or Connect
AppleInsider › Forums › Mobile › iPad › 2011 iPad 2 shipment forecast cut to 40M as Apple faces 'the mother of all backlogs'
New Posts  All Forums:Forum Nav:

2011 iPad 2 shipment forecast cut to 40M as Apple faces 'the mother of all backlogs'

post #1 of 23
Thread Starter 
Apple's struggles to meet demand for the iPad 2 in the second quarter of fiscal 2011 were allegedly due to production problems and quality concerns with components, including LCD panels and speakers. That has prompted one research firm to cut its 2011 sales forecast by 4 million units, to 39.7 million.

Last October, iSuppli had increased its forecast for 2011 iPad shipments to 43.7 million units. That change came after Apple announced sales of 4.19 million iPads in its September quarter, a number that was seen as disappointing to some on Wall Street.

But while some analysts were prompted to rethink their sales projections going forward, iSuppli, at the time, increased its forecast, citing improved component availability would allow Apple to meet demand in 2011.

The launch of the iPad 2 resulted in crushing demand, and again Wall Street became optimistic about sales.

But during his company's quarterly earnings conference call on Wednesday, Apple Chief Operating Officer Tim Cook referred to struggles to keep up with demand for the iPad 2 as "the mother of all backlogs." Wall Street watchers had expected Apple to report sales of about 6.2 million iPads, but supply constraints led to sales of 4.69 million units.

As noted by DigiTimes, because iPad 2 supply "fell far short of demand" in the previous quarter, iSuppli has revised its 2011 sales forecast to 39.7 million units, down from the previous prediction of 43.7 million units. The new expectations are a result of Apple's inability to meet demand, rather than consumer interest in the iPad 2.

Specifically, iSuppli cited supply chain sources who indicated that Apple had quality concerns with LCD panels, production shortages of the new speaker found in the iPad 2, and lamination issues with one of its touch panel suppliers. And while Apple is said to be on track to "significantly increase its production volume" in the current quarter, it is said to be "still falling substantially short of its target production goal for April."

For 2012, iSuppli has actually increased its forecast for iPad shipments. It sees Apple shipping 62.6 million units next year, up from its previous prediction of 61.6 million.

The report also reiterated Apple's insistence that the earthquake and tsunami disaster in Japan has not had a major impact on supplies. And it also reaffirmed that Apple has been willing to agree to higher prices for components in order to boost iPad 2 production.

Analyst Ming-Chi Kuo said this week that Apple's iPad 2 shipments are expected to double in the company's third fiscal quarter of 2011. He said Apple expects to increase iPad 2 shipments by over 100 percent sequentially in the current three-month frame.



Cook said on Wednesday that he is "extremely pleased" with progress ramping assembly of the iPad 2. He also revealed that Apple will launch the device in 13 more countries next week. He also said he is confident that his company will produce "a very large number of iPads" in the quarter.

"Demand has been staggering, and I'm not going to predict when supply and demand will come into balance," he said. "I can only be confident on the supply side."
post #2 of 23
All these forecasts are ridiculous. As long as demand outstrips supply, it is impossible to accurately gage that demand. Furthermore, there are nothing but guesses as to what Apple's production capacity will grow to during the year. Forecasting sales is always sketchy, but in this environment it is nothing more than plain guesswork...
Progress is a comfortable disease
--e.e.c.
Reply
Progress is a comfortable disease
--e.e.c.
Reply
post #3 of 23
How do these analysts arrive at tablet sales projections? Did Apple tell them exactly how many they expected to manufacture? Since there was no iPad sales at the same time last year, what are they basing these projections on? Just pulling the number of 6.2 million units out of a hat? Since the analysts wouldn't know how fast Foxconn can gear up production, why would they necessarily lower the entire year's forecast by 4 million tablets? At any point, Apple could very well get new suppliers or ramp up production by spending more money for greater capacity. I've read there are projections that Apple could move 45 to 60 million tablets this year, so there seems to be large leeway between 45 million and 60 million that could easily absorb 4 million units.

Apple supposedly missing by a couple of million units this early in the year would amount to next to nothing taking the remaining part of the year into consideration. Apple is being held to some exacting numbers by analysts and they're only guessing at production rates. I really don't know why falling short by an estimated 2 million units is anything to be disappointed with.
post #4 of 23
Exactly! I understand that forecasting is inevitable, but when the particular market sector is as new and so full of unknowns as Apple's iPad market, they should at least stick to making a range prediction instead of picking an exact number...
Progress is a comfortable disease
--e.e.c.
Reply
Progress is a comfortable disease
--e.e.c.
Reply
post #5 of 23
The implied logic is a bit twisted. We know there is a supply constraint NOW. One might expect the constraint to last, perhaps, 2 months. No one has suggested that the constraint will last 12 months. But the way that the analyst frames the question makes it sound that way.

What we don't know is what a consumer who would have bought an iPad now, but doesn't because of supply constraints, will do. Will he or she:

1. order and wait.
2. hold off and buy an iPad later in the year.
3. hold off and buy another tablet or no tablet.

Only option 3 will affect iPad sales volume for the current year.
post #6 of 23
I would like to sell 40 million of anything.
post #7 of 23
??? Have they check apple website as shipping as improved to 1 to 2 weeks from 3-4 weeks?? So i am guessing the supply has improved, no?
post #8 of 23
before apple allows a production shortage to hamper sales, you will see steve jobs working on the assembly line.
post #9 of 23
Quote:
Originally Posted by ezduzit View Post

before apple allows a production shortage to hamper sales, you will see steve jobs working on the assembly line.

Then he is working there now, because iPad sales, fewer than 5 million this past quarter, have absolutely been constrained by production. More than 7 million were sold the previous quarter.

Or do you suggest that demand is down?
post #10 of 23
There is something that many forecasters seem to neglect. The demand for some consumers products, like the iPad, is seasonal. There is a bigger demand during the start of the school year and an even bigger demand (usually 40-60% of the annual total) during the Christmas holiday.

The thing is, the annual demand must be gauged by the initial reception to a new iteration of the product (no matter how popular the prior product might be). This would be considered in the annual production - because this would be more or less averaged with some progressive ramped up. From previous reports, the partners of Apple, both for the assembly and their primary suppliers are almost near capacity. Thus, new factories have been announced to be built for this year and next year. These capital investments are way beyond simply buying parts, because aside from the building itself, it would also involve labor which is the major cost of manufacturing.

If they are too optimistic in their estimation of initial demand, and it did not pan out, then the company with be left with so many excess and unsold products (that have to be sold at fire sale price). The revenue may not recoup the initial capital outlay indicated above, if new factories are built and additional staff are hired.

It is not only very costly, but also very bad publicity if there is too much excess inventory. Take the flack that Samsung got with its Galaxy tablet, or more recently Motorola's Xoom.

The backlash would be even more significant for Apple. Just imagine how many were disappointed that Apple sold only 4.69 million iPads -- a number that is more than its total Mac sales. Any other company that would have such sales would have been anointed a resounding success, and would been proclaimed as the iPad killer.

It is one thing to forecast in paper, it is another to forecast, produce and actually sell the product.

Apple Ecosystems
post #11 of 23
Quote:
Originally Posted by bkerkay View Post

I would like to sell 40 million of anything.

I'd buy 40 million air molecules from you, if the price was right.
post #12 of 23
I have to say that the quality of the iPad v2 panels is not quite the same as the v1 iPad. We have 3 iPad 2s here and in direct comparisons, side-by-side, the text is sharper on the v1 iPad.

It's a niggle, however. I only noticed it because I read the WSJ using the medium size text setting. My eyes picked up a faint blurriness. You really have to look hard to see it. For playing games, for example, you would never pick up the difference.

As far as the backlog, one of the iPads we ordered is listed as arriving by April 21st. This was after an update several days ago from Apple via email that alerted us of the new arrival time. So we started with April 27, then April 21, and who knows when it will actually arrive. UPS tracking seems stuck at Osaka, Japan!

Apple must be strained beyond belief, but this is a good thing!
post #13 of 23
this cannot be accurate...

as I recall in march 2010, the ipad was ridiculed, it's already been done, they made fun of the name, and no one will buy one as proved by microsoft's attempt at a tablet.

the report must be erroneous that 40 let alone 40 million of them will be sold this year.

shoddy reporting.


post #14 of 23
The iPad was ridiculed and predicted to fail before, during, immediately after it was announced and many months after it was out.

And yet, the same bloggers and pundits who had low opinion of the iPad trumpet the notion that all the other companies had to do is to introduce their own tablets, and the iPad will be eclipsed.

The iPad killers were supposed to sell like hotcakes.

Apple Ecosystems

Quote:
Originally Posted by Katonah View Post

this cannot be accurate...

as I recall in march 2010, the ipad was ridiculed, it's already been done, they made fun of the name, and no one will buy one as proved by microsoft's attempt at a tablet.

the report must be erroneous that 40 let alone 40 million of them will be sold this year.

shoddy reporting.


post #15 of 23
Quote:
Originally Posted by apple-ecosystems View Post

The iPad was ridiculed and predicted to fail before, during, immediately after it was announced and many months after it was out.

And yet, the same bloggers and pundits who had low opinion of the iPad trumpet the notion that all the other companies had to do is to introduce their own tablets, and the iPad will be eclipsed.

The iPad killers were supposed to sell like hotcakes.

Apple Ecosystems

This just in:
The hotcake industry is experiencing severe supply constraints at the present time.
post #16 of 23
Quote:
Originally Posted by kube View Post

The implied logic is a bit twisted. We know there is a supply constraint NOW. One might expect the constraint to last, perhaps, 2 months. No one has suggested that the constraint will last 12 months. But the way that the analyst frames the question makes it sound that way.

What we don't know is what a consumer who would have bought an iPad now, but doesn't because of supply constraints, will do. Will he or she:

1. order and wait.
2. hold off and buy an iPad later in the year.
3. hold off and buy another tablet or no tablet.

Only option 3 will affect iPad sales volume for the current year.

Bingo. The "backlog" doesn't mean customers will somehow start to drop off. The backlog is the production of the iPad. Basically if Apple can hit an average of 3-4 million iPads a month we'll see a total of 30-50 million. It's all dependent on the production side now. Demand is not an issue, globally.

Quote:
Originally Posted by bkerkay View Post

I would like to sell 40 million of anything.

I still remember those estimating that the iPad 1 would only sell about 1 million. Instead it's defined a whole new category of computing for this decade.

Quote:
Originally Posted by apple-ecosystems View Post

There is something that many forecasters seem to neglect. The demand for some consumers products, like the iPad, is seasonal. There is a bigger demand during the start of the school year and an even bigger demand (usually 40-60% of the annual total) during the Christmas holiday.

The thing is, the annual demand must be gauged by the initial reception to a new iteration of the product (no matter how popular the prior product might be). This would be considered in the annual production - because this would be more or less averaged with some progressive ramped up. From previous reports, the partners of Apple, both for the assembly and their primary suppliers are almost near capacity. Thus, new factories have been announced to be built for this year and next year. These capital investments are way beyond simply buying parts, because aside from the building itself, it would also involve labor which is the major cost of manufacturing.

If they are too optimistic in their estimation of initial demand, and it did not pan out, then the company with be left with so many excess and unsold products (that have to be sold at fire sale price). The revenue may not recoup the initial capital outlay indicated above, if new factories are built and additional staff are hired.

It is not only very costly, but also very bad publicity if there is too much excess inventory. Take the flack that Samsung got with its Galaxy tablet, or more recently Motorola's Xoom.

The backlash would be even more significant for Apple. Just imagine how many were disappointed that Apple sold only 4.69 million iPads -- a number that is more than its total Mac sales. Any other company that would have such sales would have been anointed a resounding success, and would been proclaimed as the iPad killer.

It is one thing to forecast in paper, it is another to forecast, produce and actually sell the product.

Apple Ecosystems

That's what people don't get. This is the iPad, and specifically the iPad 2. There is no problem with demand. Globally people are hungering for this thing. As a business, there is always the spectre of excess inventory. But the iPad and iPhone is different. It is bucking all the trends. This is why the analysts are all over the place. All their "models" have to be thrown out the window. This is the Apple iPad 2 and iPhone 4. This is not the Mac nor iPod nor Android crapblet. Demand actually accelerates as more people use it. It is finding new uses - verticals, corporate, education, etc. in addition to regular consumers and enthusiasts. This is big. And this is just the beginning.
post #17 of 23
Quote:
Originally Posted by Bageljoey View Post

All these forecasts are ridiculous. As long as demand outstrips supply, it is impossible to accurately gage that demand. Furthermore, there are nothing but guesses as to what Apple's production capacity will grow to during the year. Forecasting sales is always sketchy, but in this environment it is nothing more than plain guesswork...

And especially when it's clear that these people guessing might as well be rolling dice.

For Pete's sake, they were pre dicing only about a 10-15% drop in iPad sales between the Oct-Dec quarter and the Jan-Mar quarter. Didn't any of the analysts ever hear of Christmas?

Not to mention, of course, that iPad 1 sales probably dropped off quickly when Apple announced iPad 2 - which wasn't delivered until a month later.

These analysts are morons.

Quote:
Originally Posted by rhyde View Post

I'd buy 40 million air molecules from you, if the price was right.

No, you wouldn't. There's no such thing as an air molecule.

Air is a mixture of oxygen molecules, nitrogen molecules, argon molecules and traces of a bunch of other gases.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
post #18 of 23
I made the mistake of putting a couple of my wife's favorite games on my new iPod2. You can add one more to that 40+million.
post #19 of 23
Quote:
Originally Posted by Bageljoey View Post

All these forecasts are ridiculous. As long as demand outstrips supply, it is impossible to accurately gage that demand. Furthermore, there are nothing but guesses as to what Apple's production capacity will grow to during the year. Forecasting sales is always sketchy, but in this environment it is nothing more than plain guesswork...

Very true.

Right now... Apple sells every single product it makes. So, if you figure out what production is... that's how many sales will be.

Apple products never sit in a warehouse for longer than a week... and I've never heard of a retailer sending products back to Apple because they didn't sell them...
post #20 of 23
I also do not know how demand is estimated, but successful companies seem to know. Apple, at least if you believe their comments, have estimated low on the iPhone 4, iPad, and iPad 2. Other companies seem to be estimating too high: MS with Zune, Motorola with Xoom, Nokia with everything.
post #21 of 23
Quote:
Originally Posted by OldMacGuy View Post

I made the mistake of putting a couple of my wife's favorite games on my new iPod2. You can add one more to that 40+million.

Really it means you get a newer faster model.
post #22 of 23
This is really interesting info. I would like to get the iPad 2. Why doesn't Apple USA do what Apple Canada does:

In Canada your register at the Apple Canada Store online at specific time and at at that time you're told whether or not you can get the item. The next day, you walk into the Apple Store and pick up the iPad. I was told that it's pretty common to have adequate stock using this method.

Why doesnt the US Apple Stores use this method? Now, the only two ways you can get the iPad2 is to order it onine and wait two + weeks or wait in line early in the AM to maybe get the iPad.
post #23 of 23
I am another customer of Apple and I can confirm that in my country, we have to make order, pay money and wait about 1-2 weeks to get it. By the way after everybody got his Items, nobody complain any single word. Now a lot of accessories shop for Apple are blooming. I do hope Apple will keep continue making a quality products, and I will always be your customer.

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: iPad
  • 2011 iPad 2 shipment forecast cut to 40M as Apple faces 'the mother of all backlogs'
AppleInsider › Forums › Mobile › iPad › 2011 iPad 2 shipment forecast cut to 40M as Apple faces 'the mother of all backlogs'