Will Tablet PCs Eat Up The Market?

It has been reported lately that tablet PCs, namely Apple iPads, are having a significant impact on notebooks and netbooks.  Are the tablet PCs cannibalizing netbooks and low-cost notebooks?

It should be noted that what is cited is consumer sales in the US.  Let us keep in mind that the US represents less than half of the world wide PC market and that consumer is about half of the US market.  Late last year it was anticipated that PC sales would be driven mainly by corporate sales in 2010.  Many companies had delayed PC upgrades in 2009 due to economic conditions.

We heard the same thing about netbooks cannibalizing notebooks when they first emerged.  Netbooks did cannibalize some of the low end of the notebook market, but it also established a new market segment which added new users to the total computing market.
Semico’s forecast for netbooks from a year ago already showed that netbook growth would slow down in 2010 (even before the iPad emerged) just because it would become mainstream very quickly.

Total iPad shipments are 3.27 million at the end of 2Q 2010.  Assuming additional growth each quarter and the introduction of competitors in 4Q 2010, the tablet PC is expected to reach 12 million units in 2010, Semico's forecast.  Netbooks will reach 38.5 million, so tablet PCs will be less than 1/3 the size of netbooks.  Notebooks are projected to hit 175 million in 2010.

Tablet PCs hit different price points and offer different functionality than netbooks.  In general netbooks are well under $500.  The Apple iPad ranges from $499 to $829.

There may be some cases of PC vendors who were expecting stronger sales in 2010.  This year is a recovery from weak sales in 2009, especially in 1H 2009.  Some PC vendors may have had unrealistic expectations for 2010.

Semico tracks the MPU shipments in the SIA/WSTS Blue Book.  The iPad A4 CPU is considered internal consumption by Apple and is not reported to SIA.  Thus, iPad shipments are not reflected in the monthly MPU data.  The computing market represents more than 80% of the Blue Book MPU shipments.  The monthly unit data has been tracking what Semico is expecting for our computing forecast for servers, workstations, desktop, notebooks and netbooks.  Semico forecasts the total MPU market including the Apple MPU’s. 

Semico is preparing a report on the MPU market and computing markets.  It will be ready by the end of September.

Tony Massimini
Chief of Technology