iPad is tops but doesn't replace a PC

Prepare for the Windows apocalypse.

Judging from the anticipation among giddy Apple investors, it's coming Monday when Apple releases its first full quarter of iPad sales.

Some analysts have speculated that with the iPad, Apple has finally found a way to topple Microsoft's 30-year dominance of personal computing.

Wall Street types are guessing Apple will report that it sold about 5 million iPads during the past quarter, providing more support for theories that the tablet's growth will overtake the lower end of the PC market and steadily make Windows and Microsoft less relevant.

Research firms are piling on with reports forecasting jaw-dropping increases in tablet sales. In contrast, PC sales are leveling off after the Windows 7 upgrade rush.

I wouldn't put all my chips on Apple just yet, though.

Not because the iPad isn't a great device. It's a terrific media browser that has finally shown the world the potential of slate computers and probably has defined the category's look and feel.

The first wave of iPad buyers love them and use them a lot — even in bed, say NPD surveys.

But it's still an expensive gadget that doesn't quite replace a full-blown computer.

What's really limited, though, are the number of people nowadays who can afford a $500 to $800 media-browsing device. Especially when it's in addition to a computer or two, a smartphone and a flat-panel TV.

Forecasts for huge growth in tablet sales are based, in part, on expectations that prices will come down.

Research firm Gartner on Friday said the average price of tablets will fall below $300 over the next two years. That will help worldwide sales expand from 19.5 million this year to 54.8 million in 2011 and 103.4 million in 2012.

Meanwhile, sales of less expensive electronic-reading devices are expected to triple this year, after Amazon.com's category-leading Kindle faces new competition and lowered prices.

In the U.S., about 6.4 million e-readers will be sold this year, up from 2.2 million last year, according to Consumer Electronics Association estimates. The CEA is predicting 7 million tablets will be sold in the U.S. and 14 million in 2011, when there are more affordable options.

At the same time, poor Intel is expecting only an 18 percent increase in PC sales this year. Chief Executive Paul Otellini said last week that the industry now ships more than 1 million PCs per day.

It's expecting even more growth as the essence of a PC — including processors, complex software and connectivity — spreads into TVs, cars and other devices.

One reason PC sales aren't accelerating faster is because consumers are being more careful with their spending.

If that's the case, I wonder what the average shopper will do when they see a $139 Kindle and a $500 iPad side by side in a Target or Wal-Mart this holiday season. Not to mention the $300 flat-screen TVs.

Wintel push

Microsoft may finally get into the game this year with some kind of Windows tablet, but even Steve Ballmer is saying the really cool ones won't come out until mid-2011, on specially designed new tablet chips from Intel. Those two companies haven't been dancing together publicly as they used to, but they seem to be gearing up for a big Wintel push on the tablet market next year.

They're not saying much now because they apparently don't have the goods ready. They also want to make a big splash at the Consumer Electronics Show in January, where Microsoft, Intel and computer companies will tee up their 2011 products.

My guess is that Microsoft will be emphasizing tablets built on a new version of Windows Embedded, a stripped-down version of its operating system that traditionally has been used for mobile devices and commercial products, such as cash registers and set-top boxes. It's the basis of Microsoft's slick new Windows Phone, and images have surfaced of upcoming tablets running the software. Microsoft's early work on portable media devices suffered because it tried to shoehorn in full versions of Windows.

And they won't just be competing with Apple's iPad. Within a month, all the major phone companies are expected to be selling a Samsung tablet running Google's Android software, presumably with a subsidized price well-below $500.

Stoking enthusiasm

Leading up to Monday's earnings report, Apple's been stoking enthusiasm about its products and stock, which climbed over $300 last week and made Apple the second-most valuable U.S. company after Exxon Mobil.

Last week, Apple said the iPad will soon be sold through Verizon and AT&T stores, and the latter will push the device to business customers. The Verizon announcement came shortly after stories surfaced of a Verizon iPhone, sending Apple fans and investors into a tizzy.

So much for a quiet period before Monday's earnings call.

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com.