After iPad Sales Decline, Analysts Adjust 2011 Predictions

Now that Apple's iPad sales figures have slipped, iSuppli has adjusted its forecast for the number of iPads Apple will sell in 2011.

Apple sold 4.69 million iPads in the last quarter, the company reported in an earnings call Wednesday. That's a sharp decline from the 7.33 million iPads sold during the fourth quarter, though that included the peak holiday sales season.

Because of the decline, iSuppli has reduced its original 2011 projection from 43.7 million units to 39.7 million, according to AppleInsider. Prior to the earnings call, various iPad sales forecasts for 2011 ranged from about 45 million to 60 million.

Why have iPad sales slipped below expectations? It appears Apple hasn't been able to keep up with demand for the device. Apple chief operating officer Tim Cook said the company faces "the mother of all backlogs" with the iPad 2.

"I wish that we could have made a lot more iPad 2s, because there were a lot of people waiting for them," Cook said.

The device, which went on sale in the U.S. on March 11, has been wildly popular. Apple reportedly sold nearly a half a million iPad 2s in its first weekend in stores, at which point wait times for the device went up to five weeks. The iPad 2 also reportedly sold out just as quickly overseas.

ISuppli blamed the shortage partly on concerns about the quality of touch screen LCD panels and production shortages of the iPad 2's new speaker. It's also possible that Apple ran into a manufacturing glitch.

"When we looked at the manufacturing numbers, they must have run into some manufacturing issues, some quality issues in terms of turning those products around, because we didn't see the volume manufactured that we expected to see in the first quarter," said iSuppli director of monitor research, Rhoda Alexander.

However, Apple said supply wasn't affected by the 8.9-magnitude earthquake that hit Japan on March 11. Cook said the catastrophic event did not hurt supply or impact cost in Apple's supply chain, although it was previously rumored that Apple had committed to paying extra to ensure smooth shipping of iPad 2 components from Japanese suppliers.

However, iSuppli has increased its prediction for 2012 iPad shipments slightly, from 61.6 million units to 62.6 million.

In spite of the decline in iPad sales, Apple reported record earnings. The company reported profits of $5.99 billion, an increase of 95 percent from the same time last year.

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Best Buy halts iPad 2 sales due to short supply

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Best Buy allegedly 'blacklisted' by Apple over iPad 2 sales

An odd rumor out this morning indicates a rift between Apple and Best Buy over the electronics retailer’s handling of iPad 2 sales. According to an unnamed CrunchGear reader who reportedly works for Best Buy, the store was only selling enough iPad 2 units to meet its daily quota. Workers would tell potential buyers that they were out of the second-generation Apple tablet, and to come back later, even though they still had some in stock.

This sales strategy was apparently not what Apple instructed. So Cupertino has sent down direct orders to no longer sell iPad 2s through Best Buy, at least until the quarrel is settled.

The Best Buy informant goes on to say that the two companies are in negotiations, presumably to make sure Best Buy stops withholding iPad 2s from customers. The Apple representative at the store where CrunchGeara€?s source works has apparently confirmed the negotiations, which he said extends all the way up the Apple ladder to chief operating officer Tim Cook.

As unlikely as this whole scenario may seem, allegations of a dispute between Apple and Best Buy — one that has prevented Best Buy from continuing to sell iPad 2s — have been corroborated by a number of other similar sources (i.e. other Best Buy employees).

One Best Buy employed reader tells 9to5Mac that managers have prevented any further sales of newly received iPad 2 units, but have not given employees a reason for having to stow away the tablets. Another reader says the spat is “over price protection of the remaining stock of iPad 1s,” and that it is actually Best Buy — not Apple — who has imposed the hold on iPad 2 sales.

“Apple is only providing price protection on units that were delivered 28 days before the iPad 2 launch, which left Best Buy with thousands of units that weren’t protected,” the reader wrote to 9to5Mac. “This translates into 10’s if not 100’s of thousands of dollars they’ll lose. This hold back on iPad 2s is a negotiating tactic to get Apple to cave on their price pro decision.”

Based on all the above information, it seems that a rift of some sort between Best Buy and Apple is underway. Which side upset the other remains to be seen. It does, however, seem unlikely that Best Buy would have an abundance of highly-sought-after iPad 2 units laying around, and simply choose not to sell them to paying customers — or that Apple would combat this peculiar tactic by preventing Best Buy from selling more iPad 2s to customers altogether.

Neither Apple nor Best Buy have so far commented on the status of their relationship, so file this one in your “grain of salt” folder until further notice.

UPDATE: Not long after this article went live did Apple’s Tim Cook send CrunchGear‘s “original tipster” an email debunking basically every part of the supposed Best Buy-Apple feud. It reads:

SL,

My understanding is most of their stores sold all of their initial supply on the first night of the launch and the balance were out by the following day. I am not aware of any units being held.

Tim

While this doesn’t totally debunk the rumor — Cook could, of course, be feeding misinformation — it does line up more with what we’ve heard about iPad 2 availability. And, as we mentioned before, it would just be silly for a store to arbitrarily decide to not sell the most in-demand gadget on the market just because it had ‘met its quota.’

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Best Buy, facing shortages, restricts Apple iPad 2 sales

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Best Buy, facing shortages, restricts Apple iPad 2 sales () April 8, 2011?|? 6:34pm

 Best Buy is temporarily restricting sales of the Apple iPad 2 as it faces supply shortages and an "upcoming promotion."

In response to reports that some customers seeking to buy an iPad had been turned away, Best Buy acknowledged Friday that its employees had been asked to hold on to iPad inventories not yet sold or reserved.

"This is a customary practice for us when there are supply constraints," the company said in a statement. "Best Buy enjoys a great partnership with Apple, and we're delighted by customer reponse to the iPad 2."

Besides attributing the move to an upcoming promotion, Best Buy did not go into further details.

The iPad 2 has been selling out in U.S. stores since it debuted last month, and supplies may dwindle even further after the earthquake and tsunami in Japan shut down factories manufacturing several key components of the tablet computer, according to a report from research firm IHS iSuppli.

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-- Shan Li

Photo: People look at the?Apple iPad on the first day of iPad sales at Best Buy in Chicago on April 3, 2010. Credit: Paul Beaty / Associated Press.

Twitter: @latimestechFacebook: latimesbizMore in: Apple, iPad, Shan Li
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