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.