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Summary:

The iPad may be partially responsible for the slow demise of netbook sales, according to a Morgan Stanley market analyst. In a report for Morgan Stanley clients, the impact of the iPad is causally linked to the rapid decline of the netbook sales growth curve.

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The iPad may be partially or even primarily responsible for the slow demise of netbook sales, according to Morgan Stanley market (via Fortune) analyst Katy Huberty. In a report released Thursday for Morgan Stanley clients, the impact of the iPad is causally linked to the rapid decline of the netbook sales growth curve.

Netbook sales apparently peaked last summer, when its growth rate reached an impressive 641 percent increase from the  same time the previous year. Since then, it’s been trending downward, though punctuated with some comebacks and maintaining impressive growth overall. Then in January of 2010, things start to go downhill fast, with a dropoff from 68 percent growth that month to only 5 percent in April of 2010.

So what’s the iPad have to do with anything? Apple’s category-spanning device was announced in January of 2010, you may recall, and it was released the following April. Considering that that period perfectly intersects with the netbook’s most significant growth drop-off to date, it’s hard not to see the two as causally related. Especially when Apple moved 1 million iPad units sometime in there, counting pre-orders and sales of the device since its release.

This is only anecdotal, but I’ve seen a number of friends put their Dell hackintoshes up for sale following the iPad announcement and release, in most cases explicitly because they don’t need their little Frankenstein monster anymore now that Apple’s provided its own affordable ultraportable. As a side note, it’s probably a good time to grab a cheap, lightly used hackintosh Mini 9 or 10v if you’re in the market.

It isn’t just the netbook’s sales growth slump that points towards the iPad’s success over those devices, either. In a survey conducted in March, 44 percent of those polled claimed that they were buying the iPad instead of a netbook or notebook PC. And if that same survey is any indication, the iPod touch is next.

41 percent of those polled said they were planning on buying an iPad instead of Apple’s marquee media player device. It can’t really be a surprise to the company, since the price gap between the two isn’t really that significant and you get so much more (screen real estate, connectivity) for your buck with the iPad. My own theory is that Apple intended this, and will try to swing the pendulum back by introducing an iPod touch with camera before doing the same six months later with the iPad.

Will the iPad kill the netbook? I hope so, but I think that device was doomed regardless of whether or not an iPad-type device came around to finish it off. Will it kill the iPod touch? That’s another story altogether, and one that I think will depend heavily on how much further Apple can push the iPhone in terms of market saturation. In theory, I can see the iPad and iPhone squeezing out the iPod touch as the markets of those two more versatile devices expand. What do you think?

Related GigaOM Pro Research: The Future of Netbooks!

  1. The iPad may slow iPod Touch sales, but I think it’s unlikely to kill the line completely. The Touch has the considerable advantage of being (a) iPhone-sized, which makes it much more mobile than the iPad (although I’d argue that the latter is a more mobile device than a netbook, which is merely portable), and (b) not a phone, which gives it appeal for users who don’t want a smartphone (or are using another smartphone platform already).

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  2. I’m with Scott. I think the touch will have a place in the market for a while. While the iPad may take some touch sales, the touch has taken (and should continue to) take traditional iPod sales.

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  3. I think people still want to go for the iPod Touch. First of all it’s similar to the iPhone (duh!), which is very good, because people who buy the iPod Touch, either can’t afford the iPhone or simply just don’t care for one.

    The iPad seems to be a great thing, but keep this in mind: it’s huge, both for good and for bad.

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    1. I second what Scott, Luke and Rockingrick said. The little cute iPod touch isn’t disappearing anytime soon.

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  4. Love my netbook and my iPad. I couldn’t imagine decent productivity without both.

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  5. Howie Isaacks Thursday, May 6, 2010

    I think they’re drawing conclusions a bit too quickly. Aren’t analysts ALWAYS wrong? It seems that every quarter’s results are “unexpected”. These people don’t know anything yet. When they finally do, we’ll have moved onto the next big news.

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    1. Eh we’re talking about different things here.

      Analysts are indeed frequently wrong about predictions, but this isn’t about a prediction. This is looking at existing data and making a guess as to what caused the drop…in this case, these people think it’s the iPad.

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    2. i don’t think you’ve been tracking the netbook genre since its inception with the original Asus EEEpc.

      the idea behind them is great but actually using of them can get very frustrating if your expecting a nearly full pc/laptop experience. basically they started out as cheap, small laptops that did basic web and thats about all and have now expanded to trying to be ultraportable laptops for under $300.

      i honestly can’t recommend a netbook to anyone anymore. i got one just to keep up with the tech trends and for my blogging (i blogged about it and wrote up some docs) but now own ZERO netbooks. if people ask me for my advice, i either tell them to:

      if you can afford it, get a MBP13 or a Lenovo, best laptops for the size imo.
      otherwise find a deal on a 15″ windows7 laptop in the $400-$600 range if you only need web and office/school type work
      if portability and windows are required, you have to spend to get it.

      The general rule of thumb is that you can pick 2 of the 3 but can’t get all 3; fast, cheap, small. pick wisely! :)

      just my .02

      oh yea, and like Josh stated, this article was based more on data, not opinions.

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  6. MacBook Air is the Apple Netbook, End of Story.

    Or not. The facts change as Apple does or does not make products.

    Nobody should be surprised that netbook sales growth is leveling off — you can get a regular thin-and-light Windows 7 notebook today at yesteryear’s netbook prices.

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  7. My personal experience says no. I work with hundreds of young people who love their iPod Touch. Many of them willing to carry a cel phone and Touch. The Touch is the right size. As a dad I have a teen who won’t own anything for music other than his Touch. My preK daughters use the Touch for preschool learning games. It’s perfect on long drives. The iPod Touch may be affected by iPad sales but the demand for this kind of device will be around for a long time.

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  8. Mike Piscitelli Thursday, May 6, 2010

    Hi!

    I like your ipad site!

    I wanted to share this item that is on Amazon.com right now. Its a Leather iPad case that comes with a free $5 Best Buy Gift Card.

    http://www.amazon.com/Ipad-Leather-Case-Folio-Stand/dp/B003KKT9PO/ref=sr_1_5?ie=UTF8&s=electronics&qid=1273190763&sr=8-5

    Best,

    Mike

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  9. Well, theres nothing surprising that iPad has to some extent reduced the other digital products purchases. But I think it cannot be looked upon as a tendency, ’cause all this situation is due to hype and marketing. People who bought it will soon understand that this gadget still cannot replace all other devices for them, so probably in some time they will decide to buy something else.

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  10. This is total spin, probably paid for by Apple. It is also well documented that sales of larger laptops/notebooks with Windows 7 included has also contributed to slowing netbook sales, now with mainly 2 generation old OS on them:

    http://community.winsupersite.com/blogs/paul/archive/2010/05/06/sorry-but-the-ipad-is-not-killing-netbook-sales.aspx

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