Apple competitors in the are reeling as the iPad effect grabs a chunk of sales and threatens to raise netbook component prices, principally display prices.

Display prices may rise if screen makers get their way. That’s because of increasing demand for displays, prices for which have already fallen to cost levels. Indeed, manufactuers are increasingly more interested in the fast-rising tablet market than they are in the netbooks and notebook markets.

No suprise when you consider recent comments (later retracted) from the top level of Best Buy who claimed the iPad had eroded 50 per cent of common notebook PC sales. (Despite the retraction I think the stat may have held some merit).

The next statement in the Digitimes report is rather telling:

The launch of Apple’s iPad has dampened the sales of netbooks, and with the prices of netbooks dropping below costs amid decreasing shipments, panel makers would rather transfer their capacities to produce tablet PC panels as producing netbook panels means losing money.”

“Samsung Electronics and LG Display, which both supply iPad panels to Apple, have seen their 12-inch and smaller notebook (including netbook and iPad) panel shipments continue to increase. Samsung’s 12-inch and smaller notebook panel shipments increased to 1.25 million units in August, up from only 650,000 units in May.”

With prices for 10- and 11.6-inch panels already falling below the cost of manufacture, suppliers are losing cash on every deal. But increasing panel prices will impact netbook prices, driving them up and further impacting demand.

The netbook market (without iPad) is expected to reach 39-43 million units in 2010, and remain flat in 2011 with about 40 million units in 2011. The tablet PC market (including iPad) is expected to reach 15 million units in 2010 and double to 30 million units in 2011.

Image above: Look, it really is a magical iPad.

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