Sales of Tablets to Impact Sales of Personal Computers – Analyst

The Success of Tablets Represents Threat for x86 PC Domination

by Anton Shilov
07/07/2010 | 02:17 PM

Slate-type personal computers cannot enable one to work properly, but they represent a nice way to consume certain content. Extrapolating the early success of Apple iPad tablet, many analysts believe that the new type of PCs will indeed become popular. Since many of those slates are not based on x86 and cannot run Windows operating system, their success can easily redefine the PC market in general.

 

“We believe [slate] category will have a negative impact on overall PC unit volumes, pushing out and even replacing some notebook sales. It is prudent to use a 30%-40% cannibalization rate of the low-end notebook market. Apple should be able to maintain a 70%-plus share of the category over the long haul given its enormous lead time to market, software, content, design and ease of use,” wrote Barclays Capital analyst Ben Reitzes in a note to clients, reports Barron’s web-site.

Mr. Reitzes reportedly has also trimmed his 2010 PC unit growth forecast to 19% from 21%, to reflect both the impact of the tablet and slowing growth in Europe and some other regions. The Barclays Capital analyst believes that media slates will sell at least 15 million units in 2010, growing to 28 million in 2011.

Unfortunately for the tablet market, there are not a lot of slate PCs available at the moment and it is hard to believe that sales of Apple iPad, which was sold in 3 million quantities in approximately three months of its formal availability, can affect sales of personal computers, which boast sales of approximately one million a day. As a result, the success of tablets depends fully on actual availability of appropriate products. But when and if there is a massive amount of slates available, they may cannibalize sales of loads of hardware and software products from the traditional PC market.

For example, Israel Hernandez, an analyst who covers software stocks, says the move toward slates leaves Microsoft vulnerable to loss of market share as consumers become less reliant on Windows-based PCs. Meanwhile, semiconductor analyst Tim Luke is trimming his forecast for x86 based processors for this year to 18% growth, from 20%, to reflect the lower PC forecast. Besides, Mr. Luke sees the tablet market as offering incremental opportunities for ARM, Broadcom, Nvidia, Qualcomm, Texas Instruments and others. Internet analyst Douglas Anmuth believes that tablets represent good opportunities for Google’s operating systems, e.g., Android and Chrome OS.

But while the mammoths of the PC industry may take a hit from slates, not only Advanced Micro Devices, Intel Corp., Microsoft and others are preparing products for tablets, even ARM itself claims that it will only command 50% of chip market for slates. Moreover, judging about the market of slates in general having only data about sales of Apple iPad in general is something that seems to be far-fetched. Apple is a vertically integrated company that controls hardware, software, services and its own business model. Such companies have long disappeared from the market of personal computers and slates will just turn into new kind of personal computers with different processors, operating systems, applications, etc. coming from certain suppliers, which is the same horizontal model that exists on the PC market nowadays. Will those slates be popular enough to affect sales of desktops and notebooks? Only time will tell.