The term "disruptive," a common buzzword in tech journalism, is typically used to describe something that jars people out of existing ways of doing things, and provides them with both new ways to do the old things and new things to do. Weather-beaten as the expression might be, it fits when talking about two products that took personal computing by storm over the past couple of years: the iPad and the netbook.
There has been a lot of talk about whether the iPad will take the place of the netbook -- or, in fact, whether it will eat into the market share for more mainstream desktop and laptop computers. Netbooks have already formed a market of their own alongside and apart from other PCs. But the iPad has a long way to go before it becomes a netbook killer -- if only because it has created a space all its own.
New tech for old
In the abstract, both netbooks and the iPad are nothing new -- there were small laptops and tablets available long before either of these more recent devices appeared on the market. But what made all the difference was the degree of fit and polish brought to the new products.
For example, current technology made it possible to offer far better communications capabilities than before. The ubiquity of high-speed wireless networking, via both current Wi-Fi and cellular networks, made it much easier for people to take those devices along with them and not be limited by what was actually on the hard drive.
In addition, for many users, desktop PCs are taking a back seat to high-end laptops. With each passing year, the performance gap between a "small" machine and a "big" machine shrinks that much more. And as raw power matters that much less, convenience and connectivity matter all the more.
Netbooks' rise and fall
When netbooks first appeared in late 2007 -- kicked off by the introduction of Asus' Eee PC 701 -- sales for the devices exploded by 872%, according to Gartner analyst Mikako Kitagawa. For a while, it looked like PC sales in general would shift heavily toward netbooks and that conventional PCs would lose out.
But things have tapered off since then, with netbooks or mini-laptops at 18.4% of total worldwide PC sales as of the first quarter of 2010. Shortly before the introduction of the iPad, Cliff Edwards of Bloomberg Businessweek wrote that the explosion in netbook sales in 2008 was fueled by the recession, but that consumers "were disappointed by flimsy keyboards, unfamiliar operating systems and a lack of programs that could be run on the machines." (This was most likely an allusion to many of the first-generation netbooks being Linux-powered.) "After a remarkable rise," he continued, "netbooks' popularity may already have peaked."
The iPad rises
There's no denying that the iPad has, more than anything else, the power to command attention. It's a trend-setter. Even before the iPad was released, speculation raged about what competing products might already be on the way.
In contrast to netbooks, the iPad seems likely to experience a long, steady growth in its popularity, in much the same way Apple's other flagship products have become market cornerstones that are nearly impossible to displace. The iPhone and iPod may not be the biggest sellers in their respective markets, but they command incredible brand loyalty. Fans of any one particular iteration of the device almost always buy the next one -- a trend that seems likely to continue when a new edition of the iPad is introduced.
Although initial sales were impressive, it's not yet clear how many non-Apple users will opt for the iPad. One possible point of reference is how many of Apple's earlier auxiliary products -- the iPhone and the iPod -- were used by people who were not Mac users. In NPD Group's 2009 Household Penetration Study, 36% of computer-owning households overall owned an iPod, which, given the general percentage of Macs to non-Mac computers, means that the odds are there that there are quite a few PC/Windows users with iPods.
In addition, according to Technology Business Research analyst Ezra Gottheil, there are approximately 5.6 times the number of non-Mac Apple devices in use than Macs -- even taking into consideration those Mac users who may own more than one non-Mac device, that probably includes a good number of PC users.
That said, those with an existing investment in a Windows PC and its software may not opt for the iPad when they can get a full-blown laptop for the same money or less. Or they may. As Gottheil puts it, "The choice of device depends more on the use than the user." In other words, it isn't always possible to predict what someone's usage of a secondary computer is going to be based on what they already use.
Whether or not existing Windows users will choose the iPad is about to get even more complicated by the impending introduction of tablets powered by Android and Windows 7. It's hard to say what impact they will have, especially since it isn't clear yet how they'll stack up against their biggest common competitor, but there's little doubt that the iPad set an example for them to follow, and possibly exceed.
Are iPads displacing netbooks?
Few analysts believe that the iPad will eat into netbook, laptop or desktop PC sales in a significant way. "The iPod Touch was probably the largest victim of iPad sales," says Gottheil. "Cannibalization of other devices, including smartphones and netbooks, will increase as the market shifts from early adopters, who tend to buy one of everything, to buyers looking to fill specific needs. As new lower-priced tablets enter the market, they will put a larger dent in the netbook market."
Longtime Windows analyst Paul Thurrott came to a similar conclusion in a blog entry in May of this year. He quoted a Wall Street Journal article that asserted that netbooks have actually had some of the wind knocked out of their sails in the past year or so by higher-end lightweight laptops, which are often used as both auxiliaries and replacements for desktop machines.
In short, changes in the netbook market cannot exclusively be attributed to the iPad. They're symptoms of the natural limitations of the market for those devices. Few people expected the original netbook growth spurt to be sustainable (and, sure enough, it wasn't). Likewise, no one expects the desktop/laptop PC market to be subsumed by either netbooks or tablets.
There remains the possibility that future (rather than present) netbook sales are at risk. If by the end of the year the iPad's sales hit 6 million (sales currently stand at 3 million-plus, and they're climbing), that would be roughly one-tenth of the projected sales for netbooks this year. It's again not clear that such sales would come at the expense of netbooks; even apart from users' buying habits, the netbook market remains an order of magnitude larger. But Apple is less concerned about cornering a whole market; it would much rather sell a hotly desired brand.
Complements rather than replacements
Netbooks and the iPad have typically been described as "complementary" devices. They generally aren't replacements for a main computer, but rather are an adjunct. They allow people to take basic computing and connectivity on the road without a lot of extra weight.
However, the average computing capacity of netbooks has risen dramatically since their introduction -- and with that, so has the way netbooks complement their desktop (or full-size laptop) counterparts. With netbooks, the main constraint isn't processing power or storage, but screen size. Most people don't use them for work that demands a large display or multiple displays. The fact that, while away from their main computer, they have access to the vast majority of programs they normally run more than compensates.
The application mix for the iPad also reflects its complementary nature. While many of the top apps for the iPad are games or readers/browsers of one kind or another -- Netflix, iBooks, USA Today -- three of the top downloaded apps for the iPad, as of April 2010, were productivity applications, namely Pages, Keynote and Numbers, all from Apple's iWork suite. It's likely that iPad users aren't downloading those programs to create new content so much as to access and edit existing content -- for instance, to take a presentation on the road.
That being said, when people have a laptop as their primary PC to begin with -- something that is happening more often -- they may opt to skip buying an auxiliary device entirely, especially if what they already have is portable enough for their needs.
Creating vs. consuming
"Form follows function" is an old adage about design. But the reverse is also true: Function follows form. This especially applies to the iPad, according to some. "The iPad is not designed for content creation, but more for content consumption," claims Kitagawa.
But do "consumers" opt for the iPad, while "producers" opt for netbooks, because of their respective designs? It's a tempting theory, since it makes it that much easier to predict who will want what.
The problem with this idea is that "producers" and "consumers" aren't static categories. People freely wander between them all the time, even within the course of their chosen activities. A programmer with a two- or three-screen workstation may opt for the iPad as her secondary device because she doesn't want to crunch code when she's away from her main PC. Likewise, someone who reads e-books on the go may end up opting for a netbook because the keyboard lets him make annotations or write critiques of the books all the more easily.
And while the iPad may not allow content creation in the same manner as a netbook, it's making new kinds of content creation possible. Consider Autodesk's SketchBook Pro, a drawing app that allows users to create remarkable-looking art with only a finger -- something made possible by the iPad's touch screen.
In other words, the "producer vs. consumer" argument that has been so popular is something of a misfire.
All apps vs. some apps
A major contrast between the iPad and netbooks generally has to do with where they get their apps. Windows-based netbooks can run almost any Windows application; they're open-ended. The iPad, with Apple's App Store, is closed-ended for the sake of creating a tightly managed end-user experience.
How users react to this seems to revolve around how they see the device generally. If they see the iPad as a larger version of, say, the iPhone (which has always run its own proprietary app collection), it's less objectionable. If they see it as a laptop equivalent and consequently expect some access to their existing apps, it's easier for them to be annoyed.
Based on the path the iPad has taken so far, it seems likely that rather than imitating netbooks, laptops or desktop computers, it will continue to exist in its own category and be shaped by the types of applications that are developed specifically for it.
As Jenna Wortham of The New York Times puts it: "The iPad is a chameleon, ready to be transformed by the software running on it."
Where are we going from here?
Now that netbooks have found their niche as travel devices rather than PC replacements, and the iPad is already a trend-setter, what comes next?
For one, desktop PC sales aren't going to be directly decimated by any of this. If anything, netbook and iPad sales may help the primary PC market in the long run. Gottheil describes it this way: "Netbooks displace some sales of the least expensive PCs for price-sensitive purchasers, especially in emerging markets, but they also expand the low-end market [for PCs] by lowering the entry price, so the net effect to primary PC sales is positive. The same will be true as less expensive tablets enter the market. Useful portable non-PC devices will enhance desktop sales, as purchasers choose to pair a larger, stationary device with a smaller, portable one."
It may take two or more years for the tablet market to reach that competitive a price point, but the effect on PC prices is still clear: It'll force them down that much further. What's tougher to predict is how the two-or-more device model might be offset by those who buy a portable device as their one and only machine, and relegate the full-blown desktop -- the default "PC" form factor -- to just one niche among many.
The most disruptive threat posed by the iPad is that it's still in the process of finding and cultivating its niche. The established presence of netbooks -- and the introduction of slates in the spirit of the iPad -- won't allow that disruption to go unchallenged at first.
What's really shaking up the computer market -- and that includes the continued presence of netbooks -- is how the palette of computers out there has become so broad that no one form factor is the default. Netbooks won't be runaway bestsellers like before, but only because they'll just be one form factor among many -- with each kind potentially being the primary computer for a different class of user. One size no longer has to fit all.
Serdar Yegulalp has been writing about computers and information technology for over 15 years for a variety of publications, including InformationWeek and Windows Magazine.
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