Tablet sales expected to overtake netbooks by 2012

The short-lived market growth by netbooks is expected to shift towards the lighter, more battery efficient tablet devices, according to Morgan Stanley's analyst Katy Huberty.

The increase in interest around mobile Internet and custom apps will help drive tablet demand, especially as consumers follow the popularity of the Apple iPad tablet.

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"We continue to believe the mobile Internet will ramp faster than the desktop Internet and will be bigger than most people think," Huberty said in the research note.  "A recent sign of this trend is our increased confidence in the outlook for iPad and tablet PC demand broadly given 1) strong initial iPad demand in the U.S. and abroad, 2) increasing evidence of netbook cannibalization, 3) early iPad usage patterns, and 4) the growing pipeline of tablet OEM announcements that signal investment in this emerging category."

The iPad has sold more than 2 million units since its release in April, with one million sold in the first four weeks.  Meanwhile, April 2010 year-over-year sales for netbooks dropped 13 percent, with a sales decline expected to carry on in the future.

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Another analyst group predicts a  total of 12 million tablet sales by the end of the year, with netbook sales estimated at 36 million units.  That's still a significant sales difference, but the figure will drop if netbook sales have peaked in early 2010 -- and netbook sales are expected to decline while tablet sales increase over the next two years.

There already has been concern related to tablet sales beginning to cannibalize netbook sales -- and that trend is expected to continue.

Apple previously said it would remain nimble on iPad pricing, and was willing to lower retail price depending on consumer demand.  A price cut hasn't been necessary, and the device is expected to continue racking up strong sales figures.

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We previously discussed the success of the popular netbook market, but a May survey said the iPad has already stolen one-third of netbook shoppers.  The Retrevo survey revealed that 78 percent of participants said they'd rather purchase an iPad than a netbook.

Will the deluge of tablet computers mean the end of netbooks? We don't think so, but it's not hard to swallow that tablets could become more popular than netbooks in the coming years.

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