Vulnerabilities / Threats // Insider Threats
7/9/2010
02:12 PM
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iPad, Tablet To Cannibalize Notebook, Netbook Sales

HP may emerge as the number two player behind Apple in the rapidly accelerating tablet computer market, according to Barclays Capital.

At least 15 million tablet computers will be purchased this year, a figure that will grow to 28 million in 2011, which will likely hurt sales of computers and notebooks, according to a report by Barclays Capital.

"We believe the initial phase of the tablet surge will cannibalize a portion of the notebook category, particularly a chunk of the netbook market and low-end notebook market," analyst Ben Reitzes said in a statement.

As a result of the "rapid acceleration" tablets are expected to have in the next two years and potential for slower growth in Europe and other regions, Barclays is cutting its PC forecast from 21% down to 19% this year Reitzes said.

Most of the tablet sales are expected to come from Apple's iPad, which costs about $660 in the United States, the report said, compared with an averaged notebook retail price of about $730. Aside from the phenomenal sales of the iPad, Apple is in the best position to remain the lead tablet vendor, the report said, because of the late entry of its competitors, notably the traditional Wintel partners like HP, Dell, Acer and Lenovo, the report said.

Barclays still anticipates that there will be solid growth for PCs -- both in the enterprise and consumer spaces, because it doesn't believe media tablets will ever take over as the sole computing device in the home long-term, the report stated. However, it also said the so-called cannibalization rate of the low-end notebook market will be in the 30% to 40% range. Given that the iPad carries a steep price point, Barclays said the average consumer can probably not afford to purchase a new laptop after buying the Apple device, and that could lengthen the lifespan of consumer notebooks. The firm now estimates that PC shipments will grow 11% as opposed to its previous forecast of 14% for 2011.

Reitzes also noted that while Dell's Streak tablet is not expected to make significant inroads, HP stands a chance of becoming the number two player behind Apple in the emerging tablet market. "HP had a choice to wait for Microsoft Windows Phone 7 or join the chorus of OEMs making phones for Google's Android,'' he wrote. "HP is opting to emulate Apple (albeit a bit late) and clearly sees synergies with Palm," which could propel tablet sales, along with sales of printers and smartphones. "We view Palm as an interesting bet by HP -- and one that should not be taken lightly given HP's scale and dominance at retail."

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