iPad Cannibalizing Mac Sales?

By Reuters  |  Print this article Print

In introducing the new MacBook Air, Apple CEO Steve Jobs said: "We asked ourselves what would happen if a MacBook and an iPad hooked up? Well, this is the result."

While plenty of attention is lavished on the iPhone and iPad, the Mac has been critical to the company's success over past years. Apple sold $22 billion worth of Macs in fiscal 2010, comprising one-third of its revenue. Shipments rose more than 30 percent and far outpaced the overall market.

Investors have wondered whether the iPad, a 10-inch touchscreen tablet that began selling in April from $499, would cannibalize sales of the Mac -- as it has done for low-end, Windows-based laptops known as netbooks.

Gartner analyst Mike McGuire does not expect much cannibalization between iPad and Macs because of the gulf in price tags. He said the Air will try to bridge Apple's newer and older product lines.

"It's that missing link between the tablet future and the existing notebook," he said.

Jobs also showed off a new version of Mac operating software, which the company will release next summer. Nicknamed "Lion," it includes an improved "iLife" multimedia suite and incorporates FaceTime video chat, which the company recently launched on the iPhone.

FaceTime will allow for video calls between iPhones, iPod touches and Macs. Over 19 million Apple devices are already equipped with FaceTime, Jobs said. It released a test version of FaceTime for the Mac on Wednesday.

The App Store for the Mac will go live within 90 days, and developers will be able to start submitting apps next month. They will get 70 percent of the revenue from sales.

The original App Store debuted in 2008 and helped spur sales of the iPhone by providing a wealth of fun, useful or merely diverting programs for sale, at the touch of a button.

It houses more than 250,000 apps and has generated over 7 billion downloads. In addition, more than 30,000 apps have been specifically made for the iPad.

In the third calendar quarter, Apple became the No. 3 personal computer maker in the United States with a 10.6 percent market share, according to IDC. It holds roughly 20 percent of the U.S. consumer market.

But Apple's global market share is less than 5 percent, and the company is aiming to increase sales outside its U.S. stronghold. The Mac user base overall now stands at nearly 50 million.

Apple shares rose 0.3 percent to close at $310.53 on Nasdaq. (Reporting by Gabriel Madway and Edwin Chan; Editing by Robert MacMillan and Richard Chang)