Reality Check: 'iPad Won’t Affect Netbook Sales'

Includes: AAPL, AMD, INTC
by: Research Recap

Are Intel (NASDAQ:INTC) chief executive Paul Otellini and Advance Micro Devices (NYSE:AMD) chief marketing officer Nigel Dessau in denial? Both are reported as saying that Apple’s iPad will not eat into sales of netbooks.

According to Morgan Stanley’s Katy Huberty, netbook sales peaked in July 2009 with a 641 percent year-on-year growth rate. However, in January it fell sharply to 68 percent and in April, to 5 percent. Huberty’s research suggests that sales became most sluggish when the iPad was announced in January and after it hit the stores in April. An estimated 1 million to 1.5 million iPads have been sold since its April 3 debut.

However, International Business Times reports that according to Otellini, demand for netbooks is stabilizing and the market is poised for growth. Citing data from IDC, Otellini said that in Mexico, about 53 percent of the laptop purchases were netbooks in Q4 2009 and the “phenomenon may replicate itself in places like India as the prices come down.”

In a similar vein, AMD’s Dessau said that while the market for netbooks is 30 million units a year, only about 10 million iPads are estimated to be sold in 2011.

Since when did 10 million become “only” – that’s one third of the volume of netbook sales in one year.

It may be true that the netbook market will continue to grow, but to suggest that the iPad won’t take a chunk of the market that netbooks would otherwise have gained defies logic. Get real.

Angus Robertson