Saturday, September 18, 2010, 01:15 am
Best Buy CEO backpedals on iPad cannibalization commentBrian Dunn, CEO of Best Buy, issued a statement Friday clarifying his earlier comment that the iPad had cannibalized sales of some notebook and netbook models by as much as 50 percent.
"The reports of the demise of these devices are grossly exaggerated," Dunn said, in a play on Mark Twain's famous quote.
"While they were fueled in part by a comment in The Wall Street Journal that was attributed to me, they are not an accurate depiction of what we're currently seeing. In fact, we see some shifts in consumption patterns, with tablet sales being an incremental opportunity. And as we said during our recent earnings call, we believe that computers will remain a very popular gift this holiday because of the very distinct and desirable benefits they offer consumers. That's why we intend to carry a broad selection of computing products and accessories, to address the demand we anticipate this season."
Best Buy had posted strong quarterly earnings this week and remained optimistic as it announced that the iPad would be coming to all of its retail stores. Dunn predicted that tablet devices would be "big for [Best Buy] during the holidays."
Dunn's original comment has been quickly disputed by analysts.
Katy Huberty with Morgan Stanley used NPD sales figures to place potential cannibalization at a much lower 25 percent.
Stephen Baker, a retail analyst with NPD, remained even more skeptical. An unreleased survey by NPD pegs the iPad's cannibalization of PC sales "in the mid-teens," according to a Computerworld report by Gregg Keizer.
Clearly, the iPad is a great product, but its way too early to say that its putting a significant hurt on the PC market, said Baker. In the future, in 2011, assuming that other tablets appear and the trend [in tablets] continues, cannibalization is likely.
According to Baker, the principal reason for the decline in notebook sales, which are down 4 percent year-over-year, is that last year's numbers were extraordinary and are difficult to match. At some point, the gravy train [of PC sales] has to wind down, Baker said. The end of the Windows 7 "bubble" and less aggressive back to school sales were also to blame, Baker noted.
Technology Business Research analyst Ezra Gottheil believes that cannibalization is definitely occurring, but consumers are buying the iPad "to replace a second or third PC." "Almost no one is giving up their main PC for an iPad," said Gottheil.
TBR's iPad & Web Tablet Buyer Study surveyed 500 U.S.-based iPad owners and future buyers. The survey found that a third of those surveyed replaced or will replace their PC with the iPad and almost half of buyers use their iPad as their primary computing device.
On Topic: Best Buy
- Following Apple, Microsoft to open mini-stores in Best Buy
- Best Buy launches limited-time trade-in program, $150 credit for iPhone 4 or 4S, free iPhone 5
- Best Buy to offer $50 off all iPhone 5 & 4S models starting Sunday
- Best Buy, Amazon knock 10% off Apple's MacBook Airs & iMacs for Mother's Day
- Best Buy MacBook Pro sale helps push down prices on 13" Retina models