iPads, Tablets Not Causing PC Sales Decline

Apple iPad 2 3G Teardown

With sales of PCs declining, many have been blaming the iPad and other tablets as the reason for the PCs regression. Not so, said the NPD Group's Apple iPad Owner Study II report.

Lagging PC sales have more to do with the launch of Windows 7--and the subsequent jump in PC sales it inspired--rather than increasing sales of the iPad, an NPD analyst said in the report.

"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 Stephen Baker, VP of industry analysis at NPD. "Overall it appears that the vast majority of iPad purchases to date have been incremental to the consumer technology industry."

The report found that 14% of new iPad owners (six months or less) decided to purchase an iPad in place of a PC. Over the past holiday season that number dropped to 12%. Yet "cannibalization" of netbooks is down by 50% among recent iPad owners, compared to the early iPad adopters, the report said.

This is contrary to reports in April from research firms Gartner and IDC, who both said the reason for falling PC sales was due to the rising popularity of tablet computers. Gartner said global PC sales declined 1.1% year over year in the first quarter of 2011, while IDC, which used a different methodology, saw a falloff of 3.2%.

"Weak demand for consumer PCs was the main inhibitor of growth," said Mikako Kitigawa, principal analyst at Gartner, in a statement. "Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers. Instead, consumers turned their attention to media tablets and other consumer electronics."

HP still leads the worldwide PC market with about 18% market share, but saw shipments decline 2.8% in the first quarter of 2011 according to IDC, or 3.4% according to Gartner. Dell, whose share stands at about 12%, saw a drop off of 1.8% or 2.2%, according to IDC and Gartner, respectively.

From October 2010 to March 2011, the under-$500 segment of the Windows consumer notebook market grew by 21% to become the largest segment of the consumer notebook market. Yet the $500-and-up PC market declined significantly, the NPD study noted.

"The conventional wisdom that says tablet sales are eating into low-priced notebooks is most assuredly incorrect," Baker said. "The over-$500 Windows consumer notebooks market is where PC sales have been impacted the most, with a 25% decline from October 2010 to March 2011."

The iPad has most likely helped boost a tech sector hit with declining prices and sales, the report noted. About 83% of people that purchased an iPad bought an accessory, with about 50% buying cases and 60% purchasing screen protectors that weren't Apple products.

"Best Buy and Apple sold 3/4 of all devices during the holiday period," the report noted. "Comparatively speaking, the carrier stores had much weaker results, accounting for just 3% of sales."