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Microsoft: Apple's iPad Is Killing Netbook Sales

The Seattle Post-Intelligencer reports that someone at Microsoft has finally admitted to the cannibalization of netbooks by the growing popularity of tablets.

Research and financial firms have reported this fact for months, yet many manufacturers state otherwise, reassuring consumers that netbooks still have a place. But there's no question that the iPad has played an important part in the declining netbook market, offering the same internet-based functions and price range in a convenient form factor while providing hundreds of thousands of apps.

As pointed out by the paper, netbooks grew in popularity around three years ago, however initially the devices didn't ship with Windows. Microsoft stepped in and changed that, and now 90-percent of the netbooks shipped today sport some form of Windows.

But now a threat is on the horizon, sparked by the launch of Apple's iPad and continues with Google Android-powered tablets poised to wash over the retail sector in Q4 2010 and in 2011. Microsoft's hold on the "and" PC market is diminishing, and real Windows-based iPad competitors aren't slated to launch until sometime next year.

Monday Microsoft's general manager for Windows product management Gavriella Schuster came clean in Building 37 of Microsoft's Redmond headquarters. On the conference table sat a little pink netbook, a device what Schuster calls an “and” device. Netbooks, tablets and smartphones aren't considered as replacements for desktops and laptops, but rather serve as additional devices.

"These are definitely getting cannibalized," Schuster said, pointing to the netbook. "These are really a second device.”

“But they are getting cannibalized,” Schuster added.

Research firm ChangeWave reported last month that PC manufacturers were forced to reduce U.S.-based netbook shipments in 2010. The report also said that touchscreen tablet manufacturers are working overtime to keep up with consumer demand.

According to Strategy Analytics, the Apple iPad claimed 95-percent of all sales in Q3 2010. Google Android-based tablets slipped from 2.9-percent to 2.3-percent in the same quarter while other devices willed in the remaining numbers. Netbook cannibalization should be fairly obvious.