Report: Tablets Could Cannibalize Netbook Shipments

The iPad frenzy is still going strong 3 days after Apple's "magical" tablet launched, and it's quickly becoming clear that this is just the beginning. Coming just around the corner is HP's Slate, a Windows 7-based tablet that will duke it out with the iPad, and so will every other upcoming tablet device currently in the pipeline.

Something has to give in the portable PC market, and according to DisplaySearch, netbooks will be the segment to budge. The concern for PC makers, says DisplaySearch, continues to be the razor-thin profit margins associated with netbooks. For this reason, manufacturers are expected to shift their focus to tablets and other higher-margin products.

This isn't to say that netbooks will soon be extinct, and in fact the market segment will continue to grow. DisplaySearch predicts that netbooks will account for about 20 percent of all portable PC shipments in 2010. And even though the profits aren't as high on netbooks, low pricing continues to be a big draw for consumers, as the average selling price has dropped from $400 to a little than $300. By comparison, Apple's iPad, which is expected to make up the bulk of tablet sales this year, starts at $499.