Netbooks vs. iPads -- can they coexist?

In today's mobile world, netbooks and iPads are trying to find their place. Will one push out the other?

The term "disruptive," a common buzzword in tech journalism, is typically used to describe something that jars people out of existing ways of doing things, and provides them with both new ways to do the old things and new things to do. Weather-beaten as the expression might be, it fits when talking about two products that took personal computing by storm over the past couple of years: the iPad and the netbook.

There has been a lot of talk about whether the iPad will take the place of the netbook -- or, in fact, whether it will eat into the market share for more mainstream desktop and laptop computers. Netbooks have already formed a market of their own alongside and apart from other PCs. But the iPad has a long way to go before it becomes a netbook killer -- if only because it has created a space all its own.

New tech for old

In the abstract, both netbooks and the iPad are nothing new -- there were small laptops and tablets available long before either of these more recent devices appeared on the market. But what made all the difference was the degree of fit and polish brought to the new products.

For example, current technology made it possible to offer far better communications capabilities than before. The ubiquity of high-speed wireless networking, via both current Wi-Fi and cellular networks, made it much easier for people to take those devices along with them and not be limited by what was actually on the hard drive.

In addition, for many users, desktop PCs are taking a back seat to high-end laptops. With each passing year, the performance gap between a "small" machine and a "big" machine shrinks that much more. And as raw power matters that much less, convenience and connectivity matter all the more.

Netbooks' rise and fall

When netbooks first appeared in late 2007 -- kicked off by the introduction of Asus' Eee PC 701 -- sales for the devices exploded by 872%, according to Gartner analyst Mikako Kitagawa. For a while, it looked like PC sales in general would shift heavily toward netbooks and that conventional PCs would lose out.

But things have tapered off since then, with netbooks or mini-laptops at 18.4% of total worldwide PC sales as of the first quarter of 2010. Shortly before the introduction of the iPad, Cliff Edwards of Bloomberg Businessweek wrote that the explosion in netbook sales in 2008 was fueled by the recession, but that consumers "were disappointed by flimsy keyboards, unfamiliar operating systems and a lack of programs that could be run on the machines." (This was most likely an allusion to many of the first-generation netbooks being Linux-powered.) "After a remarkable rise," he continued, "netbooks' popularity may already have peaked."

The iPad rises

There's no denying that the iPad has, more than anything else, the power to command attention. It's a trend-setter. Even before the iPad was released, speculation raged about what competing products might already be on the way.

In contrast to netbooks, the iPad seems likely to experience a long, steady growth in its popularity, in much the same way Apple's other flagship products have become market cornerstones that are nearly impossible to displace. The iPhone and iPod may not be the biggest sellers in their respective markets, but they command incredible brand loyalty. Fans of any one particular iteration of the device almost always buy the next one -- a trend that seems likely to continue when a new edition of the iPad is introduced.

Although initial sales were impressive, it's not yet clear how many non-Apple users will opt for the iPad. One possible point of reference is how many of Apple's earlier auxiliary products -- the iPhone and the iPod -- were used by people who were not Mac users. In NPD Group's 2009 Household Penetration Study, 36% of computer-owning households overall owned an iPod, which, given the general percentage of Macs to non-Mac computers, means that the odds are there that there are quite a few PC/Windows users with iPods.

In addition, according to Technology Business Research analyst Ezra Gottheil, there are approximately 5.6 times the number of non-Mac Apple devices in use than Macs -- even taking into consideration those Mac users who may own more than one non-Mac device, that probably includes a good number of PC users.

That said, those with an existing investment in a Windows PC and its software may not opt for the iPad when they can get a full-blown laptop for the same money or less. Or they may. As Gottheil puts it, "The choice of device depends more on the use than the user." In other words, it isn't always possible to predict what someone's usage of a secondary computer is going to be based on what they already use.

Whether or not existing Windows users will choose the iPad is about to get even more complicated by the impending introduction of tablets powered by Android and Windows 7. It's hard to say what impact they will have, especially since it isn't clear yet how they'll stack up against their biggest common competitor, but there's little doubt that the iPad set an example for them to follow, and possibly exceed.

Are iPads displacing netbooks?

Few analysts believe that the iPad will eat into netbook, laptop or desktop PC sales in a significant way. "The iPod Touch was probably the largest victim of iPad sales," says Gottheil. "Cannibalization of other devices, including smartphones and netbooks, will increase as the market shifts from early adopters, who tend to buy one of everything, to buyers looking to fill specific needs. As new lower-priced tablets enter the market, they will put a larger dent in the netbook market."

Longtime Windows analyst Paul Thurrott came to a similar conclusion in a blog entry in May of this year. He quoted a Wall Street Journal article that asserted that netbooks have actually had some of the wind knocked out of their sails in the past year or so by higher-end lightweight laptops, which are often used as both auxiliaries and replacements for desktop machines.

In short, changes in the netbook market cannot exclusively be attributed to the iPad. They're symptoms of the natural limitations of the market for those devices. Few people expected the original netbook growth spurt to be sustainable (and, sure enough, it wasn't). Likewise, no one expects the desktop/laptop PC market to be subsumed by either netbooks or tablets.

There remains the possibility that future (rather than present) netbook sales are at risk. If by the end of the year the iPad's sales hit 6 million (sales currently stand at 3 million-plus, and they're climbing), that would be roughly one-tenth of the projected sales for netbooks this year. It's again not clear that such sales would come at the expense of netbooks; even apart from users' buying habits, the netbook market remains an order of magnitude larger. But Apple is less concerned about cornering a whole market; it would much rather sell a hotly desired brand.

1 2 Page 1
Page 1 of 2
Shop Tech Products at Amazon