iPad 2 shortages continue, relief months away

Apple Inc.’s iPad 2 is in extremely short supply, with shipping delays from Apple’s online store now standing at four to five weeks and customers at several prominent retail stores today going away empty-handed.

But those shortages aren’t due to the unfolding disasters in Japan, and likely will be solved in the next month or two, analysts said today.

Customers lined up outside of Apple’s flagship Fifth Avenue store in New York to purchase iPad 2 tablets on Saturday. (Image: Lucas Jackson / Reuters)

“Just because Apple’s showing four to five weeks does not necessarily mean that’s the next time you can buy one,” said Brian Marshall of Gleacher & Co. “I expect that Apple will stagger shipments to its retail stores, with the next large one coming Monday, March 21.”

As of noon ET Tuesday, Apple’s online store showed “4-5 weeks” as a shipping window for all iPad 2 orders. That delay is almost double last week’s , when the e-store indicator changed several times on March 11, first from two to three business days, then five to seven days, and finally settled on two to three weeks.

Apple started selling the iPad 2 last Friday, first through its Web store and then at 5 p.m. local time at its retail outlets.

Marshall admitted that a four-to-five week delay is unusual for Apple. “Five weeks is pretty intense,” he said.

In the past, Apple has dealt with low supplies and high demand for new products, particularly the iPhone 3GS in 2009 and then last year with the iPhone 4. With the latter, Apple posted delays of up to three weeks on early iPhone 4 orders, and Apple CEO Steve Jobs apologized for the short supply of the new smart phone.

But the best comparison would be the iPhone 3G, said Stephen Baker, an analyst with retail research firm NPD Group, because, like the iPad 2, that smartphone was the second-generation model following the debut device that many saw as sporting serious flaws.

In 2008, iPhone 3G shipping delays extended for more than a month at Apple’s U.S. carrier partner AT&T, although Apple had sufficient supplies to meet demand within three weeks.

Marshall said that the iPad 2 shipping delay and the limited supply of the new tablets at Apple’s retail stores was due to “tremendous demand,” and not indicative of a production problem.

Rhoda Alexander, an analyst at IHS iSuppli, concurred.

“The current shortage is not at all related to Japan,” she said, referring to the earthquake and tsunami of last week, as well as the partial meltdown of several nuclear reactors at a plant on the northeastern Japanese coast. “It’s the usual case of a new product and new excitement. Apple is just ramping up now and [the demand is due to the fact] that there’s a huge portion of consumers who will not buy a first-generation product no matter what.”

iSuppli anticipated early shortages of the iPad 2, Alexander added. “When we heard that there were going to be just 100 iPad 2s per store, we knew there was going to be a problem.”

Alexander expects that iPad 2 supplies will match demand in the next month or two. “Overall, I think Apple has its ducks well in a row on this.”

Shortages at retail stores that received new shipments of iPad 2s today also continued, according to Brian White, an analyst with Ticonderoga Securities.

Lines at Apple stores in both New York City and San Francisco were long earlier today, and Apple handed out tickets to some of those waiting, telling them it was unlikely they would be able to buy an iPad 2, said White in a research note to clients.

“In New York City, three of the four stores already sold out of the iPad 2 in the first couple of hours this morning,” said White. “In San Francisco, only one of the three stores received iPad 2 shipments this morning.”

But while Marshall and Alexander credited a huge demand for the iPad 2 shortage, another expert disagreed.

“It kind of says that Apple misread demand,” said Stephen Baker, an analyst with retail research firm NPD Group. “But then, everybody misread demand. This was an incremental product change [from the original iPad], and so we all probably missed this one. The market for this category has expanded dramatically, and interest in tablets is way up, whether [the iPad 2] is incremental or not.”

The situation in Japan will probably not impact Apple, at least in the short term, said Marshall. In Japan, it’s mostly about flash RAM, but Apple has a tremendous short-term inventory [of that],” he said.

Although spot prices of flash memory , also called NAND memory, have climbed since last Friday’s magnitude 9.0 earthquake and resulting tsunami, Toshiba, one of the world’s biggest flash memory suppliers, has said that none of its memory factories were affected.

Marshall said it’s difficult to read clues from Apple’s silence on iPad 2 sales; the company typically trumpets numbers, especially early in a product’s cycle, such as it did last year when it boasted that it had sold 300,000 iPads the first day of sales.

“It is a bit strange” that Apple hasn’t released iPad 2 sales numbers, Marshall said. “Companies always like to talk about good news.”

Previously, Apple promised to start selling the iPad 2 in 26 additional counties on March 25, but at least one expert is questioning that timeline. “The iPad 2…has clearly been met with overwhelming demand, which makes us wonder if Apple will have enough supply for the international launch on March 25,” said White.

According to Reuters , Apple has postponed the iPad 2 launch in Japan. “We are delaying the launch of the iPad 2 in Japan while the country and our teams focus on recovering from the recent disaster,” Apple spokeswoman Natalie Kerris told the news service.

She denied that the decision to delay sales in Japan was connected to component supply shortages.

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Jim Love, Chief Content Officer, IT World Canada

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