post-PC' device.
Maybe someday... but it's just not quite ready yet - IMO.
...i see your point but i think this is the new beginning of computing on a personal and corporate level thats gonna rely heavily on "the cloud" rather then the old-fashioned folder-based file system we are now used to. We should see it progress from here in steps.
Remember, these new iPads/iPhones and such are really nothing but glorified "dummy terminals" with beautiful LED displays .... and yes I own both of them (iPhone/iPads 1&2)
The shift WILL happen. it's only going BACK where we've already been with the mainframe and terminal combo.
You're correct about the activate/sync/backup; the iPad in its current form is very much a PC-centric device.
I'm not sure what you mean by a "user accessible" file system though.
It's already "user accessible" isn't it? I save stuff on my iPad all the time... so if I'm not mistaken that is a user accessing the file system.
If you mean we need a hierarchical file system then I don't think that is the case at all. It needs to be shared between apps (kind of like the pictures library is already) and definitely needs to be cloud sync'd... but I don’t' see why going back to the old hierarchical file structure is a requirement of 'Post-PC'.
I see so many posters are frustrated that the iPad series cannot completely replace their low battery life notebooks (which they would dearly love to do) ... so complain, complain. Apple has a beautiful AIR that is light weight and has all the hardware interfacing they clamor for. But like all notebooks they are not as EZ to hold in your hands and lounge with. Thus the iPad with its spectacular battery life.
I like the comments re: new file system is perhaps coming. I originally bought my notebook to backup my photo shoots. Paid more fot it 5 years ago than the iPad2 64GB that I now have. With the camera connect kit I have the same capability ... but now I also have 10 hours of usage. The screen is much better and it is faster.
I liked the idea of a MacMini as a back up. I use my Mini all the time. I borrowed the monitor from my big PC and the PC has not been turned on for over a year. I will likely turn it into a server. But then Microsoft wants a short fortune for the Server software.
I think Thunderbolt is going to revolutionize data transfer ... with all the Mac hardware being equipped with mini-display port (even the ipad with a 30 pin to MDP adapter) ... I wouldn't be surprised if iPad2 wasn't already equipped with the controller built into A5 ... we'll have to wait and see what iOS5 brings us.
One big issue with cloud computing and remote locker/storage ... is speed and cost ... the phone carriers are being just like the oil companies ... charging us a fortune ... that will continue to plague the concept. This is also why I bought the largest storage iPad2... local storage.
So saying iPad sales are cannibalizing PC sales would be kind of like saying frying pan sales are cannibalizing stove sales...
Did these analyst types ever consider that the Netbook craze of the past 3-4 years might have reached its saturation point, which would contribute to a quick decline in sales?
post- (pōst)
1. after in time, later (than), following: postnatal, post-obit
2. after in space, behind: postcava
3. coming after in time, often as a rejection of or in reaction to: postmodernism
Therefore 'Post-PC' would mean coming after the time/replacement of the PC.
Hmmm... I didn't see anything in that definition that said "replacement"... as in the cell phone... which could be considered a post land line device... it came after the land line... hasn't replaced it completely but most likely will in the future.