Are Tablet PCs Killing The Netbook? Maybe.

This time last year, netbook sales were up nearly 900% from the same quarter a year earlier. No one really expected that growth rate to continue, but no one really expected netbook sales to fall off of a cliff, either. But while we're on the subject, no one really expected Tablet PCs to explode in the way they have, with Apple's iPad already selling over one million units and tons of competitors just around the corner.

It made sense when netbooks began to eat into conventional notebook sales somewhat, but they didn't really put a huge dent in things. Many people purchased netbooks as "second notebooks," meaning that they simply went from owning one mobile PC to two. But this whole netbook/tablet debate is something different. According to Morgan Stanley analyst Katy Huberty, growth of U.S. netbook sales have been slipping since January. Katy contends that this has a lot to do with Apple's huge marketing push surrounding the iPad launch, and sales dipped further in April when the iPad shipped.

But that can't be the only thing we take into consideration. The first month of each year is traditionally slow for PC sales; Christmas was the month before, and anyone getting a new PC probably received one during the holiday season. Either way, netbook sales skyrocketed in the early part of 2009, and now they're not only slowing, but sinking. Here's their official take: "“US consumer PC, and especially notebook, growth decelerated in January when Apple introduced the iPad and again in April when the iPad launched. “Given the corresponding increase in ASPs in the market, we believe much of the demand shortfall came from netbooks and low-cost notebooks. What’s more, US retail netbook unit growth decelerated to about 5 percent YoY in April from 25 percent in March and 53 percent in February, according to NPD."

Are we giving the iPad too much credit? Maybe, but it makes sense to think that the tablet form factor would become more attractive to select consumers over the netbook. They're even more portable, nearly as powerful, and for many, they'll do what they need it to do on the road: check e-mail, listen to music, and browse photos. In another report, an Alphawise survey found that 44% of iPad buyers actually purchased one as a notebook replacement, citing that they only needed limited functionality while on the go.

The netbook still has a place in the notebook arena, in our mind, but they'll need to seriously beef up internally in order to compete with the onslaught of tablets coming to market. Will the netbook be killed by the tablet? Imagine saying that to someone last year. You'd get some good laughs.