Yes, tablets are eating PCs’ lunch

lots of tablets

lots of tablets

Updated. Wednesday, UBS sent a research note that increases its forecast for the number of tablets sold this year, while simultaneously knocking down its expectations for the PC industry’s growth. The opposite trajectories of PC and tablets indicate consumers are, in certain cases choosing to opt for a tablet instead of a new laptop. And that’s not great news for PC makers, since right now not many are buying their tablets either.

Update: For the tablet forecast, UBS says it was driven to update that number based on Apple’s rather stunning revelation last week that it sold more than 20 million 9 million iPads between April and June this year. The research group also manages to sneak in a little “I-told-you-so” regarding the overall growth of the tablet market while it’s at it:

We are raising our 2011 tablet forecast to 60 million from 55 million and 2012 to 90 million from 80 million. The vast majority of our forecast change is a result of our upward revision to our Apple iPad forecast (37.9 million from 32.3 million in 2011 & 53 million from 46.9 million in 2012), implying ~63% share of the market. We believe consensus is near our once-controversial 55mn forecast but is likely to rise.

So why are people flocking to touchscreen tablets? UBS says, “We believe the tablet ramp is being driven by utility (a number of use cases for consumer as well as enterprise that help to drive demand) and broader distribution.”

Essentially, people are buying tablets because they are finding lots of different ways to use them. Of course, a tablet is not the perfect replacement for a laptop, but their skyrocketing popularity — all while PC sales are barely growing at all — makes it clear at least some people seem to be OK with less-than-full-PC functionality for basic stuff, like browsing the Web, tapping out a few e-mails, watching videos, checking Facebook and shopping online.

The UBS note added that the group’s “anecdotal retail checks indicate generally soft sell-through of non-iPad tablets,” which is a really nice way of saying people aren’t exactly lining up to buy Android tablets, BlackBerry PlayBooks or HP TouchPads. After Apple’s 37.9 million iPads UBS is expecting them to sell this year, it sees Samsung selling 5 million, Asus 2.2 million, RIM 1.9 million, Motorola 1.8 million and Acer 1.4 million.

Meanwhile in the PC industry, expectations are low. Previously UBS had expected year-over-year growth of 6.3 percent. Now, it’s estimating growth of just 4.5 percent. The report doesn’t explicitly draw a connection between the growth of tablets and decline of PCs, but plenty of others have. Research firm Gartner said earlier this year that the iPad would “dramatically” cut into PC sales .

Even Apple COO Tim Cook, who clearly has a dog in both fights, admitted to the iPad cutting into Mac sales during the company’s recent earnings report. Apple believes “some customers chose to purchase an iPad instead of a new Mac during the quarter.” He added, “But we also believe that even more customers purchased an iPad over a Windows PC. There’s a lot more of the PC business to cannibalize than the Mac.”


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