Analysts: Apple’s iPad threatens PC box assemblers

“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.]