Quit your worrying. That’s essentially the message coming from one Apple watcher on Wall Street following a day of hand-wringing over a report Apple had reduced by 25 percent iPad 2 orders from suppliers. Improvements in the tech giant’s supply chain and inventory still mean plenty of tablets for the anxious hordes of iPad customers.
Sterne Agee analyst Shaw Wu grudgingly agrees there is “some merit” to Monday’s claim Apple recently began reducing order for the iPad 2. However, the reasons are more mundane than a comical fall off in demand or some evil plot to tie up suppliers rivals need.
“Production changes are common throughout a quarter and through the lifecyle of a product,” the analyst reminds. “Not all changes have had the benefit (or detriment) of being newsworthy,” according to Wu.
Instead, Apple’s tightly-run supply chain has gotten even more efficient, improving capacity and doing a better job tracking inventory. But for consumers, the number of iPad 2s churning out of factories remains “well above expectations,” Wu told investors Tuesday.
Wu forecasts Apple selling 27 million iPads during the second quarter of 2011: 12 million in the September quarter and 15 million more in the December three-month period. That’s higher than the Wall Street consensus of 24 million to 26 million.
Suppliers often push out 25 percent to 33 percent more units than actually ship. Add in Apple’s concerns of having enough tablets to meet demand and you can see a 25 percent drop in production amid more efficient production and tracking can produce plenty of smoke, but little fire.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
4 responses to “Even With 25% Production Cut, Apple’s Still Building More iPad 2s Than You Can Believe”
Apple is doomed. The 25% iPad order reduction story is a cover-up story concealing the fact that iPad production has come to a complete standstill due to world-wide lack of consumer demand. Everyone that wants an iPad already has one and Apple is closing down all iPad production everywhere. iPad market growth is officially over and it is now the post-post-PC era.
Ed,
In the 5th § I think you meant to say “…in the second half… instead of “…in the second quarter…”
Bob