iPad isn't hurting PC sales, claims NPD

Talk about raining on the barbecue -- NPD claims iPad isn't cannibalizing PC sales after all. It's all just urban legend. Tell that to AdMob, Gartner and Nielsen, which all see a different trend.

Perhaps, it's all about positioning, or interpretation. Nielsen found that 3 percent of U.S. tablet owners had given up desktop PCs, while 2 percent gave up laptops. AdMob puts the number at 28 percent for both categories combined. NPD's survey of U.S. iPad owners falls between AdMob and Nielsen -- 14 percent for people who owned iPad six months or more and 12 percent for holiday purchasers. Those seem like pretty big numbers to me for a device only one year on the market.

But NPD sees another trend -- netbook cannibalization dropped 50 percent among recent iPad buyers compared to early adopters. Oh yeah? That's if six months lead time can be called early adoption of anything.

"The conventional wisdom that says tablet sales are eating into low- priced notebooks is most assuredly incorrect," Stephen Baker, vice president of industry analysis at NPD, says in a statement issued today. "The over $500 Windows consumer notebooks market is where PC sales have been impacted the most, with a 25 percent decline from October 2010 to March 2011."

The sub-$500 notebook segment is now the largest at U.S. retail, growing 21 percent during the six months that ended in March.

"The explosion of computer sales when Windows 7 launched, as well as the huge increase in netbook sales at that time, are much more to blame for weak consumer PC sales growth than the iPad," said Stephen Baker. "Overall it appears that the vast majority of iPad purchases to-date have been incremental to the consumer technology industry."

Conventional wisdom has been that people buying iPad displaced PC sales -- hence the cannibalization. NPD says this is fantasy -- 75 percent of consumers buying iPad hadn't planned on making other purchases. NPD sees iPad as adding incremental volume rather than taking it away from PCs.

Gartner, which is looking at the global market -- not just U.S. retail -- has a different take: "Weak demand for consumer PCs was the biggest inhibitor of growth," Mikako Kitagawa, Gartner principal analyst, says in a statement issued last month. "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."

Still, NPD's observations about incremental volume benefits make sense: Eight out of 10 iPad owners have purchased at least one accessory. Typically this is a case, and 50 percent are third-party brands. Apple and Best Buy accounted for about three out of every four iPad sales during the holidays.

NPD sees consumer resistance to the 3G, which should be a cautionary tale for carriers offering Android tablets with two-year data contract commitments.

"Consumers just do not see the utility in 3G connectivity," Baker says. "There's an added expense for the device and for the service, something a majority of iPad owners aren't willing to pay. Since most iPads rarely venture away from home the value of a 3G connection is likely to diminish, especially as other tablets enter the market and pricing starts to fall. When every penny counts, features that aren't core to the user becoming increasingly marginalized as manufacturers fight for every sale."

Apologies, I would more typically contact Baker for additional color, but on the news front this morning I'm caught between the Skype acquisition rock and Google I/O hard place.