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Production Problems Could Cut Both Ways for iPad Devs

Production Problems Could Cut Both Ways for iPad Devs

Although he still expects Apple to bring the iPad to market on schedule, Cannacord Adams analyst Peter Misek has warned that production problems may drastically reduce the number of units initially available for sale. That could throw a monkey wrench into accessory manufacturers' and app developers' plans, but it might also give them more time to refine their products.

By Erika Morphy MacNewsWorld ECT News Network
03/02/10 10:44 AM PT

An analyst's research note has thrown the expected launch date of the iPad into doubt -- or at least raised questions about how easy it will be for consumers to get their hands on the device.

Unspecified production problems may cause Apple to delay or limit the size of its launch, according to Canaccord Adams' Peter Misek.

The likely reason is that Hon Hai Precision, Apple's supplier in Taiwan, is dealing either with a production bottleneck or shortage of components, he speculated.

As a result, Apple will go to market with approximately 300,000 units instead of the one million originally anticipated for the iPad's launch, Misek estimated.

Later production could also be affected, he said, pointing to an estimated 800,000 devices originally expected to follow Apple's first one million.

Launch Delay 'Inconceivable'

With developers, other manufacturers and consumers already revved up for the launch, this news could be expected to hit hard -- assuming Misek is correct, said Rob Walch, host of Today in iPhone.

"Let's say the report is true -- 300,000 units is still a lot," Walch told MacNewsWorld. "That is 1,000 devices per store, which is not insignificant."

Going to market with one million devices in hand is not necessary if the iPhone's launch is any indicator, he suggested. "It took Apple slightly more than two months to sell one million devices."

As for a launch delay, that is almost inconceivable at this point, Walch said. "Even if Apple only had 30,000 devices, I believe it will still launch next month. Steve got up there and said the iPad will be available in 60 days. That means it will be."

Ripple Effects

Developers have been gearing up for the iPad, as have content producers such as The Associated Press, which just announced it was building a subscription-based product for the iPad. A delay, while irksome, would not dramatically affect them.

Suppliers of related merchandise -- such as accessories manufacturers -- could be adversely affected by a delay or availability of significantly fewer devices than expected, said Patrick Mish, CEO and founder of M-Edge.

"Since most accessory manufacturers are still waiting to get their hands on the device, a delay in launch will delay the rollout of their accessories by an equivalent time period," he told MacNewsWorld.

A delay would also pose problems for accessory developers, because marketing plans are scheduled to advertise these products, continued Mish. "Media buys have been scheduled, and if the iPad device is delayed, accessory developers' marketing efforts may be misaligned with the broader market momentum associated with the iPad release."

Silver Lining

That said, there is also a potential upside to an iPad delay, Mish added.

Only a handful of accessory developers have an actual physical iPad for use in the design process, he said. "Therefore, nearly every accessory developer is creating their prototype accessories from 3-D models created from publicly available iPad specs and images. They'll all have to circle back for final product fit and finish checks and design tweaks once they've got an actual iPad in their hands."

A production delay offers accessory developers more time to study the iPad and contemplate the use scenarios, said Mish. "The more time to study this, the more you can get inside the minds of the key audience and better assess what accessories will provide the best iPad user-experience."

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