The iPad is wreaking havoc on the personal-computer market. Hewlett-Packard Co’s consumer PC sales plunged 23% last quarter, and the company lopped $1 billion off its annual sales forecast.
And while rival Dell Inc beat analysts’ estimates because of corporate demand, its sales to consumers slumped 7.5%.
More than 70 million tablets like the Apple iPad will be sold in 2011, a total that will balloon to 246 million in three years, Jefferies & Co said.
“You’re walking into a buzz saw,” Jane Snorek, a senior research analyst at Nuveen Asset Management in Milwaukee, said of the iPad. Her firm manages more than $200 billion in assets. “The tablet is going to replace at least the home computer.”
At 7.3-inches across with a colour screen and an array of popular downloadable games like Angry Birds, applications for watching movies and reading magazines, and software for word processing and spreadsheets, the iPad has siphoned off more PC sales than analysts and executives predicted.
Apple, based in California, and run by Steve Jobs, sold 4.7 million iPads last quarter, for a total of about 20 million since the April 2010 debut.
The PC market, by contrast, declined last quarter. Global shipments fell 3.2%, hurt in part because some consumers bought tablets instead, research firm IDC reported last month.
While rivals including Research In Motion, Motorola Mobility Holdings and Samsung Electronics have begun selling tablets, the devices have yet to gain wide traction.
The lack of viable competitors was felt across the PC industry in the first quarter. Microsoft Windows sales fell 4.4% to $4.45 billion. Its net income of $5.23 billion was eclipsed by the $5.99 billion reported by Apple, which topped its rival in that measure for the first time in 20 years.
At Intel, whose processors run more than 80% of the world’s personal computers, growth in the PC-chip division came mainly from emerging markets and corporate sales. Hewlett-Packard, the top PC maker, Tuesday cleaved 20 cents a share from its annual earnings forecast, to $5, excluding items.
In a conference call on Tuesday, Apotheker bemoaned a “bifurcated” PC market, where companies are spending and consumers aren’t. Sales in the company's personal systems group fell 5.4% to $9.42 billion last quarter.
The success of the iPad, along with the iPhone and new versions of the Mac, helped Apple supplant Microsoft as the world's most valuable technology company last year.
Companies that aren’t selling tablets risk getting left behind, said Tony Ursillo, an analyst at Loomis Sayles & Co. “Most of the growth is going to come on the tablet side,” he said.