Growth in netbook sales slows in anticipation of Apple's iPad

As the launch of Apple's iPad looms, a new report alleges that HP and Dell have cut back production of low-cost, low-power netbooks after the market saw relatively slow growth in the first quarter of 2010.

This week, Taiwanese industry publication DigiTimes reported that major netbook makers have had second thoughts about the booming low-cost market, which offers minimal profits to hardware vendors.

"Hewlett-Packard (HP) and Dell have both significantly reduced their investments in the 10-inch netbook segment, with HP reportedly even considering quitting the 10-inch netbook market and turning its focus to AMD-based 11.6-inch notebooks because profits from Intel Pine Trail-based netbooks have been lower than expected, according to sources from notebook makers," the report said.

It added that a majority of second-tier netbook vendors have quit the market after the top brands began cutting their prices in the second half of 2009. Acer, Asustek, and Samsung, however, remain active in the market.

In addition, according BusinessWeek, market research firm IDC has revealed new sales data that showed netbook shipments to retailers from January through March 2010 grew 33.6 year-over-year, to 4.8 million units. While that is still an increase, it pales in comparison to the first quarter of 2009, when netbook sales jumped 872 percent to 3.6 million units.

The report noted that the iPad, set to launch on Saturday, may have played a part in slower sales growth for netbooks at the start of 2010. Apple has positioned its device as a counter to both the netbook market and dedicated e-readers like the Amazon Kindle.

When the iPad was first unveiled in January, Apple co-founder Steve Jobs directly compared it to existing netbooks on the market, noting that he felt the new product was lighter and more useful than low-cost netbooks, which he said are just "cheap laptops." With a 9.7-inch display and weighing just 1.5 pounds, the keyboard-less, touchscreen iPad is a much different form factor from the traditional laptop.

One recent survey found that most who plan to purchase an iPad intend to use it for work on the go. The poll of 770 smartphone owners found that more than half said the iPad, or a similar tablet, would serve as a netbook replacement.

Another study found that most consumers who plan to buy an iPad will rely on it for a variety of functions, suggesting it will serve as more of a netbook than an e-reader. The ChangeWave Survey found that 68 percent of respondents said they would surf the Internet with the iPad, 44 percent would check e-mail, and 37 percent are interested in reading e-books.

In addition, analysts on Wall Street believe that the introduction of the iPad will have the greatest impact on netbook purchases, thanks mostly to its starting price of $499.