Tablets Cannibalizing Both Laptops and Netbooks

Logic would suggest that tablet devices partly represent a new product category, but also partly will cannibalize some other related products, such as e-readers, laptops or netbooks.

Conventional wisdom suggests that, to the extent there is product substitution, tablets will cannibalize netbooks, and a new survey by Google (News - Alert) suggests there is some truth to that notion. About 9 percent of laptop shoppers, and 19 percent of notebook shoppers, indicated they at least considered buying a tablet instead.

One suspects there will be stronger substitution patterns over time as lower-cost tablets appear in the market. Looking only at device cost, and not capabilities, many consumers might conclude that a netbook or laptop costs $100 to $300 less than a tablet, thus providing the better combination of value and price. 

A change in tablet retail price could change behavior, though.

An evaluation by Google of searches for products ranging from e-readers and netbooks to tablets and laptops also finds a 1,328 percent increase in searches related to "tablets" between July 2009 and July 2010, while searches on "netbooks" declined by 50 percent over that same period. In a separate survey of shoppers, Google also found that 49 percent of shoppers start out undecided about which device, among these, they would buy. 

It stands to reason that there is less uncertainty about e-readers. The Google survey shows only 12 percent of shoppers would consider a laptop, netbook or tablet when they were looking for an e-reader. Conversely, 66 percent of netbook shoppers indicated they consider other devices. About 20 percent of shoppers looking for a laptop indicated they considered other devices while 29 percent of tablet shoppers said they weighed getting another device instead.

Netbook shoppers are five time more likely to consider a laptop than a tablet, suggesting that laptops and netbooks are considered to be functional substitutes. Some of the attitudes appear to have been time-sensitive. 

In December 2009, 54 percent of tablet shoppers indicated they considered other devices. By January 2010, the percentage that considered other devices was just 19 percent, suggesting a brief spike in tablet interest as the Apple (News - Alert) iPad came to market. 

In April 2010, about 19 percent of laptop shoppers at least considered buying a tablet, but by July 2010, the percentage of laptop shoppers reporting they considered a tablet was down to 9 percent. About 63 percent of netbook shoppers, on the other hand, reported evaluating laptops, while 13 percent of netbook shoppers said they considered a tablet. 

By way of contrast, no more than 13 percent of e-reader shoppers ever considered a tablet as a functional substitute. 

The shopper survey found that tablet prospects were 53 percent female, largely were 25 to 34, and were most concerned with appearance and style.

E-reader shoppers skewed male: about 64 percent were males. The typical e-reader shopper was 45 to 54. Laptop shoppers were 58 percent female. About 50 percent were between the ages of 18 and 34. 

Netbook shoppers were 46 percent male, between 35 and 44. Of shoppes considering both netbooks and tablets, about 37 percent say they lean towards getting a tablet, compared to 25 percent of those considering both a netbook and a tablet leaning toward buying a netbook.