NPD: iPad cannibalization of PC market has slowed
A new report from market research firm NPD claims that the iPad's cannibalization of the PC market has slowed, as new purchasers of the device are less likely to have forgone a PC purchase than were early adopters.
NPD revealed its findings in a press release entitled "Consumer PC Market May Be Weak But It Isn't Because of the iPad" earlier this week. According to the group's Apple iPad Owner Study II report, 12 percent of iPad owners abandoned a PC purchase over the recent holiday season, compared to 14 percent of iPad users who had owned the device for six months or more.
It should be noted, however, that the group's survey does not appear to take into account the recent launch of the iPad 2. Though the online survey was completed in March of this year, many of the sales figures relate to the fourth quarter of 2010.
Cannibalization of netbooks, which were largely seen as having been hit the hardest by the growth in iPad sales, is down by 50 percent among recent iPad buyers, when compared to early adopters, the report noted. A separate study by NPD found the under $500 segment of the Windows consumer notebook market grew by 21 percent between September 2010 and March 2011, making it the largest segment of the consumer notebook market.
"The explosion of computer sales when Windows 7 launched, as well as the huge increase in netbook sales at that time, are much more to blame for weak consumer PC sales growth than the iPad," said NPD vice president of industry analysis Stephen Baker. "Overall it appears that the vast majority of iPad purchases to-date have been incremental to the consumer technology industry."
After U.S. PC sales contracted by 10.7 percent in the first quarter of 2011, analysts were quick to ascribe the decline to the 'iPad effect.' Last month, Morgan Stanley analyst Katy Huberty revised her 2011 PC shipment estimates downward with predictions of a tablet cannibalization rate of 29 percent in 2011.
NPD found that 75 percent of consumers who purchased an iPad "had no intentions of buying anything else," likely resulting in the addition of "billions of dollars to the industry's coffers" after declining Average Sales Prices had drained the market for years. The iPad has also driven accessory revenues, as 83 percent of iPad owners reported having purchased an accessory for their iPad.
According to the report, expanded distribution of the iPad in the fourth quarter of 2010 had little impact on sales shares, as Best Buy and Apple made up 75 percent of sales of the device during the period. On the other hand, carriers appeared to struggle, comprising just 3 percent of iPad sales due to "consumers' indifference to 3G connectivity."
"Consumers just do not see the utility in 3G connectivity," said Baker. "There's an added expense for the device and for the service, something a majority of iPad owners aren't willing to pay. Since most iPads rarely venture away from home the value of a 3G connection is likely to diminish, especially as other tablets enter the market and pricing starts to fall. When every penny counts, features that aren't core to the user becoming increasingly marginalized as manufacturers fight for every sale."
NPD's findings on distribution run counter to an earlier assertion by Baker that expanded distribution of the iPad 2 is key to Apple's success. In a post to the company's official blog in early March, Baker wrote that "Apple's distribution clearly needs to expand into more regional CE outlets and test more alternative distribution opportunities like department and home stores."
Last year, NPD revealed that early adopters of the iPad were more satisfied with the device than other customers.
NPD revealed its findings in a press release entitled "Consumer PC Market May Be Weak But It Isn't Because of the iPad" earlier this week. According to the group's Apple iPad Owner Study II report, 12 percent of iPad owners abandoned a PC purchase over the recent holiday season, compared to 14 percent of iPad users who had owned the device for six months or more.
It should be noted, however, that the group's survey does not appear to take into account the recent launch of the iPad 2. Though the online survey was completed in March of this year, many of the sales figures relate to the fourth quarter of 2010.
Cannibalization of netbooks, which were largely seen as having been hit the hardest by the growth in iPad sales, is down by 50 percent among recent iPad buyers, when compared to early adopters, the report noted. A separate study by NPD found the under $500 segment of the Windows consumer notebook market grew by 21 percent between September 2010 and March 2011, making it the largest segment of the consumer notebook market.
"The explosion of computer sales when Windows 7 launched, as well as the huge increase in netbook sales at that time, are much more to blame for weak consumer PC sales growth than the iPad," said NPD vice president of industry analysis Stephen Baker. "Overall it appears that the vast majority of iPad purchases to-date have been incremental to the consumer technology industry."
After U.S. PC sales contracted by 10.7 percent in the first quarter of 2011, analysts were quick to ascribe the decline to the 'iPad effect.' Last month, Morgan Stanley analyst Katy Huberty revised her 2011 PC shipment estimates downward with predictions of a tablet cannibalization rate of 29 percent in 2011.
NPD found that 75 percent of consumers who purchased an iPad "had no intentions of buying anything else," likely resulting in the addition of "billions of dollars to the industry's coffers" after declining Average Sales Prices had drained the market for years. The iPad has also driven accessory revenues, as 83 percent of iPad owners reported having purchased an accessory for their iPad.
According to the report, expanded distribution of the iPad in the fourth quarter of 2010 had little impact on sales shares, as Best Buy and Apple made up 75 percent of sales of the device during the period. On the other hand, carriers appeared to struggle, comprising just 3 percent of iPad sales due to "consumers' indifference to 3G connectivity."
"Consumers just do not see the utility in 3G connectivity," said Baker. "There's an added expense for the device and for the service, something a majority of iPad owners aren't willing to pay. Since most iPads rarely venture away from home the value of a 3G connection is likely to diminish, especially as other tablets enter the market and pricing starts to fall. When every penny counts, features that aren't core to the user becoming increasingly marginalized as manufacturers fight for every sale."
NPD's findings on distribution run counter to an earlier assertion by Baker that expanded distribution of the iPad 2 is key to Apple's success. In a post to the company's official blog in early March, Baker wrote that "Apple's distribution clearly needs to expand into more regional CE outlets and test more alternative distribution opportunities like department and home stores."
Last year, NPD revealed that early adopters of the iPad were more satisfied with the device than other customers.
Comments
Have at it, guys...
Here we go again with this word "cannibalize".
Have at it, guys...
+1
you beat me to it.
Here we go again with this word "cannibalize".
Have at it, guys...
Cannibalize is a perfectly fine word... It means to "cut into" or "reduce" as well as eating flesh.
"People stopped buying our last report which was no more than speculation, so we'll write a new one which is also pure speculation. We're sure to get a few suckers to pay up."
Cannibalize is a perfectly fine word... It means to "cut into" or "reduce" as well as eating flesh.
Let's see:
I'll cannibalize this steak. Then I'll cannibalize a banana. Then watch some TV, but not too much, because that's been cannibalizing my reading time.
No good. The article's use of the word is sloppy. iPads eat into PC sales; they don't "cannibalize" PC sales.
But that's all a tangent. Back to the story ?
Let's see:
I'll cannibalize this steak. Then I'll cannibalize a banana. Then watch some TV, but not too much, because that's been cannibalizing my reading time.
No good. The article's use of the word is sloppy. iPads eat into PC sales; they don't "cannibalize" PC sales.
But that's all a tangent. Back to the story ?
Control click the word. Cannibalize means to eat own own kind. Its not sloppy writing - just wrong.
Car purchases didn't canniablize horse and cart purchases; just replaced them.
Here we go again with this word "cannibalize".
Have at it, guys...
Ahh...
The old cannibal song:
"Last night, I passed you on the street..."
Cannibalize is a perfectly fine word... It means to "cut into" or "reduce" as well as eating flesh.
Just to help you out...
From Wiki:
"In marketing strategy, cannibalization refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer."
... by the same producer. Wiki even gives an example... Diet Coke/original Coke
Regarding actual cannibalization... the iPad must be a bit of a dilemma for Apple. Too many features and it could cannibalize Mac Book and iMac sales... too few features and it could grow stale and lose momentum. What to do, what to do...
It must always be remembered that iPad is only on its 2nd iteration and just over a year old. I'm sure that Steve J would just love to have a pen sized computer that generates a fully functional touch holographic image.
I can hardly wait to see what iPad 3 brings to the table.
Let's see:
I'll cannibalize this steak. Then I'll cannibalize a banana. Then watch some TV, but not too much, because that's been cannibalizing my reading time.
No good. The article's use of the word is sloppy. iPads eat into PC sales; they don't "cannibalize" PC sales.
But that's all a tangent. Back to the story ?
If you are stumbling over an industry appropriating a word and using it contrary to the word's strict definition, where were you guys at when the industry forced "run" on us years ago.
Oh how the world was nearly destroyed when all the home hobbyists finished typing in the "basic" program they found in 'Byte' magazine and then horrible of horribles typed the word "run" to make the program work.
Where were the legions of grammar police as they instructed their computers to:
--- snip from built-in Mac OSX dictionary ---
run |rən|
verb ( running ; past ran |ran|; past part. run )
1 [ intrans. ] move at a speed faster than a walk, never having both or all the feet on the ground at the same time : the dog ran across the road | she ran the last few yards, breathing heavily | he hasn't paid for his drinks?run and catch him.
? run as a sport or for exercise : I run every morning.
? (of an athlete or a racehorse) compete in a race : she ran in the 200 meters. | [ trans. ] Dave has run 42 marathons.
? [ trans. ] enter (a racehorse) for a race.
? Baseball (of a batter or base runner) attempt to advance to the next base.
? (of hounds) chase or hunt their quarry.
? (of a boat) sail directly before the wind, esp. in bad weather.
? (of a migratory fish) go upriver from the sea in order to spawn.
2 [ intrans. ] move about in a hurried and hectic way : I've spent the whole day running around after the kids.
? ( run to) have rapid recourse to (someone) for support or help : don't come running to me for a handout.
3 pass or cause to pass quickly or smoothly in a particular direction : [ intrans. ] the rumor ran through the pack of photographers | [ trans. ] Helen ran her fingers through her hair.
? move or cause to move somewhere forcefully or with a particular result : [ intrans. ] the tanker ran aground off the Aleutian Islands | [ trans. ] a woman ran a stroller into the back of my legs.
? [ trans. ] informal fail to stop at (a red traffic light).
? [ trans. ] navigate (rapids or a waterfall) in a boat.
? extend or cause to extend in a particular direction : [ intrans. ] cobbled streets run down to a tiny harbor | [ trans. ] he ran a wire under the carpet.
--- end of snip ---
Oh how the world was nearly destroyed when all the home hobbyists finished typing in the "basic" program they found in 'Byte' magazine and then horrible of horribles typed the word "run" to make the program work.
The Byte is a larger set of bits hence it's relevant and not inappropriate use of the English language. The BASIC language stood for Beginner's All-purpose Symbolic Instruction Code. You type run to send a set of commands through an interpreter which then processed those commands line by line. So it in this case it's perfect sense to use the word run.
Your example fail.
The Byte is a larger set of bits hence it's relevant and not inappropriate use of the English language. The BASIC language stood for Beginner's All-purpose Symbolic Instruction Code. You type run to send a set of commands through an interpreter which then processed those commands line by line. So it in this case it's perfect sense to use the word run.
Your example fail.
How did you incorrectly infer that I did not understand what a byte is vs. the proper name of a publication, or what the acronym "BASIC" means? I am sorry that went so far over your head. I was simply referring to a joyous time in my youth in the late 70's of my pouring over the pages of "Byte" magazine and spending hours faithfully typing in the lines of code on my TRS 80 model III, typing "run" followed by hours looking for my syntax errors where I had incorrectly typed the code.
My example perfectly illustrates how a word has been appropriated and has had the definition expanded.
Your own answer provides the proof:
"a set of commands through an interpreter which then processed those commands"
The word "process" or "execute" would have been a much better choice of a command name as they closely match the common use definition.
So it in this case it's perfect sense to use the word run
After 40 plus years of being used this way the word "run" might seem to you to make perfect sense, but still the dictionary's definition of "run" does not prove your point.
Difference can be easily explained by:
1 - noise (data is imprecise) +
2- Holiday season - buying gift for someone else so did not forego a computer
They never would have shelled out the bucks for a full computer (besides, she just got a new one) but an iPad made a great gift.
Plausable explanation in any case. We will see what the future brings.
Uh, didn't think so...
The iPad is aimed squarely at upper-middle class and above. I'd say most iPad owners also own Macs and iPods, and probably also iPhones. That's a segment that has done relatively okay in the economic downturn, while the kind of people who buy netbooks have been hit the worst. Hence, you might see a reduction in overall PC sales, while the iPad bucks the trend due to its newness, trendiness and target audience.
Again, I'd say 99.999% of iPad owners also own PCs, so saying that iPad sales are "cannibalizing" PCs is like saying the iPhone and iPod touch is doing the same...
Have to admit that for the 2nd time in receint memory, I have recommended an iPad to a friend that just surfs, checks emails, and does a few minor word processing tasks. at 499, it's a better PC than most PC's for some of my less technical friends.
If those were his only needs you could have recommended a NookColor. At half the price of an iPad, $249 it would have filled the needs just as well.
Just to help you out...
From Wiki:
"In marketing strategy, cannibalization refers to a reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer."
... by the same producer. Wiki even gives an example... Diet Coke/original Coke
Regarding actual cannibalization... the iPad must be a bit of a dilemma for Apple. Too many features and it could cannibalize Mac Book and iMac sales... too few features and it could grow stale and lose momentum. What to do, what to do...
It must always be remembered that iPad is only on its 2nd iteration and just over a year old. I'm sure that Steve J would just love to have a pen sized computer that generates a fully functional touch holographic image.
I can hardly wait to see what iPad 3 brings to the table.
I totally agree.
Regarding Apple on this, IMHO the very success Apple enjoys is in part due to willingness to risk cannibalization of their own products. They always anticipate this well in advance and adapt. I suspect as iPads evolve into ever more powerful products we will indeed see a change in other products to compensate and evolve too. As the most innovative company on the planet this is in their very DNA. On the other hand, companies that are simply churning out cheap copies / clones have no where to turn and avoid cannibalization. Hence their inertia keeps them heading towards the cliff.
Do all of these "cannibalization" reports take into account the fact that the American, British, Irish, Icelandic, Japanese, Portugese, Spanish and Greek economies are in the shitter right now?
Uh, didn't think so...
The iPad is aimed squarely at upper-middle class and above. I'd say most iPad owners also own Macs and iPods, and probably also iPhones. That's a segment that has done relatively okay in the economic downturn, while the kind of people who buy netbooks have been hit the worst. Hence, you might see a reduction in overall PC sales, while the iPad bucks the trend due to its newness, trendiness and target audience.
Again, I'd say 99.999% of iPad owners also own PCs, so saying that iPad sales are "cannibalizing" PCs is like saying the iPhone and iPod touch is doing the same...
Off topic kind of but ... Given your opening statement is a little suspect I'm not sure your extrapolations are too accurate either. Depending on which set of data you use, the entire Eurozone's GDP is rough the same as the USA's I don't think you can lump them in all together as being in the same 'shitter'. There are States within the US with larger economies than many of the countries you mention. Does this prove anything? ... No but nor does your above rambling.
If those were his only needs you could have recommended a NookColor. At half the price of an iPad, $249 it would have filled the needs just as well.
I know you were jesting ... but to have fun, I challenge the term 'just as well'. Price isn't everything, a pad of paper, pen and a calculator would be even cheaper!
However, include the enjoyment, simplicity, power, speed, cost of apps, intuitive futuristic interface the iPad is so superior to a NookColor (and as you infer) Usefulness, the decision has to be a no brainer.