NPD Group Blog » Apple Reinvents The Netbook

Apple Reinvents The Netbook

Wednesday, January 27th, 2010
By Stephen Baker, Vice President, Industry Analysis

Apple just finished introducing their latest product; the iPad. Small, slick, typically great looking, and well priced at $499 it is an interesting, but ultimately not breakthrough device. In fact it reminds one very much of a netbook. A companion device to your main computer (or iPod in this case) that allows you to have a more focused web experience and a more media-centric device at a lower price, which is much of what the netbook is evolving towards.

Apple kept it simple in the hardware, likely to prevent the sort of cannibalization and price compression that has occurred in the PC market since the advent of the netbook. No camera and no voice forces the experience towards plain vanilla media consumption and allows them to leverage the iTunes store to deliver the content to make this product go. It also seriously separates the iPad experience from the Mac one and hopefully prevents trading down, or more insidiously, price compression. However, with no changes yet to the purchase model of TV shows or movies through the iTunes store it doesn’t appear that this will fundamentally alter consumers’ in-home media consumption. One area that might show some promise is gaming, which has proven to be wildly popular on the iPhone and the iPod Touch and showed very well during the demo, perhaps in large part due to the Apple designed PA Semi processor that is inside. One other spot of good news is that this product will be available to the entire Apple channel, including 3rd party retailers, presumably like Best Buy or even Walmart. A $499 Apple notebook-like product could considerably add to the volume potential and installed base of Apple devices when distributed that broadly.

In conclusion, this should signal the death of the whole slate/pad/tablet concept, and now Apple has put a stake in the heart of that concept. However at $499, with its media directed functionality, it could make a play for the companion computing market the PC world discovered in 2009 with the netbook. And with unit volumes for notebooks and netbooks up 60 percent during the holiday season according to NPD’s Retail Tracking Service, there is a huge unit opportunity for Apple that they have now chosen to attack.

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