NPD: Don’t Blame Declining PC Sales on iPad

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Sales of PCs may be “floundering,” but don’t blame it on the iPad, according to market research firm NPD. The company issued a report on Tuesday that said only a small percentage of iPad owners forwent a PC purchase, meaning that the effect on the much larger PC market was minimal. NPD said that its research shows that iPad sales provided billions of dollars in incremental revenue to the industry — that is, above and beyond what sales would have been otherwise.

“The explosion of computer sales when Windows 7 launched, as well as the huge increase in netbook sales at that time, are much more to blame for weak consumer PC sales growth than the iPad,” Stephen Baker, vice president of industry analysis at NPD, said in a statement. “Overall it appears that the vast majority of iPad purchases to-date have been incremental to the consumer technology industry.”

This is in direct contradiction to reports from competing firms who reported earlier this year that the media tablet (as defined by the iPad) was specifically responsible for declining PC sales.

In April, IDC issued a report that said “good enough computing ” has become a reality, meaning that both netbooks and media tablets offer an experience that is close enough to using a dedicated computer, and that sales of legacy devices are waning because of this. IDC said that PC sales dipped 3.2% during the first quarter of 2011.

“The real question PC vendors have to think hard about is how to enable a compelling user experience that can justify spending on the added horsepower,” Jay Chou, senior research analyst with IDC’s Worldwide Quarterly PC Tracker, said in a statement at the time of the report.

In November, Gartner lowered its forecast for PC sales in 2010, and pinned it explicitly on the iPad.

“These results reflect marked reductions in expected near-term unit growth based on expectations of weaker consumer demand, due in no small part to growing user interest in media tablets such as the iPad,” Ranjit Atwal, research director at Gartner, said in a statement. “Over the longer term, media tablets are expected to displace around 10 percent of PC units by 2014.”

This simply isn’t the case, according to NPD’s new report. Mr. Baker wrote in his report that, “The conventional wisdom that says tablet sales are eating into low- priced notebooks is most assuredly incorrect.”

NPD said that 14 percent of early iPad adopters blew off a planned PC purchase for an iPad. Looking at just those iPad owners who bought their device during the 2010 holiday shopping season, NPD said that the figure dropped to just 12 percent.

So who’s to blame for those falling PC sales? NPD said that a burst of sales of Windows 7 PCs in 2009 effectively consumed more than its fair share of forward demand, and that the same is true of an increase in netbook sales at the time.

In the current market, NPD said that sales of sub $500 netbooks have increased by 21%, while the over-$500 netbook market has seen a 25% decline in the six months ending arch 2011. The firm did not note that this just happens to be the price range where Apple competes with the iPad.

There were two more tidbits from NPD’s report. The first is that wireless carriers have only been responsible for some 3% of iPad’s unit sales. The company believes this indicates that 3G connectivity isn’t a huge factor in iPad demand. The second is that the firm believes that the iPad has channeled billions of dollars into the retail computer sector by spurring demand for accessories such as cases.

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I’m having a hard time following the reasoning here, which seems tortuous. That this is “most assuredly incorrect” is rather definitive, for what by definition is a speculative gambit at this stage. NPD appear to be effectively arguing that the fall in PC sales is due to the success of - wait for it - Windows 7! (???)

Perhaps I’m just a little duller than the bright bulbs at NPD, but if people are loving Windows 7, and just want smaller devices (iPad-like in size), shouldn’t we be witnessing continued growth in netbook sales commensurate with decline in expected PC growth? If so, why aren’t netbook vendors celebrating such sales, rather than bemoaning declining demand, inversely proportionate to the rise in iPad sales? Perhaps their sales expectations were simply unrealistic. Industry-wide.

I suppose one could view this as just one big ecological fallacy, like the rise in mobile device sales and diabetes mellitus (for which there is no causal relationship). That is, people just want iPads because…they just do. And any inverse relationship in sales curves between iPads and PCs is just, well…curious. But they have nothing to do with each. Nope. Nothing at all. 

Fair enough. If NPD are correct, then we should expect a PC sales uptick in a few months time, when people need to refresh those 2 - 3 y/o PCs, with no effect on iPad sales.

Bryan Chaffin

NPD’s wording was rather vague (the purpose of their announcements is to tease people into wanting to pay for their full reports, which is where they make their money. All these companies give the press enough information to write about it while retaining enough information to give the full report value to the corporate powers and analysts who are their customers).

That said, my reading of the Windows 7 reference is that there was a spike in sales back then, and that the sales cycle hasn’t yet gotten around to replacing those units. As you said, if they are correct, there will be an uptick sometime during the next year.

Mind you, I do think that the iPad is having at least somewhat of an effect on PC sales. I think IDC’s point about “good enough computing” is spot on.


Mind you, I do think that the iPad is having at least somewhat of an effect on PC sales. I think IDC?s point about ?good enough computing? is spot on

Agreed. I just think it a bit of stretch to say that a below-expectations sales rate is independent of a high-sales rate of a device that does many of the same things of the device with poorer sales. This is possible, but based on what corroborating evidence?

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