Production Delays Mean iPad Inventories May Be Tight at Launch
When Apple’s new iPad slate begins to arrive at market later this month, limited availability may leave some early adopters empty-handed–assuming it goes on sale this month at all.
In a research note this morning, Canaccord Adams analyst Peter Misek says he has heard rumblings that production issues at Apple’s (AAPL) manufacturing partners may keep the company’s iPad in short supply when it first goes on sale.
“We have…heard that the upcoming iPad launch may be somewhat limited as a manufacturing bottleneck has impacted production of Apple’s newest device,” Misek writes.
“An unspecified production problem at the iPad’s manufacturer, Hon Hai Precision,” the analyst explains, “will likely limit the launch region to the US and the number of units available to roughly 300K in the month of March, far lower than the company’s initial estimate of 1,000K units.”
Looking ahead, he adds, “The delay in production ramp will likely impact Apple’s April unit estimate of 800K as well. It is also possible that, given the limited number of units available in March, the launch will be delayed for a month.”
If Misek is right–and that’s a big if; Misek’s prediction earlier this year that Apple would debut a brand new iPhone on Verizon (VZ) at its January special event proved woefully off–it’s a slight setback for Apple, which obviously wants to take good advantage of enthusiasm for the device to really blow out first-year sales. That said, since this would be only a temporary production delay, it probably wouldn’t have that much effect on sales.
Says Misek: “We believe that the only material impact from the iPad delay could come in the form of frustrated consumers and some modest loss of lustre for the company’s product launch.” He figures Apple will sell 550,000 units in its third quarter, which ends in June, 1.2 million in fiscal year 2010 and 3.5 million in 2011.
Comments
Would the possible shortage of iPads be of Apple's own doing? It may make more people eager to get their hands on this hard to find device. It would definitely create a bigger buzz and more hype.
iPad news and updates:
http://iPadLot.com
Posted by fretboard at March 1st, 2010 at 1:52 pmPeter Misek is the same guy who predicted that iPhone OS 4.0 service would be unveiled and a Verizon deal announced at Apple's January event. You might want to point that out when reporting on his predictions. He is likely making stuff up to get his name in print, since there appears to be no penalty for being laughably wrong.
Posted by Ted_T at March 1st, 2010 at 4:26 pmWhy does your lead say “assuming it goes on sale this month at all” when the worst-case scenario you report is for a limit of 300,000? Could it be cheap sensationalism?
Posted by howardweaver at March 1st, 2010 at 10:46 pmNo. Here's Misek, quoted in the post above. “The delay in production ramp will likely impact Apple’s April unit estimate of 800K as well. It is also possible that, given the limited number of units available in March, the launch will be delayed for a month.”
Posted by JohnPaczkowski at March 1st, 2010 at 11:49 pmI think his sales estimates through end of 2011 are way low.
If Apple sells 20 million iPads by the end of 2011, that would match what the iPhone/iPod touch did in their first 18 months. (Both 3G and Wi-Fi -only versions are called “iPad” so it is comparable to both iPhone and iPod touch put together.) The surveys that have been done so far peg iPad demand at greater than demand for the original iPhone.
And the pocket devices did not have any apps for the first year. This time out, potential iPad buyers already own dozens or hundreds of apps that run on the device. I know someone who has their iPad money ready solely to use it for presentations, and another who wants one 100% for Facebook, and another who wants an iPad only for full-size iTunes movies. iPad has a wide appeal.
Also, I think at some point, maybe 6 months in, they will get rid of the Wi-Fi -only versions and do 3G models at $499, $599, $699, or maybe a single Wi-Fi only model at $399 in that case.
The demand seems high to me because I keep hearing from really non-gadgety people, non- early adopters, that they can't wait to buy an iPad.
I will be surprised if there aren't 25 million iPads or more by end of 2011.
As far as shortages and ramping up goes, the hardware is not exotic at all. The first iPad will be Apple multitouch tablet number 100,000,000 or so. Bigger is typically easier.
Posted by JohnDoey at March 2nd, 2010 at 12:52 amOh come on. Isn't this a fairly well worn ploy to get people to stand in line for the things and generate press coverage?
Oh, and then there will be some kids who after standing in line for one will take it out to the parking lot and smash it to bits to make a Youtube video.
We've seen this movie before (and the movie within it).
But I guess as long as it keeps working…
Posted by macbeach at March 2nd, 2010 at 3:01 amOh, don't forget that this uses a special Apple chip though that they like totally invented from scratch or something. I think it even has special Apple transistors in it. Whatever that means.
Posted by macbeach at March 2nd, 2010 at 3:04 amIt's from the same analyst that has been spewing garbage forever!
Posted by bruintoo at March 2nd, 2010 at 8:05 amPC World, Computer World, Paul Thurrot, ZDNet, etc… (the usual suspects) will put it in a box of nails and drop it off a four story building to prove that it does actually dent the case a little when you do that (but huh, what do you know, the screen is OK and it still works). Just like the iPhone, all over again.
Posted by Homebrewer at March 2nd, 2010 at 2:27 pm