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The PC Industry’s Worst Nightmare

Just the other night, while watching the DVR playback of a TV show, I had to fast forward through several iPad ads. It seemed almost every other station break had an iPad announcement, the very same one! You just know Apple was sending a message, and not just to potential customers.

Now running the same spot repeatedly might also be an accident of scheduling. An agency places the ads in random rotation, and sometimes random means consecutive, or maybe Apple felt the demographics of the show in question were closely aligned with the most likely iPad buyers. Or they sought saturation.

But there’s more.

When the iPad was first announced, industry analysts couldn’t figure out what to make of it. They came up with sales predictions that were all over the price, but mostly seriously underestimated the real consumer demand. They couldn’t reconcile the iPad with existing attempts to sell tablet-based computers that, aside from some business sales, were abject failures.

One estimate put total sales for all tablets in 2010 at five million. The iPad confounded most everyone, except possibly Apple, with 3.27 million units sold during the first quarter. Published reports have it that production has been ramped up anywhere from two to three million copies per month, and now there’s an estimate from UBS analyst Maynard Um that some 28 million may be sold in 2011.

If Apple gets anywhere near that, they will surely put Mac sales way back in the rearview mirror. Even the most optimistic estimates for next year peg sales of Apple’s original flagship product as roughly four million per quarter in 2011.

Yes, I know there are loads of iPad pretenders due out by then, most of which will likely run Google’s Android OS or the Chrome OS. There’s also the misguided assumption that Apple must fail in the mobile space because of their closed platform. It’s all a replay of the Mac versus Windows wars, where Microsoft emerged triumphant.

Without going into detail, there were other reasons besides that closed ecosystem that hurt the Mac in days of old, including Apple’s chronic marketing failures. Indeed, when Apple did license the OS and hardware designs to third parties, just as they were repeatedly asked to do, that action nearly killed the company. The skeptics got what they wished for, but the results weren’t quite what they expected.

Nowadays, the PC industry is really scrambling after tepid summer sales. It doesn’t appear that sales of the Mac have been impacted; they are still reported to be increasing faster than the industry as a whole.

But what about the iPad? Is it cannibalizing sales of other computers, and, if so, which ones? The industry analysts who are looking at the situation suggest that sales of the cheapest PCs are tanking, and companies who staked a lot on the low end, such as Acer, are due to be hurt the most.

If that’s the case, the PC box makers deserve to lose because they underestimated the public’s taste. The typical netbook doesn’t show a whit of innovation. It appears all the PC companies did was to make them as small as possible, using the cheapest components available. Little thought was given on how a tinier form factor PC would function with miniaturized versions of the standard components. I suppose they also hoped that customers might even upgrade to something better, rather than, having been burned once, buying someone else’s product, such as an iPad.

So is the iPad killing the netbook? Certainly you can buy netbooks for less than $300, so why spend upwards of $200 extra for an unproven gadget, one that can’t even run standard Mac software? Does that make sense?

Of course the iPad buyer profile is probably complicated. Many buy them not to replace the family or office Mac or PC, but to have a simple portable device that will let them postpone a computer upgrade. An iPad may also serve as an extra gadget.

If one’s need of a computer can be met with the apps Apple provides on the iPad, or are available from the App Store, it may well be that the iPad can replace a personal computer in many cases, particularly if you are more of a consumer than a creator.

On the long haul, Steve Jobs has told you all about Apple’s future direction, although not everyone is listening. The iPad and its successors are meant as the personal computers of the future, the ones that will take over the industry for the vast majority of people. Yes, the traditional PC desktop and note-books will still be around, but sales will not be near as high. It’s not that the era of the PC is over so much as the likely prospect that it will morph into a different sort of machine. Apple is betting it’ll be the iPad, and the rest of the PC industry clearly doesn’t know what to think. They’ll try anything, from regular PCs, to mobile devices that may also have “Pad” in the name, perhaps to fool people into thinking it’s all the same.

As most of you know, it’s not the name but what’s behind it that counts.