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    Apple iPad Cannibalization Hints at Microsoft Need for Windows 8

    By
    Nicholas Kolakowski
    -
    January 25, 2012
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      Apple apparently welcomes the iPad cannibalizing the market for both Windows PCs and Macs, according to comments made during the company’s Jan. 24 earnings call.

      “There is cannibalization clearly of the Mac by the iPad, but we continue to believe there is much more cannibalization of Windows PCs by the iPad,” Apple CEO Tim Cook told analysts and media listening to the call, “and there’s many more of them to cannibalize. And so we love that trend.”

      He also suggested that iOS devices are gaining more traction in the enterprise space, traditionally a stronghold for Windows PCs. “We’ve seen iPhones sort of being a catalyst,” he said. “And the iPad moves after the iPhone. And in several accounts, we’ve seen the Mac follow that. So there are clear examples where one product has pulled the other.”

      Apple’s revenue for its fiscal 2012 first quarter topped $46.33 billion, with a net profit of $13.06 billion. Quarterly iPad sales hit 15.43 million units.

      But Apple isn’t ready to totally dismiss Microsoft as a competitor in the mobility space, in which Google Android and Apple are battling for market share dominance. “So iOS is doing extremely well,” Cook added. “I wouldn’t say it’s a two-horse race. There’s a horse in Redmond that always suits up and runs and keeps running.”

      Nonetheless, Cook’s comments reinforce the theory underlying Microsoft’s own decision to port its upcoming Windows 8 to tablets in addition to traditional PCs. With businesses and consumers embracing mobile devices such as tablets and smartphones as one of their primary computing devices (if not their main device), Windows needs to spread to other form factors in order to stay relevant.

      Despite the Windows brand name and what will surely be an intensive marketing push, Windows 8 could face something of an uphill battle in attempting to seize share from the iPad. Other tablets have plunged into the tablet arena with huge advertising budgets and the stated aim of becoming an “iPad killer,” only to find apathetic customers and a general lack of buzz.

      “Our checks indicate most sales of most competing tablet offerings including the Motorola Xyboard, RIM PlayBook, HTC View 4G, Samsung Galaxy tab and several other Android-based devices,” T. Michael Walkley, an analyst with Canaccord Genuity, wrote in a Jan. 24 research note. “Also consistent with our checks, the Amazon Kindle Fire did not adversely impact iPad sales but more likely had a greater impact on e-reader sales.”

      And if Microsoft and its manufacturing partners begin rolling out Windows 8 tablets in the second half of the year, their shiny new devices could find themselves battling toe-to-toe against Apple’s next-generation tablet. Walkley predicted that the iPad 3 will debut during the June quarter.

      Follow Nicholas Kolakowski on Twitter

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      Nicholas Kolakowski
      Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.

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