Last year, netbooks enjoyed a real market success thanks to their cheap prices in a penny- pinching economy. Sales soared in businesses, colleges and retail stores. Then came the iPad earlier this year as a viable alternative, and now, six months later, we’re seeing the netbook wave crash.
Market researcher ChangeWave surveyed more than 3,000 consumers last month and found that only 14 percent who are planning to buy a laptop will pick a netbook. In comparison, demand for netbooks peaked last summer with nearly 25 percent of laptop buyers choosing a netbook.
“Netbooks are done,” says longtime technology analyst Rob Enderle.
While a death knell of the netbook market may be premature, there’s no question that the netbook is in a free fall. So what happened?
iPad Strikes Back
The netbook struck at the heart of an Apple core market: college-aged kids with MacBooks. So Apple made sure to deliver the iPad in the netbook’s $500 price point, whereas analysts expected the iPad to debut in the $1,000 range.
Then the iPad took off.
Apple has sold 7.5 million units since the iPad was released in April. More than 65 percent of Fortune 500 are deploying or piloting the iPad, Apple says. On the consumer front, Best Buy CEO Brian Dunn told the Wall Street Journal that the iPad has cannibalized laptop sales, especially netbooks, by as much as 50 percent.
Earlier last week consumer electronics shopping site Retrevo released results of a survey showing that the iPad is taking market share directly from the netbook. Thirty percent of potential netbook buyers are planning on getting an iPad instead, Retrevo reports.
The ChangeWave report states: “The decline of netbooks is attributable to a combination of factors including the end of the recession and the mounting penetration of tablet computers—notably the Apple iPad.”
Not only was the iPad a viable alternative to the cheap netbook, but also, laptop vendors began lowering their prices in response to the netbook. “I think that the increased value of tablets combined with the continued decline in price of mainstream notebooks squeezed the value of netbooks leading to a decline in their appeal,” says Gartner analyst Van Baker.
The bottom line: The netbook’s key value prop—a dirt cheap price—no longer holds sway over the computer market.
Mobile Content: Creation vs. Consumption
The netbook was supposed to trump the iPad because of its keyboard—that is, the iPad was considered a terrible computer for creating content. But perhaps the importance of generating content while being mobile was over blown, some analysts say.
“If you’re going to do a lot of typing, you’ll probably be at your desk,” says CEO David Patrick of Apperian, an enterprise mobile apps management vendor.
The iPad’s ability to render content on its big screen via touch may have been underestimated, too. “The Web changed things, and we simply didn’t grasp the full impact on client hardware very quickly,” Enderle says. “We didn’t put enough emphasis on the need for many to have an appliance that was focused on viewing content and doing e-mail and messaging.”
In the past, computers were largely productivity tools, not entertainment devices. But the iPad changed the way we look at mobile devices. “The iPad is fine for occasional content creation such as email or note taking,” Baker says, “and it excels at content consumption compared to most netbooks.”
The iPad is simply a better device for Web surfing and even researching, as compared to the netbook, Patrick adds. “The iPad is the dream that the netbook wanted to be.”
Tom Kaneshige covers Apple and Networking for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline. Email Tom at firstname.lastname@example.org.
Tom Kaneshige has been covering business and technology in Silicon Valley for two decades. As senior online writer at CIO.com, Tom covers Silicon Valley culture, BYOD and consumer tech in the enterprise.