ARE TABLET COMPUTERS, including iPads, personal computers?
Seems like an innocent question, but when it comes to projecting the performance of some of the world's major manufacturers of PCs, such as Hewlett-Packard, Acer, Dell, and Lenovo, it's an important one.
The scenario resembles the one that held sway after netbooks were introduced a couple of years ago. Analysts weren't quite sure whether to consider them full-blown notebook PCs or a separate category. The smaller, cheaper, stripped-down netbooks wreaked havoc with profit-margin projections for personal computers. But eventually, most everyone concluded that netbooks belonged in the personal-computer category.
Barclays Capital hardware analyst Ben Reitzes argues that "media tablets," as he calls the iPad and its existing and coming rivals, eventually will be put into the personal-computer column. Because these products tend to be hybrids part consumer-electronics gadget, part mobile-wireless device and part personal computer it could be argued that they should simply fall into one of those categories, say, mobile-wireless device or entertainment gadget.
But Reitzes says that consumers, who bought three million iPads in the first three months they were available, are buying the Apple tablets in lieu of other personal computers. "They will cannibalize the netbook and lower-end notebook numbers. You can see it in the data," Reitzes said last week in a telephone interview.
CONSEQUENTLY, REITZES HAS trimmed his personal-computer forecast for the remainder of this year and all of next year. The analyst now expects unit growth of about 19% in 2010, slightly down from his earlier projection of 21%. For 2011, he predicts unit sales will rise only 11%, down from his original projection of 14%. Reitzes, who thinks media-tablet sales, dominated by iPads, could hit 28 million units in 2011, contends iPad sales will come out of the hide of netbooks, which are mostly sold by the major PC makers. He predicts only 28 million netbooks will be shipped in 2011, about 26% below his original forecast of 38 million.
Reitzes estimates media tablets could cannibalize netbooks and lower-end notebook computers at a rate of about 30% to 40%. What's more, it should be noted, the analyst maintains that European PC sales might be slightly less robust than originally thought, owing to the euro zone's debt crisis, and he has factored that into his global PC forecast. Reitzes has yet to fold media-tablet data into his PC calculations. However, he says, "there's almost too much common sense not to cut your PC numbers. And if you're the PC makers, you just have to hope it isn't more."
In the iPad, Reitzes thinks Apple has "created another iPod, basically," figuring out how to create a market that it can dominate from scratch. The bad news for PC makers is that, unlike the iPod, a portable music device that had little bearing on their sales, the iPad can have a big impact on them. Other manufacturers will introduce media tablets this year. (Dell has already launched its Streak mobile-wireless device.) Nonetheless, Reitzes expects Apple to hold onto about a 70% market share over the long term.
It's enough to make one wonder why Apple dropped "computer" from its corporate name in the first place.