September 17, 2010, 5:28 PM — A research report released late Thursday by Morgan Stanley analyst Katy Huberty paints a stark picture for notebook manufacturers.
The chart below that accompanied the report tracks year-over-year sales of notebook PCs in the United States. As you can see, it ain't pretty.
After jumping to 61 percent and 70 percent year-over-year sales in November and December, respectively, retail notebook sales growth has been on a steady downward path (with February being the sole exception). In August, sales growth finally went negative and, as Fortune's Philip Elmer-DeWitt points out, the first week of September indicates growth likely will remain in the red for the rest of the month. (Indeed, given that college students who want a notebook probably would have purchased one by now, that's almost a guarantee.)
Has the notebook market been undone in part by the advent this year of tablets, especially Apple's iPad? Hubert seems to think so, and the timing of Apple's 1) announcement in January and 2) launch in April of the iPad seems to track with the declining YoY notebook sales data. However, TechCrunch's Matt Burns also thinks it's worth considering that consumers may finally have concluded that notebooks suck. (He refers to them as "underpowered crap.")
I don't have a dog in this fight, since I tend to prefer overpowered crap and screens a bit larger than my BlackBerry's, but it'll be interesting to see how notebook manufacturers respond. The obvious quick remedy is lowering prices, but how low can you go before a sale isn't worth it?