Best Buy CEO: Apple’s iPad has cannibalized laptop PC sales by as much as 50%

[enzo1]

http://online.wsj.com/article/SB10001424052748703376504575491533125103528.html Shoppers this Christmas can expect to see more smartphones, electronic readers and touch-screen computers in the most prominent store displays, underscoring a dramatic shift to powerful portable devices that is fast changing the face of consumer electronics retailing," Miguel Bustillo reports for The Wall Street Journal. "The new priorities are plainly evident in the changing strategy of Best Buy Co., the nation's largest electronics retailer by revenue, which is now morphing into a mobile gadget specialist after decades of promoting the latest in big-screen televisions, desktop computers and high-fidelity stereos.

"Best Buy, which reported a 61% jump in second quarter profit Tuesday despite flat sales at stores open at least 14 months, said it will showcase devices such as Apple Inc.'s iPad tablet... On Tuesday, Best Buy said it will expand iPad distribution to all of its 1,093 U.S. stores Sept. 26," Bustillo reports. "Best Buy's strong results for the three months ended Aug. 28 were due to tight expense controls, increased sales of cellphones and services such as connecting televisions with home networks, and a stock repurchase program that reduced total shares outstanding.The earnings also underscored the trends buffeting consumer electronics retailers heading into Christmas. Best Buy said smartphone sales continued to rise compared with a year ago, as did portable computer totals, buoyed by the iPad."

Bustillo reports that Best Buy Chief Executive Brian Dunn said in an interview that "internal estimates showed that the iPad had cannibalized sales from laptop PCs by as much as 50%."

[scottmandue]

That and more and more people are buying laptops online where you can get a much better deal.

The only people buying computers/laptops at Best buy are the computer illiterate.

[BGCarrera32]

Originally Posted by enzo1

Bustillo reports that Best Buy Chief Executive Brian Dunn said in an interview that "internal estimates showed that the iPad had cannibalized sales from laptop PCs by as much as 50%."

Uh huh. I call b.s.... more people are buying online and direct from the manufacturer. I have almost no incentive to buy anything like a laptop or digital device from Best Buy when the teenage customer service is terrible and on-site service is non-existent, with the exception of Geek Squad which will charge you anyway.

[enzo1]

I agree Bestbuy sucks but they still do a lot of business, anyway.... A recent study by leading market research firm Technology Business Research, Inc. (TBR) finds that the tablet will displace many consumers' secondary PCs, creating a third major device category for personal computing and connectivity. The study points to the success of Apple's iPad as a demonstration that the consumer seeks quick, easy e-mail and Web access via a device that features more portability than a laptop PC while providing instant-on and more usability than a smartphone. Although laptop PCs will lose some ground to tablets, TBR believes the market will support all three device styles for computing and connectivity, including the laptop, tablet and smartphone.

"The rise of tablets is a clear signal of consumers' desire for different forms of information consumption. Tablet devices, such as the iPad, will shake up the personal computing ecosystem and the PC market," said Ezra Gottheil, Senior Analyst at TBR, in the press release. "Tablets will displace sales of consumers' secondary laptop PCs, while their primary PC will continue to maintain its role for tasks such as document creation, storing files, and editing photographs. The majority of consumers will still own a PC two or three years down the road, but they will increasingly leverage other devices for computing and web access needs."

TBR's iPad & Web Tablet Buyer Study surveyed 500 United States-based iPad owners and future buyers, who plan to purchase an iPad in the next six months. Key findings include:
• About a third of buyers replaced or will replace their PC with the iPad.
• Almost half of buyers use their iPad as their primary computing device.
• More than 80% of buyers stated the iPad met or exceeded expectations.

The TBR iPad & Web Tablet Buyer Study report documents the emergence of a third connectivity device in the consumer arsenal. The tablet category will be a vital piece of the computing ecosystem.

"The tablet device will rapidly establish itself as a powerful information consumption device in both the consumer and business markets," said TBR President Jon Lindy in the press release. "All those in the computing ecosystem must keep the tablet in mind when putting together their strategies for 2011 and beyond."

Survey data included:
• Respondent demographics and technology profiles
• Purchase criteria and purchase process
• Device usage and anticipated usage
• Satisfaction and desired improvements
• Attached purchases

Source: Technology Business Research, Inc.

[stomachmonkey]

Originally Posted by scottmandue

That and more and more people are buying laptops online where you can get a much better deal.

The only people buying computers/laptops at Best buy are the computer illiterate.

Originally Posted by BGCarrera32

Uh huh. I call b.s.... more people are buying online and direct from the manufacturer. I have almost no incentive to buy anything like a laptop or digital device from Best Buy when the teenage customer service is terrible and on-site service is non-existent, with the exception of Geek Squad which will charge you anyway.

Originally Posted by enzo1

Bustillo reports that Best Buy Chief Executive Brian Dunn said in an interview that "internal estimates showed that the iPad had cannibalized sales from laptop PCs by as much as 50%."

He cites internal estimates which would mean they are factoring pre/post iPad availability.

It would be one hell of a coincidence that 50% of BB's PC customers suddenly decided to buy elsewhere at the same time that the iPad became available.

He also notes they will make the iPad available in all of their retail locations.

Obviously they are seeing good sell thru.

[azasadny]

I'm not buying it (literally). I have always bought my PC's from Dell direct...

[enzo1]

Originally Posted by azasadny

I'm not buying it (literally). I have always bought my PC's from Dell direct...

Oh, that explains .... everything

[imcarthur]

"U.S. consumers will spend 17 percent less on CE this year than last, a new report projects."

"But despite the decline - the largest among 20 large, industrialized nations - important opportunities still exist within key product categories like netbooks, smartphones and HDTV . . . "

"In addition, with smartphone penetration at only 28 percent of U.S. households, category growth is a "sure thing,". . ."

Source: Twice

They are trying to follow the buyer.

As for the iPad, he didn't say that they were BB sales that hit their PC sales. Apple & online helped to deepen their "cannibalized sales".

Ian

[enzo1]

Originally Posted by stomachmonkey

Obviously they are seeing good sell thru.

Apple churning out the iPhone 4s - Apple 2.0 - Fortune Tech
P.E.D. reports, "Meanwhile, production capacity for the iPad, which finally caught up demand in late August, is scheduled to go up another 25% to 30% next quarter, according to Rakesh."

[stomachmonkey]

I love the "I don't buy there so that means no one else does" mentality.

[BGCarrera32]

Originally Posted by stomachmonkey

I love the "I don't buy there so that means no one else does" mentality.

I see your point but what does it for me is this:

"Best Buy's strong results for the three months ended Aug. 28 were due to tight expense controls, increased sales of cellphones and services such as connecting televisions with home networks, and a stock repurchase program that reduced total shares outstanding.

Ah hah! Now we know the real reason.

[enzo1]

and this is the rest of that paragraph..... .The earnings also underscored the trends buffeting consumer electronics retailers heading into Christmas. Best Buy said smartphone sales continued to rise compared with a year ago, as did portable computer totals, buoyed by the iPad.

[jyl]

You can look it up. I'd be surprised if stock repurchase boosted the EPS by more than a couple percent.

I know our next PC purchase will be an iPad, not another MacBook. Almost all the use of the second and third PC in the house is for browsing, email, video streaming. Don't need a laptop for that.

All consumer PC makers are reporting their consumer notebook sales, especially lower end ones and netbooks, are being hurt by iPad. Look at stock charts of INTC AMD NVDA STX WDC etc etc. The PC OEMs are rushing to launch tablets. But when iPad came out, all the pending tablet launches were cancelled because iPad was so good and so cheap relative to what the competitors expected. So they had to go back to the drawing board. And Android for tablets is still not ready yet. iPad has a clear field for holiday '10.

[BGCarrera32]

I am wrong. You guys win.

I guess I am looking at it too much from personal experience and not by the numbers. An iPad does not suit my needs (I'm not a lower end user), and Best Buy will never see another dime of my money. I have nothing against Apple.

[Neilk]

Originally Posted by imcarthur

"U.S. consumers will spend 17 percent less on CE this year than last, a new report projects."

"But despite the decline - the largest among 20 large, industrialized nations - important opportunities still exist within key product categories like netbooks, smartphones and HDTV . . . "

"In addition, with smartphone penetration at only 28 percent of U.S. households, category growth is a "sure thing,". . ."

Source: Twice

They are trying to follow the buyer.

As for the iPad, he didn't say that they were BB sales that hit their PC sales. Apple & online helped to deepen their "cannibalized sales".

Ian

It's easy to spend 17% less when as per the article "television sales fell despite the rollout of new 3D models, with both average prices and total volumes notching "low-double digit" declines compared with last year. "

So I can buy more things for a lot less money this year. I would love to get a HDTV for our bedroom, but between never watching TV in our bedroom and falling prices, I have no incentive to buy one. Plus I don't want to have to carry my 150lbs 30" glass TV downstairs and to the curb.

[imcarthur]

Granted. It is the shift in CE expenditure + the decrease that is hitting everyone hard - especially the independents. Cedia in Atlanta next week promises to be a telling show.

Ian

[Scott R]

Must be totally user based, what this says to me is the average user didn't need a laptop in the first place for what they do. I can't sit on the airplane and bang out a 1k lines of code on a touch screen, it's just not fast enough to keep up. Secondly the ipads we have here at work don't have enough power to run our applications. But I guess it plays a mean game of farmville.

[scottmandue]

I mean no disrespect.

As was pointed out this is an internal Best Buy thing.

All I get from the article is that BB laptop sales are falling drastically.

And BB is selling iPads.

Don't see what the big deal is, huge non event.

As I said in other threads I like the iPad but I won't be getting because it doesn't fit my lifestyle... I don't need a "pad device" a laptop will do just fine for me (at the same price).

[enzo1]

Samsung Galaxy Tab up on Amazon UK for equivalent of $1,063 | Electronista

[crustychief]

I just bought a Toshiba 17" laptop for 499. at the navy exchange. My wife wants an i-pad but I need RC airplane parts.