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1/13/2011
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iPad Takes A Bite Out Of PC Sales

Apple's hot-selling tablet, along with Android-powered slates, is eating into Microsoft and Intel's dominance of the personal computing market.

Apple's iPad and other tablets are cannibalizing sales of Windows-based personal computers at a significant rate, according to industry data released Thursday.

Research group IDC said PC sales in the U.S. fell 4.8% year-over-year in the fourth quarter of 2010, to 20 million units, while Gartner researchers said sales declined 6.6%, to 19.1 million units. Analysts at both firms said the sudden popularity of tablets, such as Apple's iPad or devices powered by Google's Android operating system, is partly responsible for the decline.

"Media tablets, such as the iPad, as well as other consumer electronic devices, such as game consoles, all competed against PCs" during the key holiday shopping season, said Gartner analyst Mikako Kitagawa, in a statement.

IDC research director David Daoud agreed.

"Growth steadily slowed throughout 2010 as weakening demand and competition from the Apple iPad constrained PC shipments. In addition to relatively high market penetration and a 'good enough' computing experience with existing PCs, consumers are being more cautious with their purchases and competing devices have been vying for consumer dollars," said Daoud, in a statement.

The numbers are consistent with previous research that indicates tablets, which mostly run Apple iOS or Google Android on ARM processors, represent a serious threat to Microsoft and Intel's longstanding dominance of the personal computing market.

Market watchers at Goldman Sachs last month released a research note in which they predicted that tablets would cannibalize one in three PC sales this year. "If this is the case and our tablet forecast is anywhere near accurate, this would be the first time in three decades that a non-Wintel technology has made inroads into personal computing," wrote Goldman Sachs hardware analyst Bill Shope, in his note.

Microsoft announced at last week's Consumer Electronics Show that it plans to develop a version of Windows that's compatible with ARM's tablet chips, but said it won't happen until the release of Windows 8, which is more than a year away.

Microsoft shares were off 1.17%, to $28.21, in midday trading Thursday, while Apple shares were up .53%, to $346.26. Google shares were flat at $617.04.

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