Nintendo Games | Apple Ponders Ipad Cannibalization Of Pcs

July 23, 2010 – 10:16 pm

Apple Chief Operating Officer Tim Cook said Tuesday that the
iPad market is “very big” and speculated about cannibalization of PCs, while two market research firms upped their forecasts for tablet shipments in 2010.

As iPad continues to sell briskly, will it take a chunk out of PC sales?

During Apple’s third-quarter earnings conference call Tuesday, Cook mused about the continuing strong sales of the iPad and its potential to eat into PC sales. The iPad “is not following typical early adopter curve and taking a long time to cross into the mainstream…We are absolutely selling every unit (iPad) that we can make,” Cook said.

Cook continued. “Our guts tell us that this market is very big…if it turns out that iPad cannibalizes PCs, that’s fantastic for us because there is a lot of PCs to cannibalize,” he said.

This outlook varies somewhat with that of Intel, which supplies processors for the vast majority of PCs sold worldwide and sees tablets as merely additive. “I think this is an additive category of computing much like Netbooks were an additive category,” Intel Chief Financial Officer Stacy Smith said last week during Intel’s earnings conference call. Additive implies that there is little if any cannibalization of PCs.

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Cook also explained how the iPad may have a positive effect on Mac sales. “Historically…iPod created a halo for the Mac and, in fact, as the
iPod volumes took off you (saw) a dramatic change in Mac sales. So, could that happen on
iPhone and iPad? We’ll see,” he said. “The Mac has outgrown the market 17 straight quarters. However, the Mac share is still low, so there is still an enormous opportunity for the Mac to grow. And certainly the more customers we can introduce to Apple through iPad, and through iPhone, and through iPod, you would think that there might be some synergy with the Mac there.”

Meanwhile two market researchers on Tuesday revised their forecasts upward for tablets, of which the lion’s share in 2010 is Apple’s iPad. ABI Research said it “has revisited its forecasts, almost tripling the original estimate to reach about 11 million tablets expected to ship by the end of 2010…based both on the broader availability of the iPad.”

iSuppli, another market research firm, was even more bullish. “Amid indications that Apple Inc. is ratcheting up its iPad production targets to meet booming demand, iSuppli Corp. is ratcheting up its shipment forecast as well. iSuppli now predicts Apple will ship 12.9 million iPads in 2010, an increase from the previous forecast issued April 2nd of 7.1 million units.”

The only thing crimping iPad shipments is limited production capacity, iSuppli said. “iSuppli believes that the only limitation on iPad sales now is production–and not demand,” said Rhoda Alexander, director of monitor research for iSuppli.

Updated at 11:25 p.m. PDT adding Cook’s discussion of iPod, iPad and Mac sales.

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