Collateral Damage
Thursday, April 1st, 2010
By Stephen Baker, Vice President, Industry Analysis
Reading the first set of reviews of the iPad I have been struck by one comment: That this is a notebook killer. Our recently completed iPad survey also revealed a considerable amount of overlap in consumers’ perception and usage intentions between the iPad and the notebook. Now, with the first reviews in, our initial assumption in our first iPad blog post appears more correct than ever - the iPad is aimed squarely at the heart of the notebook market. And while we mentioned in that post that the lack of certain features might prevent a direct cannibalization, the initial reviews indicate that, even without those features such as Flash support or a camera, this product can take over much of what your notebook does, and do it more elegantly and more comfortably.
If the reviewers’ impressions match the early adopters’ usage and satisfaction then Apple, and the industry as a whole, have some serious thinking to do. More than a year ago we warned about the insidious impact netbooks would likely have on notebook pricing, and were correct. Windows non-netbook notebook pricing has fallen considerably since that time and Apple too has been forced to respond to this demand for lower-priced notebooks and has seen its ASP fall by $170 in the past 12 months. Now comes the iPad and soon, other tablets, all focused on the core slice of the typical computer users experience and needs at prices far below, especially for Apple, what I am used to paying for a notebook. NPD’s iPad study found that more than 80 percent of all potential iPad users were focused on Internet and email, and that 90 percent of all computer users do these activities as core functions.
Why do I need a $1200 Macbook when the $500 iPad (or less than that someday) can do almost everything I need to do? It is a question that has not been answered fully by the PC community, and one not addressed by the reviewers in today’s wrap-up of iPad functionality. Yet on a business sense it is a key one. Can the iPad sell enough units to make up for both the trading down phenomenon that we might see as well as the price reductions Apple could be forced to take to keep Macbook sales humming? No one yet knows the answer but the questions should be raised and the implications thought out. If anyone can prevent collateral damage through clever marketing and polished selling it is Apple but the risk remains real.
Consumer Technology | Stephen Baker, Vice President, Industry Analysis | 
April 1, 2010 3:58 pm
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