Market research and analysis firm Canalys has announced that the PC market grew 7% in Q1 2011, as the pad market, led by Apple’s iPad, continued to bolster growth, with Apple cementing its position amongst the world’s top 5 PC vendors. Once again, Canalys observes, Apple set the standard in the pad market, mainly at the expense of notebook and netbook shipments, as pads competed for a share of consumer IT spend.
During the first quarter of this year, pad shipments reached 6.4 million units worldwide. Apple accounted for 74% of these shipments, while other vendors struggled to bring competitive products to market. Canalys expects that next quarter will see a significant change in the market, with products appearing from Acer, Asus, LG and RIM.
Apple continued with its strategy to dominate the pad market, with the iPad or iPad 2 available in 59 markets by the end of Q1. A combination of strong Q4 sales and the announcement of the iPad 2′s launch across major markets at the end of March contributed to Apple’s iPad shipments being down 31% sequentially. The full impact of the iPad 2 launch will not register until subsequent quarters, as Apple gets the product into the hands of consumers. While pad sales continued to lift Apple’s results, PC vendors with a focus on the consumer netbook and notebook market, such as Acer and Asus, did not fare so well.
Overstocked retail channels and unsteady consumer confidence in major European countries and the United States have cast a shadow over the potential for notebook market growth for the remainder of 2011, Canalys observes. Likewise, the tsunami and earthquakes in Japan led to an 8% slowdown in the local PC market there. The natural disasters also contributed to supply chain disruption and uncertainty – highlighted in many IT vendors quarterly financial reports – the consequences of which will continue to be felt in the second half of the year the analysts predict.
“Taking into consideration the iPad’s halo effect on the company’s other products, Apple has grown considerably in most markets worldwide,” says Canalys Analyst Tim Coulling. “As the iPad 2 and its competitors continue to roll out, we expect pad sales to propel PC market growth for the rest of the year.”
The findings of a recent consumer survey by Canalys show that current pad usage resembles that of a PC, rather than a media player or e-book reader. After web browsing, both pad owners and non-owners in Western Europe, linked pad usage to e-mail/messaging and social networking. Among pad owners, all three categories rated much higher than e-book reading and video watching. Non-owners, however, expected e-mail/messaging, e-book reading, and video watching to top pad usage after web browsing.
At least 10% of Western European pad owners surveyed by Canalys claimed to use over 24 different application categories, spread across communications, entertainment, leisure/lifestyle and financial/business. Educational apps were the only exception, only used by about 8% of pad owners.
iPad owners used a significantly wider range of categories than other pad users. The most popular apps among non-iPad owners tended to be relatively functional ones, such as e-mail, social networking, news and banking. While iPad owners also used these apps, they reported a much higher use of general web browsing and video consumption.
Feedback from potential pad owners shows how pad marketing campaigns, some of which refer to the devices as media tablets, have influenced their perceptions. In reality, pads have a wide range of uses. While browsing, for example, does include finding and consuming content, it also includes many other activities.
“This broad usage pattern reinforces the pads role as a general-purpose computing device, and much more than just a consumption device,” says Coulling. “The pad represents a real threat to PC and consumer electronics vendors, as it is capable of replacing devices in a range of other categories.”
Canalys attributes differences between iPad and non-iPad users to screen size, user experience, and app inventory. While the iPad has a 10″ screen, a large proportion of other pads have 7″ screens. There is evidence from video service providers, such as MobiTV, that the time consumers spend watching video on different devices is directly proportional to screen size. Non-iPad users choice of e-book reading over video watching as the most valuable app by four times as many respondents supports this conclusion.
“Vendors should continue to promote content consumption as an important benefit of pads, especially as ownership spreads to older consumers, while highlighting other uses of the device and preloading advanced browsers and localized messaging and social networking apps,” comments Canalys Chief Analyst Adam Daum. “Pad app stores also need to offer a broader inventory of both apps and content designed to take full advantage of a pads size and functionality.”
“Beyond a one-stop sales opportunity, content and apps provide vendors with the chance to drive new revenue streams,” says Daum. “Apple’s ecosystem suggests that pad owners will generate substantially higher average revenue from app and content sales than smart phone users. Through a combination of appropriate device marketing and app store strategy, device vendors can use apps and content to build customer loyalty.”
Canalys was the first analyst company to include pads within its PC market results. For hardware and software vendors, as well as service providers, this service tracks desktops, netbooks, notebooks and pads, as well as their routes to market. Canalys delivers overall volume forecasts and market shares for all PC categories.
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