Apple delays iPad's international launch
Thursday 15 April 2010
Apple said it would delay for one month the international roll-out of its iPad tablet computer, due to heavy demand and swift sales after its launch in the United States.
Although international markets are increasingly important to Apple's growth, investors appeared unfazed by the delay announced on Wednesday, and the company's shares rose more than 1 percent to touch yet another all-time high.
Analysts said Apple is having difficulty ramping up iPad production, but that any frustration from overseas customers would likely give way to pent-up demand for the popular touchscreen device once it hits store shelves.
In the United States, the device has proven to be more popular than some expected, selling 500,000 units in the week after its April 3 launch.
"It is a little surprising: 500,000 -- weren't they expecting that?" said Hudson Square Research analyst Daniel Ernst. "On the flip side, it's a high-quality problem. There isn't another product on the market like it."
The company expects sales will "likely continue to exceed our supply over the next several weeks."
Broadpoint AmTech analyst Brian Marshall said there was no danger that the international delay would cause the iPad to fall short of sales estimates for the June quarter. Analysts expect 1 million devices or more for the period.
"I think this is a positive, ironically, because it shows strong demand," he said.
Marshall said he did not believe it was a component shortage that was causing the delay, but rather the complexity of manufacturing a brand new device. The iPad is being built by contract manufacturer Foxconn.
"Clearly there's a learning curve while they ramp up production, but that's temporary."
Apple launched in the United States with the Wi-Fi-only version of the iPad. The company said it has also taken a large number of pre-orders for the 3G model, which are scheduled for delivery by the end of April.
"Apple is sensible to push back its international launch and focus on the strong demand in its home market and on meeting existing pre-orders for the 3G version of the iPad," said Ovum analyst Tim Renowden.
Apple plans to announce international pricing and begin taking online orders on 10 May, and iPads will hit store shelves at the end of May.
Separately, Vodafone Group said Wednesday it will offer iPad price plans from the end of May in Australia, Germany, Italy, Spain, and the Britain. Orange said it would offer plans in France, Britain, Spain and Switzerland.
Although Apple was once thought of as more dependent on the US market, its international presence has grown dramatically, thanks to the popularity of iPhones and iPods.
International sales accounted for 58 percent of Apple's revenue in the December quarter, up from 46 per cent a year earlier.
The delays risk irking customers and creating headaches for retailers banking on the popular tablet computer to draw in store traffic.
But Apple may reap higher margins from additional sales made at US Apple stores and through its Website, according to Cross Research analyst Shannon Cross.
"It validates that there is strong end-market for the device and that the demand was not coming just from early adopters or 'Mac heads'," she said. "It has actually got widespread interest."
The iPad's early US sales impressed analysts, many of whom expect roughly 5 million in 2010, though estimates vary widely.
Analyst Cross on Wednesday raised her iPad sales estimate in the quarter to 2.25 million iPads from 1.5 million. Apple has much riding on the success of the 9.7-inch touchscreen tablet, essentially a cross between a smartphone and a laptop. The tablet computer market is expected to grow to as many as 50 million units by 2014, according to analysts.
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