Fears of iPad Cannabalization Lower PC Sales Estimates



Woe be the PC maker. That seems to be the message coming from a number of analysts, slashing expectations in the face of growing tablet demand. The latest to adopt shrinking expectations is Morgan Stanley analyst Katy Huberty. Huberty cut her PC growth estimates for 2011 to two percent, down from seven percent. Tablets will cut 29 percent of PC demand, she estimates.

Acer, maker of many low-cost netbook PCs, could be the hardest hit. According to IDC, the PC maker’s first quarter 2011 U.S. shipments fell 42 percent, compared to the same period in 2010. Dell, who Huberty says faces the “greatest risk” due to falling commercial demand and rising supply costs, saw first-quarter growth fall 11.8 percent.

As we reported Thursday, if only the PC industry would count tablets among their sales, the future would not be so grim. Analysts expect PC growth to be around four percent in 2012. However, if rocketing tablet sales were included, PC growth for next year would nearly triple to 11 percent.

Faced with overall declining growth and Apple posting record profits, it came as little surprise when Microsoft Thursday reported netbook sales fell 40 percent coupled with the second straight quarter of declining Windows profits. To cap off the bad news, Microsoft was passed by Apple based on quarterly revenue.

By comparison, Huberty retains strong expectations for tablet growth. Tablet makers should ship 55 million devices in 2011 with 85 million projected next year. All of the data begs the question what PC makers are waiting for before they classify tablets as a new form of personal computer.