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The year of the iPad for the second year in a row

The iPad and Mac businesses both grew well in the last quarter. Tim Cook said they are observing some cannibalization of Mac from the iPad but much more switching to iPad is coming from the Windows PC market.

The evidence is still hard to pin down directly but the fact that PC sales (excluding the Mac) are down gives credence to the claim. Mac growth, in contrast, is largely unaffected. The following chart shows the the iPad volumes vis-a-vis Mac volumes and the Mac growth through recent history.

The iPad has out-sold the Mac since inception and is now about three times the volume. However, the growth rate in the Mac has not changed much.

The impact on the PC market has been discussed recently and the data in the following chart is an update given more precision on the units from Apple:

The new data shows that the iPad alone would be the largest PC vendor and Apple with iPad and Mac combined is selling 5 million more units (or 30%) than the top PC vendor.

The impact of the iPad is not specific to any single vendor (Apple included). It competes for time and purchase decisions across all computing alternatives and though many times it’s additive, it is also substitutive and will become increasingly so.

Tim Cook mentioned on the earnings conference call that Apple sees the iPad as addressing a market larger that the PC market:

I truly believe, and many others in the company believe, that there will come a day that the tablet market in units is larger than the PC market. In fact, it’s interesting to note that in the U.S., it’s clear from the IDC’s recent data on desktop PCs in the U.S., that tablets exceeded desktop PC sales last quarter in the U.S.

 

  • http://twitter.com/designker designker

    It is fascinating to watch this. I would love to know more about people that had a wintel laptop or desktop and now use an iPad as their main computer. I wonder if instead of the perception they are able to do less, these people are doing more or different things.

    • Anonymous

      Although it was a Mac laptop (instead of a Wintel computer) I can definitively say that I have not touched my Macbook since buying an iPad 18 months ago.  Granted I still have a iMac desktop, which gets occasional use for using Excel/Numbers & for converting/streaming media to my appletv, but other than that, all my home computing needs are met buy the iPad.

      I find the iPad better than a laptop for web browsing & reading digital books/magazines. I often prefer using an iOS App from particular website/service than using their website. examples are: My Optionstrader app, CNBC app, Facebook App, Twitter App, banks App. the list is long.

      Plus – when people see specialised iOS touch based games, they often say to me that their next computing purchase will be an ipad.

      Whenever someone says to me: “Why would I want to spend $499 on an iPad when I can get a PC laptop for the same price that does more?”,  I reply: “Good luck using 200,000+ multitouch apps on your laptop…” That usually ends the conversation.

      • Marcos El Malo

        My girlfriend has inherited my MacBook. Unlike you, on rare occasions I do touch it . . . On the screen, much to her amusement. She was playing World of Goo the other day, and got stuck, so I tried to manipulate goo balls directly. Unless I’m typing a lot, it’s really hard to go back.

    • Wesley Hsu

      I’m with Kirk below. Our household has 2 desktops, 2 laptops, 2 smart phones, and then we added the iPad and it’s the clear winner. My netbook feels as obsolete as a Victrola. The iPad’s killer difference is that is doesn’t sit on a table. You hold it up, you play with it lying down, you use it in the car, you aim it at things and people. It’s mobile in three dimensions. Every other computer feels like “sitting at the office.” 

      If they ever make one that’s waterproof, I’ll buy it. 

  • http://kaizenity.blogspot.com/ FalKirk

    When Steve Jobs announced the iPad 2, he scoffed at the idea that 2011 was going to be the year of tablet. He said that 2011 – like 2010 – was going to be the year of the iPad. Again. He was oh so very right.

    The analysts and the pundits and commentators (present company excepted) are totally missing what is happening in the tablet market. They are so focused on whether tablets are REPLACING traditional computers in the personal computing category that they are ignoring the EMERGENCE of a whole new category.

    First, tablets are bringing computing to a whole new class of jobs. Two examples should illustrate my point. Salesmen who struggled to carry, deploy and display their notebook computers now do so with ease thanks to the tablet. And Airline pilots who found notebooks impracticle to use now carry all of their charts with them on tablets. These tablets are not replacing the tasks performed by traditional Personal Computers. They are doing tasks that those older devices couldn’t or were ill-suited to perform.

    Second, tablets are creating a whole new class of computer users. Tween, teens, stay at home moms and dads, seniors and others – many of them first-time computer owners – are entering the computer market primarily because of the tablet. Some are replacing their computers with tablets, but most of them are ADDITIONAL computer owners.

    Tim Cook says that tablets will one day outsell traditional notebook and desktop devices. Believe him. With tablet sales literally doubling every year and with notebook/desktop sales flat and even declining, that day is coming sooner rather than later. (As soon as 2014?) But when that day comes, there will not be a mix of 450 million desktops/notebooks/tablets as there is today. There will be 600 to 700 million desktops/notebooks/tablets with over 50% of them being tablets.

  • http://www.facebook.com/profile.php?id=741717344 Dick Applebaum

    Interesting… if you do a little math:

    50 MM units Acer + Dell + HP + Levono
    20 MM units Apple Mac + iPad
    ——————————————————-
    70 MM units Total

    28% Apple + iPad

  • http://www.facebook.com/profile.php?id=741717344 Dick Applebaum

    If these trends to iPad adoption are accurate (I believe they are), the question arises:

    Can MicroSoft risk waiting until the end of 2012 to deliver MS Office apps exclusively on an Windows 8 ARM Tablet — or should they hedge their bets and deliver Office on the iPad?

    • Anonymous

      They announced that they’ll ship Office for iPad, google it.

      • Anonymous

        Throughout its history, Microsoft has announced a lot of upcoming products that never see the day of light or else are delayed for years. So announcing doesn’t mean much in this context.

      • ewan

        Exactly.  MS uses vaporware as a weapon.

        No big company will waste effort developing an Office Suite for tablets if they fear MS will release one.  I’m sure MS is working to develop a touch interface for Office for Win8 tablets, but who knows how long this will take.  Bluff the competition until they actually do ship.

      • http://www.facebook.com/profile.php?id=741717344 Dick Applebaum

        I can find “rumors” and “reports” — but no official MS announcement of Office for iPad.

      • Luis Berumen

        If Microsoft is counting on Office exclusivity as a unique selling point for their Windows 8 tablets, they would become the Nintendo of personal computers as they see their legacy of software plummet down. Nintendo’s strategy to bet on their Mario games as a selling point proved to be wrong and now they lag behind the Xbox and PS3.Microsoft, the Office suite is one of the few good products you make, so please, stop this nonsense and make it available for the fastest selling computer on the market.

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

        It’s not much of a secret that Office is the life blood of Windows (for desktop).  One billion (approximately) Office users have proven that.  As long as those users still rely on Office, MS will not release the biggest weapon they have on iOS before Windows 8.  I would be very shocked if they did. That would be showing a lack of confidence in Windows 8’s ability to compete with iOS.

        If (and it’s a big IF), they release Office for iOS, they will do it at the same time as the Windows 8 Metro version or a few months after the Windows 8 version, not before.

        MS is very entrenched in the business / enterprise space.  They, more than Google & Apple, can be patient and wait as there’s no immediate threat from being knocked from that perch.

        I cannot speak for everyone, but in my opinion, Windows 8 is far bette than Android and at the very least just as good as iOS.

      • Kizedek

        Windows 8 is at least as good as iOS? Well, OS X is at least as good as iOS, but that’s not really the point I use them for two different things.

        How is Windows 8 going to be at Touch UI? That’s the question. How are the APIs doing, so that developers can create lots of dedicated apps and immersive interfaces by which “the device becomes the app”? Is it going to be as suited for all these new tablet (iPad) uses (by salesmen, presenters, trainers, pilots, deliverymen…), or is it going to be awkward? Is it really going to function fully and well on ARM (the demo was on Intel), or is it going to be a battery and CPU hog? If ARM is left to Metro only, how good is that going to be?

        Lots of questions are unanswered, so it remains to be seen if it is as good. I guess we’ll find out at the end of the year, maybe.

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

        Windows 8 is what MS coins the term a “touch first” OS meaning touch / gestures are a first-class citizen unlike Windows 7.

        Windows 8 Metro apps are based upon a re-architected api known as WinRT which is extremely powerful.  When it comes to looking after its developers and giving them powerful tools & API’s to develop, MS is second to none.  Apple is doing very good, but Xcode is still no Visual Studio.  Plus, If you’re a .NET or Windows Phone developer the transition to the WinRT API won’t be that bad because a lot of your skills will transition over.

        The Metro UI is absolutely immersive and is geared towards and well-suited for the type of apps that you see on the iPad.  As far as working on ARM properly, I can’t say because you said there is no ARM device in the wild yet and yes ARM-based Win8 devices will be Metro-only, the last time I checked anyway.  We’ll have more accurate info once the beta is out in late February.  As far as Intel devices go, Windows 8 works very well.  It’s up to Intel now if they’re up to the task of making processors that perform well AND are as power efficient as ARM if they want to do well in the smartphone & tablet space.

        Another plus for Windows 8 is the UI will work seamlessly across, tablets, desktop, & laptops.  If I code a Metro app for a tablet, it will work across the desktop & laptop.

      • jawbroken

        Not sure what the UI working seamlessly means. I’m guessing you mean the program will run across all device types and look the same, but it seems to me that nearly everything about the UI should be different if it is optimised for touch or optimised for a mouse and keyboard. Perhaps you are considering the advantage to developers only.

      • Kizedek

        Right… but MS, as we know, is pretty good at coining terms.

        So, is it “Touch First” because the OS is built from the ground up with that in mind, or is it because the Metro layer is “on top” or is what you “see first”, providing some kind of Desktop or HomeScreen for mobile devices, portables and desktops alike?

        Then, on your desktop or laptop, when you get tired of gorilla arm having interacted with what may be essentially dashboard widgets, does not the desktop “slide” back into a familiar mode (I think I have seen something similar mewhere else) in order for you to work with heavily mouse-oriented programs like Photoshop or Office?

        1) So, if ARM based tablets are going to be Metro-only, what exactly is Metro? Is it a full OS, or not? What kind of apps does it really run all by itself? Are programs like Photoshop and Office really going to be ported across (because it sure sounds like there would be more to the process of getting these apps “Touch First” then merely recompiling them).

        2) What terms are going to apply to the different tablets (ARM and Intel)? Is MS going to perpetuate “Media Tablets” and “Tablet PCs” to refer to them? Is MS going to coin new terms? Who should get each type of tablet? What will each type be good for? Will apps of each kind be able to interact and sync files ala iCloud?

        Again, there are lots of questions that appear be unanswered; and even MS itself seems to be confusing the issue; I suspect their answers often involve coining a new term.

      • Anonymous

        How is Nintendo behind Sony of Microsoft? They sold more consoles of the recent generation, they made money from them from day one (unlike Microsoft and Sony, which only recently stopped selling consoles for a loss) and they’re releasing their nextgen console this year – making a good start ahead of the competition.

      • http://twitter.com/qka qka

        Windows Desktop doesn’t count.

      • http://twitter.com/WaltFrench Walt French

        I found this: “citing ‘sources,’ [The Daily] reported that Microsoft is working to adapt Office for Apple’s tablet. … Microsoft didn’t comment directly on the report.”

        And I see that somebody has put up a virtual desktop version, allowing you to run the full Windows version as long as you have an active network connection. As someone who has suffered from using virtual applications over a network, nobody will accept this as a “solution.”

        I’m a heavy Office user. This would matter to me a lot. I don’t buy it with what I’ve seen so far.

    • Canucker

      I’d hope they already have it running on iOS but I kinda doubt it. Microsoft is likely counting on exclusivity of Office on Windows 8 tablets to boost sales. The question is whether they have taken the blue pill and truly recoded Office with a comprehensive touch interface, or whether they took the red pill and just grafted on the odd interface element. 

      • http://twitter.com/WaltFrench Walt French

        I’m totally NOT expert, but unaware of any easy C# – ObjC converters or compatible libraries. The UIs are sufficiently different that I would presume relatively little shared code, and many different tradeoffs of which of the full suite’s features to include.

        I’m pretty sure, tho, that the grafted interface thing wouldn’t be acceptable. Should be a hefty challenge.

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

        MonoTouch is C# development for iOS: http://xamarin.com/monotouch

      • http://twitter.com/WaltFrench Walt French

        Thanks, Paul, I’d forgotten about the talent at Mono. 

      • http://twitter.com/Hunter Hunter

        As an iOS developer, I can tell you that porting Office to iOS would be a ton of work, even with the Mac version of Office as a starting point.

        That code is mostly Carbon, not Cocoa (related to Cocoa Touch that we have on iOS).

        That’s not to say that they couldn’t/can’t/haven’t been doing it… but there *are* significant technical obstacles, even with something like MonoTouch. Porting is about more than just languages. APIs, the real layer of logic, are totally different.

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

        What if MS ported the Mac version of Office to the Cocoa code base? How easy would it be to port Office for Mac then to the iOS Cocoa Touch code base?

        Or would MS be better off starting from scratch with iOS?

      • http://www.facebook.com/profile.php?id=741717344 Dick Applebaum

        MS already has Office running on Mac OS X — iOS is a fairly complete port of Mac OS X to ARM.  The big difference is the single-window Touch UI.  

        To have a successful tablet offering MS will need to implement Office with a single-window Touch UI.

        Or, they’ll have about as much success on tablets as they’ve enjoyed for the past decade…

    • http://twitter.com/WaltFrench Walt French

      By the scheduled Q3/Q4 rollout for Win8, there may be oh, 60–90MM iPads in Americans’ hands. Many of those will travel in purses and briefcases to the office, and businesses will want to exploit the BYO Device windfall — as a wild SWAG, think $80 billion of free CapEx for iPads and iPhones.

      That’s presuming no critical mass (network) acceleration, which I think is a bad assumption.

      Just visited tech site Ars Technica, which featured this very issue. Many die-hard IT types will be dragged kicking and screaming into supporting Apple. But Gartner (IIRC) is showing it’s happening already. Android is utterly anathema in the workplace, so shops will either wait to see if Microsoft can field a strong product, or go with Apple for all the appropriate functions.

      This is going to be a watershed issue for Microsoft. I’ve stocked up on popcorn.

      • http://www.facebook.com/profile.php?id=741717344 Dick Applebaum

        Watershed issue… Exactly!
        As I see it there are 3 possible paths for MS Office to Tablets:

        1) Wait for low-power Intel tablets to run MS Office as is (touch/stylus)

        2) Recode MS Office for ARM Windows 8 tablets (touch UI)

        3) Recode MS Office for iPad

        As I see it, even if MS pays developers, there will not be enough usable Windows 8 apps on either ARM or Intel tablets to form a critical mass for business to adopt Windows 8 tablets before Q3/Q4 2013…

        IMO, the best [only] MS option is to release MS Office for iPad ASAP… then, possibly, backfill with Windows 8 tablets whenever they become available.

        The question, really, is:  In a competitive environment, can business afford to wait for MS to catch up — or are alternatives ‘good enough” to move full steam ahead with the iPad?

    • Anonymous

      I’m just not so sure that Microsoft office belongs on a multitouch tablet. The user experience is so much different – once Microsoft changes it to suit a multitouch UI, then it will be completely different, and probably inferior to apples iWork multitouch apps.

      Other than 100% compatibility, what other use would MS office for ipad serve? or is compatibility the killer feature that would convince people to pay more than $100 for an iPad app?

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji


        Other than 100% compatibility, what other use would MS office for ipad serve.”

        The fact that hundreds of millions of users rely on MS Office for their daily needs in terms of document, spreadsheet, and presentation creation.  By having Office for iOS, it would cement iPad’s lead.

        Apple has iWorks for iPad, which is good, but not close to being MS Office, with one exception and that is Keynote.  Keynote is highly regarded as being better than Powerpoint.

      • Anonymous

        >By having Office for iOS, it would cement iPad’s lead.

        By not having Office for iOS, tens of millions of iPads are cementing non-MSOffice use, which would be even scarier for MS.

  • Anonymous

    I’m going to go not very far out on a very sturdy limb and predict that this is the decade of the iPad. Apple’s going to rule the personal computing roost until the next transformative change comes along.
     
    Re: Office on the iPad,

    Rumors say that Microsoft is already working on Office for iPad. And why not? They make Office for Mac, and it seems to do fairly well. Both products may be a valuable hedge to keep Microsoft’s productivity platform relevant as their personal computing platform wanes.

    • http://twitter.com/WaltFrench Walt French

      A few years ago there was a major debate about the core OS for their mobile strategy, and they have only recently (this year?) reversed the older “two separate needs” model and gone merged. I take it that the split approach means a much wider split than the grafting of the Touch libraries on OSX. Sure wish somebody would write a piece on the Apple core codebases.

      Anyway, I don’t think MS is in a position to hedge anything; nor can I think of their doing it. Not unlike Apple, they figure out what they want to do, and commit resources heavily.

      Probably the worst result of the failed breakup of Microsoft was that the firm has hobbled itself in competing full tilt. There is a HUGE pool of talent there, but you wouldn’t know it from examples such as Skype: available on many different platforms, they’re still not on WP 8 months after the acquisition. The old Skype was hustling to get as many satisfied users as it could; something is broken.

      • Yyy

        Not sure if it’s what you’re looking for, but I believe Dilger at Roughly Drafted had posted some articles on AAPL’s codebases.

        He lets things fly a bit more freely at his private site than what he does at AppleInsider, but I doubt you’d be too put off by it.

      • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji

        No offense but Dilger’s blogs are the last place I go to for Apple news. He’s hardly what I call objective when it comes to Apple.

      • Anonymous

        Certainly, he is unashamedly pro-Apple. His conclusions and advice may well put off a lot of people. But as far as research and historical data are concerned, he is actually one of the best. If he details the relationships between OS X and iOS, or even DOS and NT, then I would go with his research over most others, even on so-called objective news sites, or on pro-Windows sites like CNet, where writers seem to be parroting the latest talking points for page hits and have no idea what they are talking about.

        So, separate his rhetoric from his research and facts. It’s OK to not like the guy (I don’t like his political or religious vis, even though his analogies are often amusing and make you think). NOBODY is really objective, so get used to thinking critically about what you hear or read, no matter what the source.

  • Anonymous

    Tim Cook is absolutely right. Someday, the iPad will be the most ubiquitous device in the world… and it won’t even be close

  • http://search.websonar.com:8080/ Duane Bemister

    Horace, I imagine you are already thinking about it but I would sure like to see an interactive graph showing how a reduction in expected gross margins would effect the selling price of each of Apples products. I see they are already doing a test market with their own employees.

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

      The selling price is not going to change.

  • http://twitter.com/parvc parvc

    horace,

    why don’t you use the ibooks author app to create an interactive analysis and sell or offer it for free on the ibooks store? I always read your articles and they are really interesting.

  • http://twitter.com/WaltFrench Walt French

    I didn’t go back to the transcript, but I heard Cook to say that iPads were definitely cannibalizing BOTH Macs and Windows boxes. Just fine with him, because there were MORE Windows machines to go after.

    What he DIDN’T say was that they were getting a higher percentage of Windows converts. Increasingly, the difference between a Mac and an iPad is a bigger HD + keyboard on the former. I guess I understand that Apple isn’t pushing a tablet/keyboard form as some competitors are doing.

  • Luis Berumen

    Please delete I screwed up.

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  • http://pulse.yahoo.com/_5BHLNE6HC75ETNMNDKEEKLMF3M Steve Pederson

    Thinking about strategic implications for MS… Apple is a competitor making huge gains. But Google is an existential threat–literally challenging the whole idea that software is a product that can be charged for. Apple’s model always leaves room for MS to sell OS software to other manufacturers (who can’t use Apple’s), and sell apps on Apple’s platforms. In an Apple is winning world, MS always lives to fight another day.

    In fact even though Apple did try to embrace advertising with iAd, I think the idea of a cluttered, ad-supported world goes against Apple’s DNA.

    Apple may be drinking their milkshake, but Android threatens to kill their children.

    Unfortunately, Ballmer’s MS has never shown any ability to focus on what truly matters.

    He’ll go down in business history as the man who lost mobile and the future of computing.

    • http://www.facebook.com/people/Shameer-Mulji/1685212657 Shameer Mulji


      He’ll go down in business history as the man who lost mobile and the future of computing.”

      That’s assuming that Windows Phone & Windows 8 become a complete failure.  I don’t personally think they will but I”ve been wrong many a time before.

  • Anonymous

    I think we should be comparing OSX+iOS with Win+WinPhone. Apple has just done about 70m in the quarter I believe, and its rocketing.

    • Gerry

      iOS + Mac = 62m + 5.2 m = 67.2m
      Android = 60mWin licences sold = 75mcan’t find number of win phones sold

  • Alberth

    Heard an interesting discussion on recent efforts to bolster the automobile dashboard to embrace all things computing and communications. All the auto companies are trying to add the shiny new things in A/V, Internet services, Gps, communications, etc to participate in the new technology age. Then I heard an investor say that anytime he got into his fancy new car he hooked up his phone to the audio system for his latest music needs, maps, Internet, communications. The implication is that autos, like the phone carriers before them, would just remain a dumb pipe or dumb wheels replaced on a much slower time schedule. The more rapidly updated smartphones/tablets would be carried by the user in and out of the car and be the digital center. Calls into question if the auto efforts in digital are misplaced.

    • Gerry

      All cars need to do is leave a space on the dashboard to plug in an iPad.

    • Anonymous

      Given the different pad sizes already in the market, picking one, even if it for the iPad, will give the dash something of an 8 Track look as the tech evolves. I think some kind of slot that would accommodate the Pad or a phone would be enough. Especially with Siri, or her Android/Windows counterpart, much of the usable Internet info will be available while driving, and when she can read and transcribe docs, then the commute will become even more dangerous or interesting, depending upon your level of cynicism.

      • Davel

        Wireless. Why do you need a physical port? A short range wireless protocol should do the trick.

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  • Sensical

    Whenever I hear or read of iPad success I do think of the workers who make these devices for a pittance. I wish others would think of this before they make this purchase.

    • Anonymous

      I trust you will apply those same ethics to everything you buy. Toss in only buying Union Made products; and maybe throw in environmental damage, as well. Deregulated Capitalism has a less than sterling effect on everyone it touches.

    • Davel

      I agree with MarkS2002

      Western manufacturing has moved to China. The clothes on your back, the shoes on your feet, most technology products and some of the food that goes on your table come from Asia and a lot of it is from China. A friend told me recently that garlic in his store was from China.

      China is where the west was 100 or 200 years ago. They live in company rooms and eat company food. Not unlike the west as written about by Charles Dickens. It is reported that workers in China are reluctant to travel 100’s of miles for the job anymore. Their conditions are terrible but it seems that by getting paid multiples of what they would get otherwise they are willing to put up with the conditions.

      I am not apologizing for the situation, rather I am trying to explain the motivations.

      You can boycott Apple if you want, but to be fair you will need to boycott many others as well.

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

      I believe the demand for these jobs is quite high. Would those workers be better off if the absence of a purchase were to make them unemployed?

  • Davel

    Do you have any thoughts as to why Lenovo is bucking the trend?

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

      My guess would be that they are taking share from Dell in China.

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