demand

Yesterday we decided not to run with a story published by Bloomberg that Pegatron’s forecasted 25 percent to 30 percent drop for second-quarter revenue was due to “falling iPad mini demand.” It seemed a little far fetched that an Apple supplier would be giving up specific information on product demand, something we know suppliers in Apple’s circle typically remain tight-lipped on. Today CEO of Pegatron Jason Cheng has confirmed our suspicions in an email to Fortune claiming that Bloomberg reporter Tim Culpan made the iPad mini angle up.

While quoting an analyst’s expectations for iPad mini demand in Q2, Bloomberg’s Tim Culpan offered the following quote from Pegatron Chief Executive Officer Jason Cheng as proof:

A decline in revenue from the iPad Mini “is more on demand, while price has been stable. Not just tablets, also e-books and games consoles, almost every item is moving in a negative direction.”

Pegatron chief Jason Cheng says he wasn’t referring to iPad mini specifically, but rather all of its products including all tablets and game consoles, while noting that “clearly refused” to answer Culpan’s questions related to specific products. Here’s what he had to say about the Bloomberg piece:
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According to a report from Reuters, citing a statement from Foxconn Chairman Terry Gou, Apple’s assembler is having a hard time keeping up with iPhone 5 demand. Gou confirmed previous rumors that the company is indeed “falling short” of meeting supply for iPhones and its other unit, Foxconn International Holdings, is assisting with production:

“It’s not easy to make the iPhones. We are falling short of meeting the huge demand,” Foxconn Chairman Terry Gou told reporters after a business forum.

Following the launch of the iPhone 5, reports claimed employees at Foxconn’s Zhengzhou plant went on strike over quality control concerns and lack of training. The same quality control issues were linked to scratching found out of the box on some iPhone 5 units, but it’s unclear how much these setbacks have contributed to iPhone 5 delays. Another unnamed executive speaking to The Wall Street Journal last month said the iPhone 5 is “the most difficult device that Foxconn has ever assembled. To make it light and thin, the design is very complicated.”

To speed up production of new iPhones, specifically the production of display components, Reuters suggested Apple could provide cash incentives to Sharp, one of its keep suppliers that was thought to have contributed to initial low supplies. Following rumors yesterday that Apple might even be considering making further investments in the failing company, Asymco’s Horace Dediu (via Fortune) speculated today that a $2.3 billion discrepancy in Apple’s 2012 financials might have already went to Sharp:
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iPad mini window display from NorthStar Mall, San Antonio (via <a href="https://twitter.com/alanweinkrantz/status/264338171469369344">@alanweinkrantz</a>)

iPad mini officially went on sale at 8 a.m. this morning and reports are already starting to flow in that many Apple Stores have sold out of initial stock. Topeka Capital’s Brian White released a note to clients this morning (via BusinessInsider) that noted all models of iPad mini sold out in just over two hours at Apple’s flagship Fifth Avenue New York City store. Before today’s launch, shipment dates for Apple’s online pre-orders of the device had been pushed back, while shipment dates for pre-ordered LTE models of the device were recently removed.

Now reports indicate stores in the United Kingdom, Singapore, Canada, and many other states from Alabama to Hawaii have sold out of initial supplies.

[tweet https://twitter.com/madfruitstand/status/264374161076523008]

It’s unclear just how much stock Apple had delivered to its various stores and resellers, but we noted earlier today that lines were much smaller than usual at many locations. The lines were most likely due to the fact today’s launch included just the Wi-Fi-only model, but it looks like Apple is still not able to meet demand in many locations. Some stores were rumored to get about 100 units, as noted in the tweet above, while we heard bigger stores received as many as 300.

It’s also not yet clear if supply of the new iPad mini will be held back by similar manufacturing troubles and supply constraints of which Apple is now experiencing with iPhone 5 and the new iMacs leading into the holidays.

Judging by the collection of tweets that we put together below, Apple is quickly selling out of initial iPad mini stock in many locations around the globe. Most stores are not expecting additional shipments today:

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We know that demand for the new iPad met expectations with Apple telling USAToday demand is “off the charts.” Apple also confirmed that the initial pre-order supplies were purchased with shipping times for the device slipping to “2-3 weeks.” Now, a new ChangeWave Research study of “1,604 business IT buyers” gives some insight into just how in-demand the new device will be in the enterprise.

From the study, we learn that approximately 22 percent of companies plan to buy tablets for their employees during Q2 2012. ChangeWave noted, among those companies, demand for iPad increased to the “highest level of corporate iPad demand ever” with 84 percent planning to make the new iPad their tablet of choice. The increase represents a 7-point jump from ChangeWave’s last study due to the new iPad launch. The study also aimed to find which carrier the companies plan to use for data services with their tablets. Not surprisingly, AT&T and Verizon were neck and neck:

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