Apple iPad Seizing Netbook Market Share

Declining notebook prices overall and the success of Apple's tablet computer combined to drive down netbook sales in the second quarter, according to DisplaySearch.
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Apple's iPad in the second quarter stole a big chunk of market share from netbooks, which were also hurt by falling prices of mainstream notebooks, a research firm said Thursday.

Without the iPad tablet, which was released in early April, shipments of the mini-notebooks and other tablet computers combined would have been down 14% from the first quarter of this year and 13% year over year, DisplaySearch said in its quarterly report on the laptop market. With the iPad, overall shipments of netbooks and tablets were down only 4% quarter to quarter, but up 29% year over year.

DisplaySearch defines a netbook, which the research firm calls a mini-notebook, as a clamshell-style computer with a display size ranging from 7 to 10.2 inches. While tablets other than the iPad were thrown into the mix, they represent a very small portion of the market. Apple on the other hand sold 3.3 million iPads from April through June.

The impact of the iPad would have been greater if Apple was able to fill demand at a faster clip, DisplaySearch said. Shipment times for the device were listed as seven to 10 business days for all of the second quarter, and shipments to Japan and China were just beginning at the end of the period.

Complementing the iPad effect on the netbook market were falling prices for mainstream laptops. People who wanted a thin, lightweight device chose the iPad, while those in need of more functionality chose larger notebooks, oftentimes the standard model with a 15.6-inch screen, DisplaySearch said.

Netbooks, which typically sell for less than $500, were first introduced in 2007 and were among the fastest growing PC categories over the next two years, particularly during the economic recession. "The first quarter of 2010 signaled the birth of the tablet PC, and possibly by extension, the beginning of the end of the mini-note market, especially in developed regions," John F. Jacobs, director of notebook market research at DisplaySearch, said in a statement.

What's likely to eclipse the mini-notebook market is the sheer number of tablets expected to hit the market. More than 50 companies, besides Apple, have tablets in varying stages from development to mass production.

In addition, where netbooks are mostly low-cost, basic laptops running the traditional Windows/Intel platform, the majority of tablets will offer newly developed apps from online stores, along with next-generation Intel Atom or ARM-based CPUs paired with Google's Android operating system or, in the case of Hewlett-Packard, WebOS. Apple uses its own iOS.

"Although Apple now holds the vast majority of tablet PC market share, the plethora of other brands that have, or will soon be launching, their own tablets are sure to capitalize on what at this point appears to be widespread consumer demand for very thin and very light devices with exceptional battery life and a primary focus on portability and content consumption," Jacobs said.

DisplaySearch predicted in June that the iPad would grab market share from netbooks. The latest report quantified the forecast.


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