Apple's iPad will soon face competition from other manufacturers, but it now ships in 24 hours, suggesting production bottlenecks might have eased.
Apple's iPad now ships within 24 hours from the company's online store,
suggesting that the company's production capacity has caught up with consumer
demand for the bestselling device.
That narrowed ship-time extends to both the WiFi-only and 3G-enabled
versions of the tablet, which presents a challenge to both e-readers such as
the Amazon Kindle and lower end notebooks. Previously, Apple's online store had
reported days' or even weeks' worth of delays for shipments.
For the third quarter of fiscal 2010, Apple reported sales of 3.27 million
iPads. "We're increasing capacity as quickly as we can," Tim Cook,
Apple's COO, told analysts and media
during a July 20 earnings call. However, he offered no timeframe for when
capacity would begin to keep pace with device orders, which had settled into a
sell-through rate of roughly 1 million units per month.
Demand for the iPad also squeezed Apple's suppliers.
"We can't meet it all," Kwon Young-soo, CEO
of LG Display, told
reporters from Reuters and other media outlets July 22
. "Apple may
have to delay launches of the iPad for some countries due to tight component
supplies and strong demand. We are considering increasing production lines for
iPad products, but overall supply is likely to remain tight until early next
The iPad and other devices could lead Apple to spend $16.2 billion on OEM
semiconductors in 2011, according to estimates from research firm iSuppli,
enough to rank it second behind Hewlett-Packard at $17.1 billion. The firm
estimated Apple's 2010 semiconductor spend at $12.4 billion, meaning the
company will need to increase spending by 30.4 percent to reach that 2011
Other manufacturers are moving to carve off their own piece of the
still-nascent consumer-tablet market. Samsung
has offered quick glimpses of its upcoming Galaxy Tab tablet PC
Hewlett-Packard is developing a tablet that runs its newly acquired Palm webOS,
and Dell recently released the 5-inch Streak.
However, some analysts think those companies have a decidedly uphill battle
ahead of them.
"Apple's vertical integration with software, online services, apps and
design give it unparalleled advantages in time-to-market and ease-of-use for
customers," Ben Reitzes, an
analyst with Barclays Capital, wrote in a July 7 research note
believe HP must demonstrate to investors that its Palm deal gives them
exposure-and that it can use its distribution and link with printers to help
gain a foothold. We believe the tablet market presents challenges for Dell."
Reitzes estimated that Apple will sell 20 million iPads in 2011.
Reports from other analysts suggest the tablet market will increase
exponentially, perhaps cannibalizing part of the notebook market in the
process. Research firm IDC estimates that
worldwide media tablet shipments could total 46 million units by 2014, with
analyst Susan Kevorkian suggesting that "consumer demand for media tablets
[will] be strongly driven by the number and variety of compatible third-party
apps for content and devices."