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Microsoft exec confirms that tablets are eating into netbook sales

by Pete Mason on 5 November 2010, 14:33

Tags: Microsoft (NASDAQ:MSFT)

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A lot of analysts and commentators have repeatedly predicted that tablets will eat into netbook sales, but so far we haven't heard much from those in the industry who would actually feel the impact. Best Buy CEO Brian Dunn seemed to echo these sentiments a few months ago - though the company later downplayed the statement - but now a Microsoft executive has confirmed that the software-giant has also experienced the drop in demand.

In an interview with the Seattle P-I, general manager of Windows product management, Gavriella Schuster, described netbooks as belonging to a category of "and" devices. This grouping also includes tablets and smartphones, and she explained that the vast majority of people will use them to complement, rather than replace, a more traditional laptop or desktop. However, she made it clear that "[netbooks] are definitely getting cannibalized...These are really a second device. But they are getting cannibalized".

Obviously 'and devices' describes a pretty crowded category that will continue to become more competitive in the coming months, yet there's only so much consumer spending to go around. With interest in netbooks thought to be cooling, Microsoft risks losing a small but significant amount of income in licensing fees. Of course, the company still dominates the 'primary' PC market, so we doubt that the shift in spending habits will have too much of an impact on its bottom line.

The question is, with the problem identified, how will the company respond to a growing segment that is - at least in some way - affecting sales. Windows 7 - in unmodified form - doesn't provide a suitable tablet experience, though we've heard that Microsoft is working on custom interfaces with ASUS as well as pushing Windows Embedded Compact 7. However, this doesn't represent a unified strategy that will help the company tackle alternative platforms from Apple, Google and HP Palm.

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