Thursday, August 18, 2011

HP Admits "iPad" Effect Is Real; Which Dell Announces Shortfall, Is the PC Market In Trouble?

According to HP, the tablet effect that Microsoft and other PC makers tried very hard to ignore is all too real. While HP doesn't specifically mention the iPad, no one thinks HP is referring to its own Touchpad, Playbook, Xoom, the Tab, or other Windows-based tablets. Obviously, with the iPad controlling a majority of the tablet market, consumers as well as some businesses are buying iPads and not buying laptops.

 Last quarter, even Apple admit that the iPad has cannabilized some Mac sales. The only thing is there is a way bigger chunk of PC market for the iPad to cannibalize. What's funny is that data companies like Gartner, which refuses to admit that the iPad is a computer but rather categorize it as a media tablet, never admit that the iPad was affecting PC sales.  Now that the world's biggest PC maker admit the "iPad" effect, I wonder what will these firms say the next time they release their PC data.

 And speak of the biggest PC maker in the world, HP may not be the biggest computer maker after all.  Apple would be the biggest computer maker in the world by volume if iPads were counted along with the Macs.  It means Apple shipped 13.6 million computers to HP's 9.7 million.  And to make matters worse, Apple has over 30% in operating margin while HP was pulling in less than 6%

So, what is going on here?  Is the PC market in trouble?  It's is difficult to say.  While Microsoft and others refuse to admit it public, they know that the iPad is killing them.  Microsoft's Windows revenue shrank last quarter just as Apple sold over 9 million iPads.

Furthermore, Dell provided a lower guidance this week when it reported its quarterly earnings but it did not mention the tablet market.  However, given today's HP news, it is not a difficult leap to believe that Dell also was affected by the iPad and anticipate rough waters ahead.

Meanwhile, in western Europe, Apple's Mac share increased to 7% from 5.6% a year ago.  And how did the other PC makers do?  On a while, the PC market shrank nearly 19%.  How much of that is because of tablets in general and the iPad specifically?

Microsoft promises Windows 8 for tablets next year.  We may see a reversal of the PC makers' fortune in 2012.  However, there is also the issue of the global economic condition.  At this time, things are not going well.

And given the economic risks and failure after failure of non-iPad tablets in 2011, Windows 8 tablet rollouts may not be as robust.  Keep in mind that Apple isn't done yet.  The iPad and Mac sales in Asia, especially Greater China, is continue to outpace the market by a wide margin.

Even with home field advantage, Apple's revenue in China is now bigger than Lenovo's own - $3.8 billion to $2.8 billion.  And that's before Apple's iPhone and iPad are being offered on other major carriers' networks.  Furthermore, Apple's retail reach is not as extensive as those as Lenovo.  Just wait until Apple opens up more stores.

It'll be interesting to revisit this issue in a quarter, in six months, and a year from now.  I wonder if we'll be able to recognize the PC market as we remember it today.

 Source: Light Reading, Appleinsider.


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