The consumer PC market isn't floundering because of the iPad, in fact, the rate of cannibalization is actually declining among more recent purchasers, according to market researcher The NPD Group's Apple iPad Owner Study II report.

According to the report, only 14 percent of early iPad adopters (iPad owners of six months or more) abandoned a PC purchase for an iPad, and that dropped to just 12 percent of iPad owners who purchased over the past holiday season. In fact, cannibalization of netbooks is actually down by 50 percent among more recent iPad buyers, when compared to early adopter buyers.

"The explosion of computer sales when Windows 7 launched, as well as the huge increase in netbook sales at that time, are much more to blame for weak consumer PC sales growth than the iPad," said Stephen Baker, vice president of industry analysis at NPD. "Overall it appears that the vast majority of iPad purchases to-date have been incremental to the consumer technology industry."
Port Washington, New York-based NPD notes that under $500 segment of the Windows consumer notebook market grew by 21 percent for the 6 months ending March 2011 to become the largest segment of the consumer notebook market.

"The conventional wisdom that says tablet sales are eating into low- priced notebooks is most assuredly incorrect," continued Mr. Baker. "The over $500 Windows consumer notebooks market is where PC sales have been impacted the most, with a 25 percent decline from October 2010 to March 2011."

NPD said in it report that it's more than likely that iPad sales added billions of dollars to the industry's coffers after years of ASP declines draining the market. According to the report, nearly 75 percent of consumers who bought an iPad for themselves said they had no intentions of buying anything else, making all of those iPad purchases incremental sales volume.

That additional volume has spurred the development of new accessories opportunities that also serve to direct more money into the retail market. Approximately 83 percent of iPad owners have purchased an accessory for their iPad, with cases being the most popular. The sales opportunities are being spread across all manufacturers and retailers, not just Apple. Approximately 50 percent of all cases are non-Apple branded, and according to the report about 50 percent of cases and more than 60 percent of screen protectors were purchased at a different store than where the consumer purchased their iPad.

While consumers looked far and away to find the right product to accessorize their iPad, the expansion of distribution in the fourth quarter for the device itself had little impact on sales shares. Best Buy and Apple sold 3/4 of all devices during the holiday period. Comparatively speaking the carrier stores had much weaker results, accounting for just 3 percent of sales. Clearly, consumers' indifference to 3G connectivity was a driving factor as sales for the basic $499 WiFi only iPad increased by almost 33 percent during the holiday period to nearly one-in-three sales.

"Consumers just do not see the utility in 3G connectivity," said Mr. Baker. "There's an added expense for the device and for the service, something a majority of iPad owners aren't willing to pay. Since most iPads rarely venture away from home the value of a 3G connection is likely to diminish, especially as other tablets enter the market and pricing starts to fall. When every penny counts, features that aren't core to the user becoming increasingly marginalized as manufacturers fight for every sale."

PC Sales Down 3.2% in First Quarter

Research firm International Data Corporation said in March that a nearly 18 million tablets were shipped in 2010, with Apple's iPad accounting for 83 percent of the market. Apple is expected to face more competition this year from Samsung's Galaxy Tab and Motorola's Xoom. But with Apple's release of iPad 2 in April this year, IDC expects Apple to maintain between 70 and 80 percent of the 50 million tablet shipments expected for 2011.

As for personal computers, according to IDC, there were 346,198,000 PC units shipped in 2010, up 13.6% from 304.8 million units in 2009, with HP grabbing 18.5% of the market, and Dell having 12.3%. In the first quarter this year, PC shipments totaled 80.6 million, down 3.2% from 83.2 million in the first quarter of 2009.

"The U.S. and worldwide PC market continues to work through a difficult period that we expect will continue into next quarter, but will start to improve in the second half of the year," said Bob O'Donnell, program vice president, Clients and Displays, of IDC, in April. "Slower than expected commercial growth in the first quarter failed to offset the ongoing challenges in the consumer market. While it's tempting to blame the decline completely on the growth of media tablets, we believe other factors, including extended PC lifetimes and the lack of compelling new PC experiences, played equally significant roles."