Is iPad cannibalizing Windows PC sales?

About a month ago I asked: "Will iPad cannibalize Mac sales?" Today's report that iPad is outselling the Mac is another reason to ask. The answer may not come until Apple releases second calendar quarter results, to see whether there's cannibalization or new revenue. Oh, but I can speculate, meantime.

RBC Capital Markets analyst Mike Abramsky released a report indicating that Apple is now selling about 200,000 iPads a week, compared to 246,000 iPhone 3GSes and 110,000 Macs. Data is for United States. That puts iPad's sales rate nearly double the Mac, and that's with constrained tablet supplies. How much greater could they be if Apple met demand.

I first saw the report in a post by All Things Digital's John Paczkowski, earlier today. On May 17, Paczkowski answered my question, or perhaps thought he did, with post: "Is the iPad Cannibalizing Mac Sales? Not Really." Piper Jaffray analyst Gene Munster asserted that, based on April US retail sales, "iPad has a minimal cannibalization impact on Mac sales, and could be slightly cannibalizing iPod sales."

But I wonder. Sales of a new product category typically come from completely new buyers or those buying the new thing instead of something else. The something else could be Macs, or even Windows PCs. As I asserted in late January: "iPad fills a gaping hole in the Mac product line between the aforementioned $399 and $999." Various iPad models sell between $429 and $829. "Apple now offers portable computers -- and that's how I classify iPhone, iPod touch and iPad along with Macs -- ranging from $99 to $2,499. From a pricing strategy perspective, iPad is a brilliant product, because it fills the gap between iPhone/iPod touch and Macbook without price cuts or risk to the Mac's premium brand status."

The cheapest Mac you can buy today is iPad. It's reasonable to ask if people who might otherwise buy a cheap Windows laptop are instead picking up iPad. It's also reasonable to presume that iPad will also cannibalize some Mac sales, particularly as education sales begin to kick in later in the quarter. But it's too early for there to be meaningful substantiating data, because:

  • Second calendar quarter tends to be stronger for Mac sales because of back-school-buying. However, iPad could reasonably appeal to educational institutions, particularly with budget cuts, as Macs.
  • About 45 percent of Apple sales are international, but iPad has only been available in the United States. The one market isn't measure enough to long-term gauge whether or not iPad will eat away global Mac sales.
  • Apple is heavily marketing iPad, but not Macs. Early marketing could be just as likely to generate new sales as take them away from some other Apple product.
  • Second quarter typically is slowest of the year for Windows PC sales, although it's typically strongest for Microsoft because of software license sales to businesses. Typical channel checks likely wouldn't yet reveal whether sales sluggishness, if any, would be seasonal or lost sales to iPad.
  • Recent stories about iPad cannibalizing netbook sales are probably wrong. I've looked over the data, and netbook sales declines started around the release of Windows 7. At least through April, cheap Windows 7 laptops almost certainly sucked away sales from netbooks. The question: What happened since?

So, I don't yet have a definitive answer to either question. For Apple, the best two scenarios would be iPad opening a whole new revenue stream without cannibalizing Mac sales and/or iPad taking away new Windows PC sales. My educated guess based on years covering Apple: iPad is opening a new revenue stream and pulling in new sales from Windows users who couldn't justifying $999 or more for a Mac. Additionally, I predict that iPad will cannibalize future Mac sales; people satisfied with the device will augment their existing Mac, delaying its replacement.

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