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More media tablet hype

The iPad is still only slightly more than a year and a half old. Forecasting unit volumes has proven very difficult. But more than that it’s proven very difficult to appreciate the impact on the market it’s disrupting, PCs.

For some people this is obvious, but what if you don’t live and breathe disruptive theory? What if you don’t watch every data source like a hawk for hints of change? What if you are not even a technologist. How would you form an opinion on the effect of the iPad on PCs?

There are many industries and sectors about which I know nothing. If you asked me to analyze a market like industrial lubricants, I’d probably start by reading the consensus opinion put forward by the leading market analyst, an expert in that particular sector. That would form the baseline.

In the PC sector, that opinion is formed by Gartner (and IDC and Forrester perhaps). Gartner will get a lot of citations and its stats and opinion forms the baseline view. It may not be right, but we can expect it to be the “consensus”. This is because Gartner surveys a lot of data and interacts with a lot of insiders in the industry. They collect and weigh these inputs and put out what is likely to balance them all.

If Gartner says that the iPad is a “media tablet” that is not a PC they may be wrong. But they are also repeating what the PC industry is saying. So I value Gartner as a reflection of the consensus. If there is a significant gap between Gartner and what I conclude to be reality then there is an interesting opportunity as well as evidence of incumbent ignorance.

Let’s then look back on how Gartner has been reporting the iPad’s rise and the PC’s decline.[1]

Q2 2010

“The consumer PC market registered double-digit shipment growth, but consumer mobile shipment growth slowed. This was due in part to slower growth of mini-notebooks,” Ms. Kitagawa said. “Surging popularity of Apple’s iPad temporarily cannibalized mini-notebooks, as well as consumer notebook sales to some degree. It is not certain at this stage if the cannibalization will continue with the current price point of media tablets.”

Q3 2010

“Media tablet hype around devices such as the iPad has also affected consumer notebook growth by delaying some PC purchases, especially in the U.S. consumer market. Media tablets don’t replace primary PCs, but they affect PC purchases in many ways,” Ms. Kitagawa said. “At this stage, hype around media tablets has led consumers and the channels to take a ‘wait and see’ approach to buying a new device.”

Q4 2010

“U.S. holiday sales were not fantastic for most PC vendors, but the professional market did show healthy growth during the quarter,” Ms. Kitagawa said. “Media tablets undoubtedly intensified the competition in the consumer market. These devices do not replace primary PCs, but they are viewed as good enough devices for these who want to have a second and third connected device for content consumption usage. Mini-notebook shipments were hit the most by the success of media tablets.”

Q1 2011

“Weak demand for consumer PCs was the biggest inhibitor of growth,” said Mikako Kitagawa, principal analyst at Gartner. “Low prices for consumer PCs, which had long stimulated growth, no longer attracted buyers. Instead, consumers turned their attention to media tablets and other consumer electronics. With the launch of the iPad 2 in February, more consumers either switched to buying an alternative device, or simply held back from buying PCs. We’re investigating whether this trend is likely to have a long-term effect on the PC market.”

Q2 2011

Overall shipments of media tablets took place late this quarter and volumes remained low, minimizing any impact of the media tablets for PC substitutions in the second quarter of 2011

Q3 2011

“The main contributor to the weak consumer PC market in the U.S. was intensified competition for consumers’ money,” Kitagawa said “Media tablets and smartphones took center stage in the U.S. retail sector, and the expectation is for continuing demand for these devices throughout the holiday season.”

I’ve added emphasis for the key words describing the impact of the iPad (referred to as “media tablets”).

Note how the message changed over time. At first the effect was thought to be temporary (presumably due to “hype”). Three months later the “hype” was leading to “hesitation” in the channel. Three more months and there was “a hit” on Mini-notebooks but only for those needing a second or third device for “consumption”. In the fourth report it seems that “consumers” (vs. business users) are really interested in this. The fifth report suggests that the effect is “minimal”. The latest report suggests that this is a “localized effect”.

An external observer (or paying customer) reading this must conclude that five quarters in, these media tablets are having some effect but most probably a transient one. By keeping tablets separate from PC’s Gartner is implicitly stating that the two products do not compete. If they have an effect it’s on the discretionary spending by consumers. Similar to the effect game consoles or consumer electronics may be having on PCs.

However, if tablets were added to notebook totals the chart for 2011 would look like this:[2]

 

Notes:

  1. The quotes are from periodic reports (every quarter) from the same analyst at the same firm using a consistent set of measurements about the market. In order to ensure the same context, I’ve selected the comments from press releases published using the same template.
  2. Source: Digitimes Research, compiled by Digitimes, October 2011
  • Erik

    It would be interesting to see this data charted over time the way you do for the phone vendors, especially with a variant crossed on YoY growth to eliminate seasonal swings..

  • Kizedek

    It would be interesting to see ASPs for the various vendors. Of course, profit margins tell the real story.

    But with Apple having a strong 999+ presence, plus the cheaper iPads, I would imagine that ASP would be similar to those with a strong portfolio of solid notebooks. Those whose shipments comprise a high proportion of netbooks or mini notebooks must be losing revenue. Therefore, don’t know how Gartner can call the effect transitory, or minimal and only having to do with discretionary spending.

    Next, of course, it would be great if there was some way to analyse what these purchases “are hired to do”. There has been a lot of data and talk about the how much of mobile surfing the iPad accounts for. It would be great if there was a way to break mini notebook and netbook Internet usage away from general PC utilisation. I would not be surprised to learn that the iPad was more widely utilised in many ways than netbooks or mini-notebooks, despite the constant harping on its being a consumption device and not a PC.

    • Anonymous

      Almost all non-Apple tablets sell at a loss. Almost all non-Apple notebooks have ASP less than iPad. The high profit tablets and notebooks are all in the Apple column.

      > I would not be surprised to learn that the iPad was more widely
      > utilised in many ways than netbooks or mini-notebooks, despite
      > the constant harping on its being a consumption device and not a PC.

      Easily, because in the hands of 90% of the population, iPad simply does more things than a mini-notebook does. The browser is more capable, the apps are easy to install and are cheap or free. And the whole thing is much, much easier to use, and it rewards exploring.

      • Tom Thompson

        You have hit the nail on the head. The iPad is not being used (or bought) as just a media consumption device. I took my son to a music course specially tailored for ASD students. Last year, each student brought a flash drive and spent time on the university’s computers (iMacs using GarageBand). This year they’re using iPads. The course director told me that there was enough music apps on the iPads that they could use those rather than have to block out time to have access to the university computers. The course has about a dozen students, so obviously they bought a dozen iPads. This is not media consumption, and it is also (as other deny) content creation. To the course director (and many others), the iPad fills in nicely as a PC.

        —Tom

    • Anonymous

      One only needs to have used an iPad and a netbook for browsing to understand why surfing on an iPad is so popular. A typical 9″ netbook screen had about 600 vertical pixels. Horribly cramped vertically. An iPad, as you know, can be used vertically as well as horizontally, giving it 60% more pixels in the vertical dimension, making webpages much easier to read. Not only that, resizing is both smart and dynamic.

  • Sergio

    I find it slightly insulting (to their clients) that they used the term ‘media tablet hype’ in the first place, trying to make it pass for factual evidence; it’s their job to gather, report and analyse opinion, not to simply parrot it. Now they look all the sillier and less credible for it.

    And, come on, it’s taken them 6 quarters to finally accept that tablets are here to stay?!

    • Anonymous

      Gartner and similar firms will always choose to err on the side of caution. The hit to their reputation from failing to see how big the iPad would be is far lower than the hit they would take if they predicted a blow-out success and it didn’t materialize.

      There is a strong herd instinct in analysts.

      • Anonymous

        There is more than just “caution” in those comments. There is the same dismissive tone I heard from my own advisors re the Apple “toy” and the then coming Playbook that enterprise was waiting to consume. (Now that the tablet is here to stay, I see that Windows 8 is replacing Rimm in the meme.). Until I bought APPL and started reading the comments around analysts’ reporting, I believed stock advisors were working for the benefit of their clients. Now I am not so sure…

      • http://twitter.com/PaulMaxime Paul Franceus

        Welcome to investing in Apple. The “Apple’s death is just around the corner” meme has been here forever. It keeps the stock cheap.

        http://aaplinvestors.net/stats/ipad/ipaddeathwatch/
        http://aaplinvestors.net/stats/iphone/iphonedeathwatch/
        http://www.macobserver.com/tmo/death_knell/

      • Anonymous

        No PlayBooks because amateur hour is over.

      • Anonymous

        “Until I bought APPL and started reading the comments around analysts’ reporting, I believed stock advisors were working for the benefit of their clients. Now I am not so sure…”

        Welcome to the club that EVERY investor in the market for 5 years or more joins.

        Stock Advisors/brokers/analysts are out to make themselves rich, NOT you.

        The sooner you realize this the more successful you will be as an INVESTOR not speculator.

        Don’t feel bad though. it took me 15+ years to stop chasing the story/flavor of the day/week/month & realize that I could find good companies to invest in better than any advisor/broker/analyst.

        Ayuh

      • davel

        As the other poster states Analysts are not working for you. They work for their company and are part of the marketing machine of that company. Their analysis is not objective. There are traders who have an agenda as well as investment bankers who are selling their products to various companies.

        I hear you with regard to the PlayBook or Microsoft. Remember, Microsoft is a strong brand. They are a quality high tech company that everyone on the street relies on. The machine they are writing their analysis on is a Windows PC, the software they use is Microsoft Excel, Microsoft Word, Microsoft Powerpoint. They know and respect the brand. Microsoft is embedded in the enterprise of their company and their clients.

        So there is a certain bias. Also if you notice Apple does not play by the rules. They do not tell them what the product roadmap is. They do not manipulate the stock. No stock buybacks. No giving the cash hoard to the institutional investors. No debt which means no fees to the street to advise them and guide them on capital to run the company.

      • Tatil

        Follow the money. The may release summary versions of these reports publicly, but their main income is from CEOs of companies who need validation for their annual business plans. The reports do not shape those decisions as much as the shareholders would wish. Decisions get made for many reasons, where the market tendencies are only a small part, and then reports are gathered for supporting evidence or to finalize revenue forecast numbers. The analysts are forced to state what their customers would like to hear.

      • Anonymous

        Yeah, you only need to see Ballmer and the like, trot out a Gartner projection that they’ll have such and such percentage of the smartphone market by 2015, as justification for their plan to their shareholders, to see that what you say is true!

      • http://twitter.com/Moeskido Moeskido

        I see similarities between Gartner’s characterization of this market and Neilsen’s characterization of broadcast television advertising. Both institutions sound as though they’re dedicated to keeping incumbents reassured of their superiority.

  • http://profiles.google.com/simon.hibbs Simon Hibbs

    I get the impression this article is laying a foundation for later articles that will attempt to make a better job of it than outfits like Gartner. If so, I’m looking forward to them.

    The chart at the end is interesting, but by itself doesn’t actually indicate whether iPad sales really are affecting notebook sales. It does clearly contradict the assertion in the fifth report that volumes of ‘media tablets’ remained low. Clearly volumes of iPad sales are very significant, being roughly equivalent to total notebook sales by market leading vendor HP. But how many people are actualy buying iPads instead of notebooks? That’s a tricky question to answer.

  • MattF

    Evidently, Gartner is sticking to the ‘media tablet’ narrative– I’m guessing that their tacit definition of a ‘computer’ is something that runs the Office suite and Outlook, and it’s probably true that the iPad will never do that as well as a Windows desktop or laptop. But because it’s a negative definition (“iPad can’t do X”) they miss most of the actual, positive use cases. In particular, they just don’t see web surfing, email, gaming, and dedicated mobile business applications.

    • Anonymous

      Taken to its ultimate conclusion, if you’re right that Gartner defines a “computer” as something that runs Office, Outlook, and Windows programs in general, then tablets based on Windows 8 will, in Gartner’s view, be included with PC sales, and iPads will continue to be excluded!

      • Anonymous

        Yes, that is how they do it.

      • Anonymous

        Yes, but this definition will create reports that will become increasingly nonsensical, as their clients one day wake up to find their market totally disrupted. The CEO will think, but we dominated the PC market, how could we lose?

        The world has changed, and Gartner’s definitions of what is and isn’t a PC needs to change with the times. It’s a consultant’s key task to ask the right question that needs to be answered. That’s 90% of the job!

    • http://twitter.com/PaulMaxime Paul Franceus

      I don’t remember who said “It’s hard for a person to understand something when their paycheck depends on them not understanding it.”

      You also have to look at who pays Gartner for their opinion.

      • huxley

        That was the great Upton Sinclair. “It is difficult to get a man to understand something when his salary depends upon his not understanding it!”

  • The CW

    If one pays attention to popular culture, it’s clear that the world is moving away from laptops and toward iPads (not generic “media tablets”) as their information portal of desire. References on SNL, Colbert Report, Daily Show, as well as a myriad of local TV and radio shows are making american audiences feel left out if they’re still carrying a laptop in lieu of an iPad. iPad has cornered the “cool” market and that’s a hard thing to overcome.

    It seems to me that, from an investors point of view, it works in my favor to have Gartner perpetuate its mythology to keep Apple stock from becoming a bubble.

    • James Lambeth

      being heavily invested in Apple I don’t need a bubble , I would just be happy with a realistic “fair value”
      Eric in Austin

    • Anonymous

      No fear of Apple becoming a bubble stock with a Price/Earnings ratio that is one seventh that of Amazon. Rather the opposite. Apple stock is in danger of being branded underperforming. We’ll know more in a week, but there’s a possibility that Apple’s P/E will drop into the 13’s immediately following their earnings report. If Apple is still at $400/share and 2011 Earnings Per Share comes in at $30/share, that would equate to a P/E of 400/30 or 13.33.

      • $390AShareIsTrulyExciting!}:-D

        It’s going to be a bit annoying to Apple shareholders when Amazon sells 2.5 million $199 Kindle Fires and the share price goes up 10% while Apple sells 25 million $499+ iPads and the share price goes up maybe 4%. Compared to Amazon, Apple is definitely underperforming. YTD, Apple stock is also underperforming stuffy old IBM which I sort of found amazing considering all the revenue Apple has been piling on this year.

        Apple share prices are going to have to be held down by Wall Street or Amazon is going to end up with a P/E of 130 just to continue outperforming Apple which I’m sure it will. I continue to follow Amazon as it continues to rise and I can’t even find any particular news that would make investors pour money into the stock they way they do. Kindle Fire to eat into Apple iPad sales!! BOOM… 5% Amazon rise. You’ve got to be kidding.

      • Anonymous

        It’s got “Flash” in the Fire. I am pretty sure that for 200 bucks that will make it very appealing. Pity neither of us invested in Amazon while waiting for our Apple dough to rise. Still, we will be able to tell our grandkids how we made our money the hard way, chasing a dream, while Amazon and Google make everyone else instant millionaires.

        Still, $406 makes me smile.

      • Anonymous

        I can’t see how an investor attracted to Apple fundamentals would even consider investing in Amazon.

        Is there a website, like this one, that focuses on Amazon somewhere? A place where they explain the value proposition? I just don’t see how Amazon can grow their profit enough to justify their current valuations. Sure, revs and profits are growing nicely, but not that nicely. At 2% net margins, it’s making less than WalMart, and yet pays little to no sales tax. What’s their plan to increase margins?

      • Anonymous

        I can’t argue with you. But the amazing thing about Apple is precisely the way it’s “piling on revenue”, wnd that shows no sign of abating. From 2007 to 2010 Apple grew its gross revenue about 165%. Microsoft grew its gross revenue about 16% over the same time period, or roughly a tenth of Apple’s growth. Yet Microsoft has a P/E ratio of 10 and Apple has a P/E of 16 (until next Wednesday, when Apple’s P/E will drop precipitously). If Apple keeps “piling on” revenue without a concomittant increase in its P/E ratio, it will eventually match Microsoft’s P/E ratio – even though it is growing, far, far faster! Ironically, Microsoft’s P/E ratio is low for the exactly opposite reason Apple’s is low!

        The question in my mind is, how long can the market continue to ignore this situation? Will it have to get completely crazy, with Apple at a P/E of 5 or so, before the market wakes up and smells the coffee? Stay tuned.

      • Anonymous

        Kindle Fire actually is a “media tablet” … same as iPod touch. They are both media players with touch controls and phone apps. Both are too small to run PC apps.

    • Anonymous

      Just yesterday, my roommate’s 68 year old brother said he is buying an iPad because he feels “left out.”

    • Anonymous

      The same happened previously with iTunes, as every tv show would refer to something being available for download on iTunes, as a podcast or whatever.

    • Harvard Irving

      “The CW”, as in The Country and Western?

  • http://twitter.com/andrekibbe Andre Kibbe

    I’d love to see how “media tablet” sales trends correlate to web browsing. Five years ago, before smartphones were mainstream, pretty close to 100% of web surfing was done through a desktop browser, since people had to buy a desktop or laptop to access the web. However much “media tablets” have displaced PCs in browser share is, IMO, a loose correlate of how much PCs have been displaced as general computing devices. What’s being impacted is the PC as a consumer device.

    Tablets have fundamentally changed the perception of laptops from being general purpose devices (which were necessary for web surfing) into workstations (which are only necessary or optimal for production work–e.g. using Photoshop or Excel).

    • Anonymous

      The problem is, iPad is put in with mobile browsing because even though it shows a desktop view of the Web, technically it runs MobileSafari. However, iPad is over 25% of mobile browsing.

      I agree that Macs are back to being workstations, like they were in the 1980’s, during the desktop publishing days. You worked at a Mac for many hours and then walked away with a printout of your work to share. The Mac is back to that, except iPad is the printer/printout. You can make a website, iOS app, movie, music album, book, etc. on the Mac and “print” it to iPad to see the finished version. It is even the same psychologically.

      • Anonymous

        It’s not included in mobile by statcounter, where we see it is now 1.03% globally, and 1.77% in North America.

      • Kizedek

        Yeah, I just read on Stat Counter’s website:
        “We define a mobile device as a pocket-sized computing device, typically having a display screen with touch input or a miniature keyboard.”

        So, the iPad isn’t mobile, and it isn’t a PC. There are so many contradictions out there: eg. it gets compared in use to a PC (where critics can crow that it does so much less than a PC), but not in sales, etc. And yet, iPad users do much more with their iPads than does the average user of the average PC with his average software.

        I guess the iPad really is in a class of its own. Maybe there really is only an “iPad market” –not a media-tablet market, nor a tablet-PC market (until a Windows 8 tablet is released, of course ;) ).

      • Kizedek

        “The problem is, iPad is put in with mobile browsing because even though it shows a desktop view of the Web, technically it runs MobileSafari.”

        That is just so ironic, isn’t it?

        1) I think there have been lots of testimonials to the effect that iPad users browse on their iPads when they get the chance — even at home when there is also a desktop. I am using my wife’s iMac at this particular moment, but I would rather be on one of our two iPads instead (with 5 of us they are in constant use). I prefer the direct interaction with the page, I prefer the form factor, and being able to hold the screen and keyboard where I want to (both in relation to my eyes and in posture and in location around the house).

        2) these same pundits and analysts are ones who said: “no-one will actually want to carry their iPads around with them; phones and similarly small devices [7″ ‘media tablets’?] will be the tool of choice as mobile devices; iPads will prove to be expensive, faddish toys for lazy gadget-freaks who don’t want to get off the couch.”

        So, they say it is technically “mobile browsing”, just as the iPad is, technically, “not a PC”. And yet the satisfaction is likely higher than both “portable browsing” and “desktop browsing”.

        Not only is the iPad “good enough” (my iPod Touch is good enough), the iPad is actually created “to be better at the things it does”.

      • davel

        There are problems with the iPad. I want tabs on the browser which I think is included with the iOS update.

        I want a better way to manage applications. I haven’t touched an Android or Windows mobile device but I understand that at least one of them does not use the one application one screen metaphor. You can overlay applications which might work on this form factor.

        However I think the best properties of the iPad are in no particular order:

        1) instant on
        2) long life
        3) simple interface
        4) mobility

        I have the first generation tablet and must say this is the best first gen product I have ever seen.

  • Anonymous

    Now that iPads are truly “PC free” how can Gartner not define them as PCs? – even if only to call the Tablet PCs?

    Another interesting graph that you could do Horace is the future predictions in the PC market (also phone markets) by Gartner and others and how they over time have to completely alter their future predictions as Apple ascends. A corollary review could also include what the predictions were and what the actual results were. For example, a year or so ago they were predicting some 15% overall growth in the PC market I believe for 2011…now the actuals may be less than 2% growth and if you take out Apple it may be flat or negative.

    • Anonymous

      Over on Apple 2.0, PED makes the point that, if you remove Apple PC sales from the mix, PC sales were actually negative more than 1%. And it would have been even worse if not for sales of HP PC’s.

      BTW, is there a way to compute where Apple would have been worldwide if iPads were included as PC’s? would that have put them in the top 5?

      • http://www.asymco.com Horace Dediu

        I will put this together but only after Apple publishes their earnings.

      • Anonymous

        Apple would be either #2 or #1 if you include their entire Mac+iPad PC line in the numbers.

  • Anonymous

    Gartner is the dimwit of the bunch. When I worked for a firm that regularly used Gartner reports I was always amazed at the lack of real insight and the obscene lack of value their reports represented. Forrester is at least sometimes quite perceptive and clever, but it’s interesting that analysts in general seem to get hypnotized by the routine and almost never catch the small signs that mark major inflection points in the industry.

  • Sebi

    Can you add to the chart the average sale point of the companies?

  • Anonymous

    The problem with gartner & others is they like many other “players” in the financial sector have a vested interest in PRETENDING. Don’t forget their goal is to SELL as many reports as possible to as many DIFFERENT CLIENTS as possible. It does NOT serve their purpose to point that 97.2% of tablet internet access is done on an iPad. That is why they insist on selling reports where they go on SHIPPING numbers and claim that Apple “only” has about 64% of the market share BASED ON SHIPPING REPORTS FROM THE MANUFACTURER. Why? Because if competitors believe there is a 36% market share to grab, they will pay $15k for a Gartner report to see if they can gleam any insight. If there is less than 3% of the market up for grabs, you are much less likely to spend $15k on a report. It’s THAT SIMPLE. That is also why they don’t want to intrude upon their reports to netbooks sellers if they include the iPad. Because it does affect the netbook market, they can’t ignore it completely but to dance around the issue of the BILLION dollar ipad market is idiotic. The ipad is clearly a netbook-Pc affect product. It has a microprocessor. It has a keyboard. it has a screen, it runs apps and it accesses the internet … really, what else could it be? That would be like saying a netbook is not a PC because it doesn’t have a 50″ screen as you can with a desktop PC. THEY DON’T WANT TO TALK ABOUT THE ACTUAL TRUTH.

    The WIN PC market is now a LOW END COMMODITY market thanks to MS’ 10 years of neglect (through weak, wonky upgrades), outright neglect in regards to viruses & malware and branding WINDOWS as the low end neighborhood of computers, MS accidentially beheading of the market by putting a $5k processor in a $300 Xbox console so there’s no need to pay more for a WIN PC than rudimentary surfing and emailing and since there’s nothing left to compete, it’s a race to the cheapest (and easier to break) commodity collection of parts from all PC makers. Why does Apple have 95% share of the $1k+ PC market? Because WINDOWS has devalued the PC experience so it’s NOT worth anything more than rock bottom pricing … AND if consumers can afford better, they SWITCH. Why have Mac sales grown up to 10 times the PC growth EVERY QURTER for the past 5 years? Why does a $499 more limiting iPad outsell netbooks priced at $299? Because of WINDOWS. Because WINDOWS says cheap both in branding, in value to the consumer (from experience) and pricing.

    And Android is ALREADY branded as the mobile WINDOWS. Wonky, fragmented, crash prone and with malware (and when it’s cheap – $.01 phones and $99 clearance tablets), it’s a passable second choice.

    This is why Apple wins but this is also why Gartner and othes have a vested interest in blurring the truth. They CANNOT SELL $15-$50k reports to 100 other players (manufacturers, suppliers, telcos, etc) by explaining why 10 years of neglect & stupidity by MS and 4 years amateur hour by Google means they are stuck on ONE road they cannot escape from without starting from scratch. Everyone wants to buy the report and then go sell their bosses there’s still 36% of the ipad market up for grab or that the ipad effect on their netbooks can be easily fixed with a few more stickers and marketing … remember who is writing these reports, look at the track record and why they are writing them.

  • Anonymous

    What I love about I-T analysts is after all these quarters, they did not just go and ask iPad owners why they bought them.

    Apple said pretty early on that 80% of iPad buyers bought one “instead of a Mac/Windows notebook,” and 10% were buying “their first PC ever.” Only 10% bought it to be a tweener, which sounds exactly right … that’s about the same percentage who are high-end PC users, who work in some kind of high-end app like Photoshop or Logic or Excel or Xcode, where they have expert skills. Retailers of Samsung/Motorola tablets have also said the #1 reason they get returned is people expected them to replace a PC (like an iPad) and they didn’t.

    And why would we need PC Free and AirPort Utility for iOS if we are all using iPad as a secondary device to a Mac/Windows PC?

    I have seen a few households now go from 1 Windows desktop PC (hidden away in the basement) and a couple of BlackBerry phones to adding an iPad to sort of bridge the gap, but then very shortly afterwards, everyone has their own iPad and iPhone, and they look at the Windows PC like it is a vinyl record player. And these are really non-technical, non-gadgety people. Rather than looking at iPad as a new kind of media tablet gadget, they saw iPad as a non-gadgety PC. A PC you could have in the living room or kitchen.

    The funny part is nerds like Gartner saying “well, no mouse, no Intel chip, no Windows … not a PC,” and regular folks see a full-size Web browser on a full-size PC screen and go “PC!” and they are right.

    What is interesting also is how empires die with their eyes closed.

    • deV

      ‘Apple said pretty early on that 80% of iPad buyers bought one “instead of a Mac/Windows notebook,”‘

      And I’m sure 80% of them also bought their iPad “instead of a unicorn.” Or a car, a house, a boat… That stat says absolutely nothing except stating the obvious: most people have do not have unlimited income and make decisions to buy one electronics product at a time, or one large expense at a time…I could go on, but is it really necessary? Conversely, 80% of all laptop owners bought their laptop “instead of an iPad, house, boat, or unicorn.”

      “Retailers of Samsung/Motorola tablets have also said the #1 reason they get returned is people expected them to replace a PC (like an iPad) and they didn’t.”

      That says more about people’s differing expectations of the 2 platforms than the capabilities of the given platform. Also, where are your stats on the number 1 reason people return iPads? Kind of deceptive without that information, don’t you think?

      The stats here (https://docs.google.com/viewer?a=v&q=cache:7JSSXAfSTFgJ:www.rwbaird.com/docs/Aug2011USTabletSurvey.pdf) say 17% of people believe they can do without a PC now or in the future. I’d expect that number actually to be high due to rather overly-optimistic people who are not forced to put their money where their mouth is. Got any better stats to backup your proclamations? I mean, that post without any real data seems to have gotten more likes than any I’ve seen on this site. Interesting.

  • http://www.linkedin.com/home?trk=hb_tab_home_top Matthew Gunson

    If you accept that tablets WILL disrupt computing completely, it may already be too late for windows/droid maunufacturers.

  • Cdoran

    As I saw the chart it made me wonder “What if Apple bought HP’s PC business?” and “What could Apple do with HP’s enterprise sales staff?” Customers comfortable with Windows could continue to buy Windows machines and have a relationship with sales staff who would then have Apple product knowledge too. Shifting a little of the profit from the Apple sales side could keep PC sales slightly lower than Dell and the rest to win the bids.

    • Anonymous

      I can imagine the uproar if Apple bought HP’s PC business. Instead of marginalizing the iPad as a separate category, critics would all of a sudden change their tune, and begin lumping the iPad in with PCs and pointing out how dominant Apple would be with HP, as it would be the combination of the #1 and #2 players in the PC space!

      Of course, this is all hypothetical as Apple would never in a million years buy HP’s PC business, as that would be akin to cats sleeping with dogs or something like that. Sure, Steve respected Bill Hewitt and David Packer, and Woz wanted to stay working there, but that was a long time ago!

  • iBookUser

    Imagine if the media reported the Fact that Apple is More iPads than HP is selling computers!

  • davel

    To be fair to gartner you show 6 qtrs of comments on the pc/tablet sector. I think Gartner is not being fair to Apple, but if you are watching a market you do not change your opinion on the dynamics of the market based on one or two quarter’s data.

    From the 4th report:
    “We’re investigating whether this trend is likely to have a long-term effect on the PC market.”

    It is a long term structural view that you want. and 4 qtrs worth of data is not really a trend. Are they discounting the iPad? Certainly, but if you look at the tablet market it is really only the iPad. Nothing else really has a share. In that light does one product – and it is one – there is only one version sold split into 3 sizes of memory and 3g or not. So how do you model a tablet form factor when the form factor boils down to one device from one manufacturer?

    So one and a half years after its introduction the iPad is selling very well. If the tablet form factor is a market why does the market consist of one device from one company? I have seen a Samsung tablet and it looks pretty good. It is relatively fast and can do many of the same things. But no one is banging down the doors for one. Why is that? Is it solely due to the Steve reality distortion field or does its ecosystem/software/hardware synergy truly make it an experience with no substitute goods?

    • Walt French

      “I think Gartner is not being fair to Apple…”

      Well, Apple is crying all the way to the bank.

      I think the point of these reports was to show the gulf between incumbents’ mindsets (because, like any consultant, Gartner merely asks to borrow the customer’s watch when asked what time it is), and that of disruptors such as Apple.

      Until competitors have product offerings that would have customers wondering, “let’s see… HP laptop or HP tablet?” the incumbents have no interest in adding in what is to them an extraneous product line. Industrial lubricants bundled with home drain uncloggers?!?

      So these reports are fine for Acer to figure out how to compete in selling value-priced small-office desktops. They’re not intended for decisions such as HP’s call that there’s no profitability left in that market, and that whatever low-margin sales it might get there, does little or nothing for its consulting or warehouse business.

    • deV

      Buying a tablet is already a risky proposition to most people. Buying a tablet that is not an iPad is even riskier in the public’s mind. That, I believe, is the number one reason it will continue to dominate.

      The only way to break that trend is to offer something *much* more compelling than the iPad.

  • Adrian Constantin

    Horace, what is it that surprises you more? The fact that the professional analysts are completely missing the point of the media tablets or the fact that people pay for such analysis?

    If it’s the former, then I could remind you that the whole analyst industry missed big elephants like the crash of 1929 or 2008, so one should not have great expectations.

    If it’s the latter, then I could pint out that you use yourself the raw data provided by the professional analysts, but you do your own analysis and draw your own conclusions. The raw data is worth paying for. If some company pays for the actual forecast…., well…, people find various ways to handle their anxieties. Some use cigarettes other use business forecasts.

    • http://www.asymco.com Horace Dediu

      I’m no longer surprised. I just try to understand why there is a systematic reluctance to accept disruption as a cause for much of what is being observed. I do use their data about actual sales (as much as is published freely) but I constantly worry that poor judgement about causal links could affect their data quality. Failure at causal inference also condemns all their forecasts so I do not take them seriously.

  • http://www.facebook.com/daemon.hr Goran Daemon Peuc

    To completely seal the deal (for me) in this debate – do tablets eat notebooks’ lunch, at home I decided not to have any “real” computers. I have my workstation type of computer at work, I do all heavy duty computing there, and at home I decided – screw it, I do not need another computer/laptop. iPad will suffice. And it does. Because I do not want to be chained to the keyboard+monitor setup again after I come home from 9 hour work. I want something that I can take into sofa or bed, curl up and read a few blogs, watch a few videos, play a game or two. That’s it.

    Screw workstation type of computers at home (if you work with one whole day).

  • JamesW

    I bought an iPad for my dad because it was easy to use, inexpensive, and does everything he needs it to do. I would not have bought him a notebook due to complexity and cost.

  • http://eydryan.com Anonymous

    I feel that a tablet still cannot replace a proper desktop but it can easily replace a laptop/second computer, except for a quite small number of tasks (gaming, resource intensive software, etc.).

    It’s a shame that we cannot have a proper evolution of the computer, in that we get a true PC experience on a tablet, complete with photoshop and gaming, but perhaps that is what things like cloud computing and services like OnLive will bring us eventually, granted with a serious need for a proper mobile low-latency broadband connection.

    I am however very worried about the disruptive impact that Apple products are having on the market as its competitors go more and more towards imitating their vision rather than improving their own core competencies. The problem that I see here is that we are looking at a future that is very user-friendly and very simplistic but lacks many of the abilities of modern-day computers. And for most people that’s fine, but won’t that result in our kids learning how to play angry birds rather than how to program in Java?

    Should we not strive to better ourselves by learning the language of the machines rather than forcing the machines to dumb down to our level?

    • http://www.asymco.com Horace Dediu

      When cars were new a driver had to know how to fix his car. It required a high level of mechanical expertise to even operate the car as you had to know about fuel mixtures, ignition timing and fuel quality in order to get a Model T running.

      This mechanical knowledge was very useful later when drivers began to modify their cars and led to the hot rod movement.

      However, with time, and with more people driving, that knowledge was relegated to a few. Fewer still can “tune” cars today as the engine is managed electronically. Manufacturers frown on this as it can violate the conditions the engine and car was designed to operate under.

      Should we bemoan the mechanical incompetence of modern drivers?

      One can argue the same about the modern incompetence with farming, hunting, smithing and any number of other professions that have been either automated or become highly specialized.

      There is always a sadness when a skill evaporates, but more often than not a new set of skills is born.

      • http://www.asymco.com Horace Dediu

        I should add that as the mechanical skills developed with automobiles, many animal husbandry and riding skills were lost. Perhaps this was the lament of the early part of the 20th century.

      • http://nmuppala.wordpress.com Nalini Kumar Muppala

        What were once essential skills tend to become hobbies and recreation. Hunting, fishing, camping, hiking.

      • http://eydryan.com Anonymous

        Yes but these are not essential skills at the moment, they are skills that could help better mankind in the near future. That’s my point, this is not evolution and discarding of unneeded skills but rather a change in the direction of the future.

      • http://eydryan.com Anonymous

        You’re being slightly obtuse about this argument. I’m not talking about building or servicing your own phone/tablet and I’m not even talking about flashing custom ROMs and stuff like that (which is pretty much what you’re referring to – mechanical skills). I’m talking about usage. I’m talking about being a better driver, about knowing how to use a manual gearbox and being able to park your own car without one-button mechanisms that sometimes fail.

        I am not discussing the matter of losing skills that have become obsolete but rather limiting our own perspective of the future. We have these tools in our pockets that are immensely more powerful than the computers of our childhood were but their uses are being limited to trivial things like movies and Angry Birds.

        And that’s why I worry, because although enterprise products result in ugly and unusable interfaces, they leave a lot of room to grow, to expand. A GUI can easily be added but extra functionality is hard.

        I’m talking about teaching kids to program on their smartphones (a skill that is undoubtedly necessary going forward as opposed to your examples of lost professions) rather than giving them mind-toasting content and pushing them towards it.

        Of course, the discussion varies slightly here but my point is that we have become much more limited in our interaction with these devices. While it is true that we can use them more easily I dislike the direction where it’s headed, over-simplification and over-specialization of these devices.

        Because you do say the fact that a new skill could be born but I see no such thing, all I see is personal devices becoming easier to use with no associated gain. Perhaps all we need is filters (and a proper internet connection) to have these devices turn into much more serious tools, at least from an informational point of view.

      • http://eydryan.com eydryan

        Your comparison is skewed because what I’m talking about is comparing race car drivers to normal drivers rather than drivers to mechanics. I’m not expecting people to learn applied physics and build their own SSDs.

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