“Apple’s new iPad, a lightweight device that browses the Web and delivers media, may serve as an alternative to netbooks and pose a threat to PC makers,” Arik Hesseldahl reports for BusinessWeek.
MacDailyNews Take: Apple done more than just threaten PC makers, they’ve been taking away their best customers for a long time. Let’s face it, anyone with any sense and a bit of disposable income (meaning they actually – gasp – pay for software) buys a Mac. The PC box assemblers are left with the ignorant and/or the skinflints. Hence the vast discrepancy between Apple’s healthy margins and, for example, Dell’s. Mikey can barely keep his little leaky raft afloat by cramming somebody’s else’s upside-down and backwards fake Mac operating system into his cut-rate commodity boxes, much less do any real R&D like Apple. (See: NPD: Apple grabbed 91% share of premium computer market in June – July 23, 2009)
Hesseldahl continues, “While the iPad is not a full-fledged PC, it’s capable of handling many of the tasks consumers deem important… In a lightweight package, the iPad provides access to e-mail, the Internet, and digital media such as electronic books. The cheapest version of the iPad will sell for $499, compared with about $400 or less for many kinds of netbooks. ‘People who are looking at netbooks will also take a very serious look at the iPad,’ says Charles Smulders of market research firm Gartner.”
“That could spell trouble for computer makers such as Hewlett-Packard, Acer, and Dell, which relied on netbooks for growth in recent quarters as consumers and companies delayed purchases of more expensive machines,” Hesseldahl reports.
MacDailyNews Take: Relied on netbooks for unit sales growth, not profit growth. Big difference. For example, Dell has to generate roughly three times Apple’s revenue in order to arrive at the same end profit. There comes a point where you can’t make it up on volume.
Hesseldahl continues, “The number of PCs shipped rose 15.2% in the fourth quarter, compared with a decline of 0.4% a year earlier, according to research firm IDC. ‘A substantial portion’ of that growth came from the sales of netbooks, says IDC analyst David Daoud.”
MacDailyNews Take: Again, the number of PCs shipped means nothing if you’re not making, or worse losing, money on each unit. It’s smoke and mirrors. Pretend success. The PC box assemblers must have learned how to run their businesses in Washington DC.
Hesseldahl continues, “If there’s a silver lining in the iPad’s introduction, it’s that PC makers may need to boost their reliance on higher-priced devices, analysts say. Sales of netbooks can put pressure on average selling prices that if unchecked can lead to narrower margins. ‘The netbook market has created a race to zero margins,’ Forrester analyst James McQuivey says. ‘It has created a market where higher-priced, higher-margin notebooks have a harder time selling because consumers think they can get essentially the same experience in a netbook with a lower price.'”
MacDailyNews Take: Apple sold a record number of Macs last quarter. Like we said above, anyone with an ounce of sense and enough cash to be a desirable customer (someone who buys accessories, software, etc.), buys a Mac. This is only increasing as more and more people see their friends and family getting Macs and starting to enjoy their computers instead of pulling their hair out in frustration.
Hesseldahl continues, “So if netbook growth slows, PC vendors may need to refocus their efforts on selling higher-margin traditional notebooks, says David Daoud of IDC. ‘It will bring some needed sanity and new alternatives for the PC industry,’ Daoud says. ‘For so long, all they could do was drive down prices. Now they can think outside the box and bring out devices that will compete with Apple at prices they can live with.'”
MacDailyNews Take: They don’t have the money or the business model to “compete” with Apple. They’re stuck with a bunch of sticker price obsessed cheapskates and an OS provider who follows Apple poorly at a great distance. Apple owns the high end and, no, Dave, we’re not switching to Windows. Get real. Daoud is either delusional or has zero understanding of Apple’s massive vertical advantages if he thinks PC box assemblers can compete with Apple for higher-margin computers.
Hesseldahl continues, “Sumit Agnihotry, a vice-president at PC maker Acer, which sells several netbooks, says the smaller computers will probably keep their place in the PC industry. “The industry has proven that the netbook is an important category,” he says. “We think they’re here to stay.” Still he says Acer is working on a tablet product that will compete head-to-head with Apple’s iPad. It’s due to be announced in the second half of 2010.”
MacDailyNews Take: Keep dreaming, Sumit, you crazy bastage. What’s your OS going to be, Android sans Multi-Touch™ because Google knows Apple will sue them into the stone age if they try to infringe on Apple’s patent portfolio? Some other Linux? Windows, perhaps? Puleeze.
Hesseldahl continues, “Apple’s iPad may also make a dent in sales of existing tablet-style computers, a category that has been available for the better part of a decade but failed to catch on with consumers.”
MacDailyNews Take: And, why did they fail? Because they don’t have Apple’s OS. They don’t have Apple’s fanatical attention-to-detail. They don’t have Apple’s A4 processor. The don’t have Apple’s Multi-Touch™. They don’t have anything Apple doesn’t have or doesn’t want. Nice styluses, luddites.
Hesseldahl continues, “Only about 1.03 million tablets were sold in 2009, down from 1.3 million in 2008, according to Gartner.”
MacDailyNews Take: Apple will sell that many iPads in the first week, if not the first weekend.
Hesseldahl continues, “Apple says it expects to start shipping the iPad by the end of March. The company may sell 3 million to 4 million in the first 12 months it’s available, says Gene Munster, an analyst at Piper Jaffray. It may sell 8 million iPads in 2011, he says.”
MacDailyNews Take: Munster’s estimates are too low and will have to be revised upward if he wants his predictions to be more accurate.
Full article here.
MacDailyNews Take: The PC box assemblers are in for a very rough year. With the iPad starting at US$499, Apple is now squeezing them from not just the top down, but also from the bottom up. Apple’s iPad is going to hurt PC makers bigtime on their netbook-juiced, margin-free unit sales numbers and then their plight will be so obvious that even analysts will be able to see it.
[Thanks to MacDailyNews Reader “James W.” for the heads up.]
iPad = Netbook killer
MDN’s take is right on! Apple is taking the market by making products people want.
Once again it looks like Apple will be ‘padding’ their bottom line at the expense of the PeeCee makers.
With the tech that is in the iPad and the power required to do the things it does, I do not think the PC box guys can touch the $499 price. They would do it on razor thin margins, not on Apples 35+%.
That is without bringing up the whole OS thing and the integration. Just watch where iPad, MobileMe, Apple TV integration goes over the next two years.
The only company that has the money and the reach to catch up is Microsoft and they have proven themselves completely incapable.
Apples integration and platform growth is only going to accelerate, good luck for everyone else.
And as usual, Apple unveils a transcendent new device and the stock takes a hit.
Open the iCal app, because Enderle, Dvorak, et al, are busy this morning writing stories attacking the iPad, just the way they proclaimed the iPhone a flop, and the iPod, and OSX, and the iMac, etc.
Perhaps this was covered elsewhere, but is the iPad a standalone device? The tech specs say that it requires a computer, either Mac or PC.
Phhheeewww! That was a bit of work for you MDN! Nice job!
Will the iPad be added to Apple’s PC count? If they count the NetBooks then Apple’s iPad must be counted!
Now, here is the rub. If iPads are counted, why not the iPod touch and iPhones? Why not the AppleTV? Will ALL of Apple’s programable OS X devices be counted? A Windows PC connected to a scale or time clock is counted!
WHAT IS APPLE’S REAL PC MARKET SHARE!
The iPad is not a full replacement for a laptop or desktop computer (even with the physical keyboard option). A friend of mine is looking for a new computer. “What do you use your computer for?” I asked her. “Oh, you know- email, surfing the web, listening to music, watching videos,” she answered. So I thought “Wow, the iPad is made for her!”
But no. It pretty much ONLY works if you already have another computer you can sync with. How do you get your music and videos on to the iPad if you don’t have a DVD drive? And you can’t video chat in Skype because it has no built-in camera. Sadly, she’ll just get a netbook and suffer…
The iPad is “almost” there- but it’s not quite there yet…
Talk about disruptive technology- the damage is not even entirely apparent yet. Companies setting up rural internet? Ouch you’ll be able to do that wireless 3G. Internet Cafe? Ouch. Sorry I have 3G. Not to mention in car GPS units, and nautical GPS units. Garmin is a dead-man-walking because you know the next iPad will sport GPS. A 10 inch nautical GPS goes for >$1000. iNavex about $35-
It remains to be seen if this is a niche product of limited reception (like the AppleTV was) or if this is a real ground-breaker (like the iPod and iPhone were). There are a lot of people saying they like the effort, but are going to wait for 2.0 (same as the AppleTV, in fact, and I was one of those – wanted it, couldn’t make sense of it, still haven’t bought it, but still waiting).
There are some significant missed steps here. I’d have liked an RF port. You could have used it for home media center (or just TV) control – watch and control TV while surfing the web from your couch.
And if you could have connected it directly to an iPhone (cable or Bluetooth) to allow it to serve as an external display and keyboard for the iPhone (and/or a tethered device), this would have instantly sold 10 million easy.
Right now, it’s duplicating iPhone and laptop functionality with overlap, rather than replacement or enhancement. It doesn’t quite stand alone if you have a limited budget or limited tolerance of ‘yet another information media device to have to sync, configure, charge, accessorize, carry around, etc.
And I forgot to mention that there is yet another subscription to pay. For a lot of people, we are getting sick of all the different monthly charges that we are piling up (cable, phone, internet, cellphone, etc.)
These last few comments have been very enlightening. Regardless of its potential to threaten netbook makers, the iPad will not a be a “real”, stand-alone computer until it gets at least a USB port.
After MDN’s take not much left to say .
Stay tuned for MAcBook Pro upgrades and iPAd/Apple TV related upgrades too
MacMan:
What kind o MacMan is you ?
The iPad comes with built in iTunes and App Store and the is an – iPad Camera Connection Kit for importing photos.
iPad also has has built in Mail attachment support for the following document exchanges:
Viewable document types: .jpg, .tiff, .gif (images); .doc and .docx (Microsoft Word); .htm and .html (web pages); .key (Keynote); .numbers (Numbers); .pages (Pages); .pdf (Preview and Adobe Acrobat); .ppt and .pptx (Microsoft PowerPoint); .txt (text); .rtf (rich text format); .vcf (contact information); .xls and .xlsx (Microsoft Excel)…
There are other shared folder options available for “sharing” files between your MAc and iPad which you can research also…
Get with man.
MacMan:
What kind o MacMan is you ?
The iPad comes with built in iTunes and App Store and the is an – iPad Camera Connection Kit for importing photos.
iPad also has has built in Mail attachment support for the following document exchanges:
Viewable document types: .jpg, .tiff, .gif (images); .doc and .docx (Microsoft Word); .htm and .html (web pages); .key (Keynote); .numbers (Numbers); .pages (Pages); .pdf (Preview and Adobe Acrobat); .ppt and .pptx (Microsoft PowerPoint); .txt (text); .rtf (rich text format); .vcf (contact information); .xls and .xlsx (Microsoft Excel)…
There are other shared folder options available for “sharing” files between your Mac and iPad which you can research also…
App Solutions will address most of your concerns, probably by the time iPad is available.
Get with it man.
iPad is a killer for business users who are not forced to use Windows. Like Real Estate users and Financial agents. Locked into Windows Active X POS. If only Safari would work on these system, people can really start migrating to Mac.
“the iPad will not a be a “real”, stand-alone computer until it gets at least a USB port.”
“The iPad is “almost” there- but it’s not quite there yet…”
The iPad was never designed to replace the iPhone or a stand-alone computer. Jobs couldn’t have made it clearer–this is a 3rd category of product. It does MANY things better than the iPhone or a laptop, but not everything better.
@willychu:
OK, fine, I see your point. But why not add a 50-cent connector and make it soooo much more versatile?
This seems like having an off-road vehicle with the bad ass raised suspension, wheels and tires-and two wheel drive.
Sumit is right: netbooks are here to stay, profitable or not. PC assemblers will find some way to squeak a thin margin of profit from them, or the number of manufacturers will dwindle, but they’ll still be there.
They’ll still suck, but they’ll be there.
What the netbook makers don’t get is that those who buy a netbook are buying on price alone, but many are demanding full laptop performance. Ain’t gonna happen.
Apple struck the right chord with iPad – it’s designed to be an email, web browser, contact manager, and add in the App Store and you have the real killer. It’s not meant to be a full laptop, although it can do iWork and likely other more sophisticated apps will come out.
It will be very interesting to see what iPad apps are available in a year. Will it be mostly games or will sophisticated business apps be developed?
Netbooks cannot be killed by Apple. Cheapskates refuse to pay more money for anything. Netbooks can only be killed by PC manufacturers that force cheapskates into having no alternatives of a cheap computer.
It doesn’t matter if the netbook continues to survive. Little by little, the manufacturers are raising their prices by adding more features to them and the netbook will become notebooks nearly in size and price. They’ll have to do this to get higher margins.
I believe the iPad will be bought first by the usual Apple product users and then be bought by Windows switchers who have older Windows desktop computers. Those are the ones that just want something easy to use. The iPad might even sell to people that don’t have computers at all.
Still, I don’t think the iPad will kill netbook sales on its own. Netbooks do have their use, however poorly performing they are, they are definitely useful for basic internet use or just to be used like a cheap digital typewriter.
@willychu:
But the iPad COULD kill netbooks AND be a true alternative to even a laptop or desktop with only a few small additions. As I tried (but apparently failed) to say in my first post, I could ALMOST recommend the iPad to my friend as a full computer replacement.
Yes, it’s not a full computer with a full OS (no copying files via USB, no DVD player attachment), but it’s SO close to fulfilling the needs of 95% of the people using a computer today. Most people simply don’t do heavy graphics editing or video editing or run complex macros in Excel. Most people surf, email, write Word documents, listen to music and watch movies. That’s it. The iPad COULD replace most computers (not only netbooks) with just a few small additions. But my guess is that Apple doesn’t want to cannibalize their laptop market (at least not yet).
Too bad. Yes, they will sell millions, but just as the iPhone disposed of PDAs, MP3 players, digital cameras (and more) to elegantly combine them all into one device, the iPad could do the same for computers/phones. It COULD be an iMacPhone or even an iMacTouch if Apple so chose. Well, perhaps future iterations of the iPad will bring us closer to this dream. But for now, you will need 3 devices (iPhone, iPad and MacBook/iMac) and, while that may be very good for Apple (and their shareholders, it’s not so good for the millions who could easily make due with one device.
I want to take this moment to thank MDN for it’s environmentally sound elimination of black bold lettering in the Comment from: line.
I think the electrons saved should be able to light up at least one LCD screen at the palatial MDN estates.
It’s very clear that many people do not yet understand how Apple is positioning the iPad. Over the next few months it will become clearer and most of the negative comments that are posted today will become irrelevant.
The “need for USB” is old news. You are thinking about a traditional Mac/PC device that needs USB. Apple has proven with the iPhone and iPod that a USB connector is not needed to make a product successful. The iPad will share/connect via wireless (wifi/3G) instead of cabling.
The “need for another computer to sync” is also old news. While there are some nice-to-have reasons for syncing (backups, and downloading content from physical media — like DVD) that’s not Apple’s positioning. Clearly Apple wants consumers to download all content to the iPad from their stores (app, tunes, books). So for regular use there is no need for a Mac/PC to sync with.
Lest we forget that this is a new category for Apple between the iPhone/iPod and their desktop/laptops. So all this talk about replacing an existing device with the iPad is also not how Apple is positioning the iPad. I am sure some people can, and will, replace an existing Mac/PC with an iPad since it can be done if the main need for such a device is media consumption and not creating spreadsheets or presentations.
If the iPad had a usb port and a standalone OS it would cut into Apple’s own sales.
It simply wasnt designed to replace your computer – its a supplemental device.
If that isnt what you are looking for, then buy the $999 Macbook, an excellent machine.
I suppose there are people who wont buy a car because they have to fill it with gas, so they have a bicycle or they walk.
Thats a reasonable choice for some.