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Summary:

One line buried in a Wall Street Journal story is making the rounds as the latest evidence of Apple (NSDQ: AAPL) iPad power: Best Buy CEO Br…

Counter at BestBuy. I am already dreaming...
photo: Rafat Ali

One line buried in a Wall Street Journal story is making the rounds as the latest evidence of Apple (NSDQ: AAPL) iPad power: Best Buy CEO Brian Dunn “said internal estimates showed that the iPad had cannibalized sales from laptop PCs by as much as 50 percent.” By the time I first saw the news nugget being tweeted, that had morphed into “by 50 percent” — and conclusion jumping was in Olympic form.

The instant assumption: Buyers are choosing iPads over laptops. The truth: Yes, no and maybe. From an anecdotal basis as someone often asked to help others with tech spending decisions, people who need computing power and features that aren’t on the iPad go with laptops (Mac or PC), while the iPad is an answer for people who own a computer for the heavy lifting and are attracted to the sleek, light device with its instant-on apps. Then there are those who don’t want a computer in the full-blown sense but like the cross between a net appliance, DVD player and e-reader. (A young niece turned down the possibility of an iPad for the even more portable iPod Touch.) In most cases, money plays a role.

As for Best Buy, it’s not at all clear what this means on a large scale. Until Sept.26, when it expands chain wide, Best Buy has been selling iPads online for in-store pickup and in 673 of its stores. Supplies have been limited. Dunn told analysts on an earnings call earlier this week that “some of the constrained availability of iPad early on in the quarter definitely impacted our share.” That was in response to an analyst who asked about Best Buy’s chances to improve market share “as we think about strong sales of iPad continuing and perhaps cannibalizing the overall PC category.”

We don’t know store-to-store comps or overall numbers. We don’t know when iPad sales will hit a wall while people wait for the next iteration or if the iOS 4.2 update due in November will be a spark. We do know that Best Buy is counting on sales of tablets, led by iPad, and e-readers (Amazon (NSDQ: AMZN) Kindle, Barnes & Noble (NYSE: BKS) Nook, Sony) to help second-half sales, along with 3D and IPTV. We also know there isn’t anything new and incredibly exciting to sell when it come to laptops. (If you need proof, try a Best Buy store. The last times I’ve checked, the bulk of the PCs were either netbooks or serviceable 15″ screens and up.)

Will tablets erode laptop sales? Yes, but this iPad isn’t the one that will replace laptops.

Update: I’m not trying to throw any doubt on the numbers from Best Buy or its CEO. My aim was at the conclusion jumping based on that comment. There are other factors in play here — changes in consumer buying patterns, overall, whether people pushed up purchases for Windows 7, whether people buying iPads as laptop replacements are sticking with that.

On the quantitative side, this morning Philip Elmer-DeWitt posted a chart from Morgan Stanley’s Katy Huberty, drawing on data from NPD that showed a 4 percent drop in notebook sales in August — the first time it’s gone negative — and that other data shows the same for the first week in September. That’s graphed against the iPad launch announcement and the actual launch. She suggests tablet cannibalization as one reason.

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  1. Interesting piece with an odd sign-off – seeing as it already has (eroded laptop sales)

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  2. I don’t understand how the conclusion is supported by the rest of the article. Best Buy says that “as much as 50%” of sales are cannibalized, presumably based on real data, then the author gives some anecdotes and concludes this isn’t true? This is some pretty shoddy reporting.

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  3. “…Will tablets erode laptop sales? Yes, but this iPad isn’t the one.”

    Well that’s a daft comment. Assuming erode can be used in this sense, then my front wall is eroded, but there’s still 99.9% of the stone left.

    The iPad has eroded laptop sales if it’s consumed any noticeable portion.

    If the chap from BestBuy is saying up to 50%, and component watchers are saying netbooks and low end laptops are down, and the iPad is selling well, then it’s a no brained that there has been some erosion.

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  4. The iPad is obviously cannibalizing laptop and tablet sales and for good reason. As a purchaser of five iPads so far, the iPad is simply more convenient to travel with, which of course is the number one reason people used to purchase a laptop.

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  5. I don’t understand the bone being picked. I guess your “anecdotal basis” for trying to refute a factual statement by Best Buy’s CEO says it all. Is this news or opinion or bloviation?

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  6. Some laptops especially HP and Sony were marketed as consumer electronics and we need to keep in mind that Best Buy is a consumer electronics retailer. Of course, iPad will erode these types of laptops in these types of stores.

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  7. What kind of report will let him come to this kind of conclusion. Laptop sales are slow as Windows 7 sales have dried up and iPad sales are up as its a new form of device that a lot of people are buying mainly as a secondary device to a laptop . None of my friends have put off their laptop purchase because of iPad.

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  8. Re the update – well okay if you’re really that keen on mental gymnastics – go for it. More logically ne can see that the decline in netbook sales is so clearly linked to the launch of the iPad and a surge in interest in tablet computing as a result.

    It’s a bit like people determined to deny the possibility that the iPhone has had an impact on Nokias profits even though the timelines coincide almost exactly

    Mental gymnastics can be fun but often what seems obvious is what’s really happening

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  9. iPad would disrupt the PC market.—- absolutely!
    Just read the numbers, ‘internal estimates showed that the iPad had cannibalized sales from laptop PCs by as much as 50%.” 50%!!
    I love my iPad. It has almost completely replaced my personal computer. For the things I do… It is perfect! Much nicer than any CPU I have ever owned. All my other computers would do a lot of things I would never use it for, and do it painfully in the process (slow, buggy, etc.). When you get down to what you do most on you personal computer… the iPad does almost all of the things an average user needs, and with a much much nicer U/I. Easy of use, fast, and efficient. The other computer manufacturers could learn a thing or two from this, but even if they do… they will probably screw-up the one they come out with by adding all the crap back in again. Ugggggg!!!!

    I am sticking with my iPad. I think other will do the same once they try it and realize it is the perfect personal computer :-)
    And some of my collections: http://www.ifunia.com/ipad-column/index.html
    http://www.ipadhelpguide.net/
    make the cool device more fun.

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  10. I’d be interested in seeing cannibalization from Apple laptop sales…

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