The conventional wisdom goes something like this: Sales of Apple's iPad are so strong that they're cutting into PC sales. It makes sense, right? I mean, you see iPads all over the place. Those sales must be coming from somewhere. There's just one problem: There is zero evidence that the iPad has impacted overall PC sales at all. Meanwhile, there is ample evidence to suggest that the slowdown has other causes.
Cue up HP and Dell, which this week revealed that sales of PCs to consumers have tanked so far this year, a situation that is now stretching from Q1 into the current quarter. "Ah ha!" the Mac noobisphere cries. "More proof of the iPad effect!"
Nope. And for whatever it's worth, iPad sales are underperforming too. In fact, iPad sales are so far below expectations this year that analysts have been forced to dramatically reduce their calendar year unit sales expectations. Even Apple's internal iPad sales goals are now "out of reach," FBR analyst Craig Berger said.
So what's really happening?
HP—the world's biggest PC maker—reported this week that consumer PC sales were off a whopping 23 percent in the last quarter. Dell reported a drop of 7 percent in sales of PCs to consumers ... But since these sales just represent 20 percent of its product offerings, Dell says it's in fine shape, thank you very much. Acer? Its sales were flat year over year, but because its PC portfolio is made up largely of low-end netbooks that would most directly be impacted by the iPad, analysts are watching this company very closely.
As for the iPad, Apple claims that it is selling every device it can make, and that the demand is "staggering." But it also sold only 4.69 million iPads in Q1 2011, far below expectations. And now this year's iPad sales are being downgraded, not so much because Apple won't sell what it makes, but because it may never get ahead of demand and its competition is coming on strong.
Apple had expected to sell 40-45 million iPads this year, and some analysts had pegged the number as much higher. That's no longer the case: The 40-45 million figure is "out of reach" and Apple will lucky to ship just over 5 million units in the current quarter, a figure that would put total iPad sales at midyear at roughly 10-12 million units.
But the iPad isn't really the issue: Whatever the number, the product is a hit, and Apple has established a new product category. What we're more interested in is whether iPad sales—or overall tablet sales as other competition enters the market—is eating into PC sales.
Forrester reported this week that "tablet cannibalization" of the PC market—that is, sales of iPads to replace PCs—is only "a minor contributor" to slowing consumer PC sales. (And while it didn't specify this, I'd further argue that it only impacts netbook sales; no one is choosing between mid-level or high-end PCs and an iPad.) The problem is exactly what I reported back in late April, that Microsoft's lengthy Windows release cycle is really to blame. PC sales appear to be low now simply because they were artificially high a year ago, thanks to the recent release of Windows 7 at the time. This year-over-year change has had a far bigger effect on PC sales than the iPad.
"So many consumers bought new PCs when Windows 7 came out, and without a new version of Windows this year, there isn't the same catalyst to buy," Forrester's Sarah Rotman Epss wrote. "[And] tablet [i.e. iPad] owners are actually more likely than US online consumers in general to have recently bought a PC."
Forrester isn't the only analyst firm tossing sand on the "iPad is killing PC sales" myth: NPD also released a separate report a week ago noting that the iPad is not a "sales thief," and that the PC sales dropoff has other causes. Yep, you guessed it, the release of Windows 7 artificially bumped PC sales a year ago. But NPD took things a step further and said that even netbook sales were unaffected by the iPad. In fact, according to that company's data, sales of PCs costing $500 or less surged 25 percent between October 2010 and March 2011. And iPad owners are still buying PCs too, NPD said.
So much for conventional wisdom.