A report that Apple is slashing Q4 iPad 2 orders with manufacturers has set off speculation that demand is falling and that price cuts on the market-leading tablet computer could be in the offing.
While Apple hasn’t confirmed the Bloomberg News report, which cites numbers from JPMorgan Chase analysts in Hong Kong who watch the electronic manufacturing market, such a change in strategy wouldn’t be unthinkable in the face of several market changes.
JPMorgan suggests that rather than making 17 million iPad 2 units, Apple’s producers are more on track to make 13 million in Q4, although the financial firm still expects Apple to ship up to 12 million units in the quarter (and Boy Genius Report raises the idea that some production could simply be shifting to Brazil from China).
Apple faces growing competition from makers of Android and other tablets. The latest threat could be Amazon, which is prepping an announcement this week of an Android tablet, possibly called Kindle, that could sell for $250, according to some reports. That would be much cheaper than Apple’s iPad 2, which sells for between $500 and $830 depending on how much storage and which connectivity features you want.
The success of the recent HP TouchPad fire sale of $99 tablets showed that there is a demand for low-priced tablets.
The Today’s iPhone website also cites the theory that demand for the iPad is soft in Europe. “Being based in Europe, I can tell you that I only know one other person who owns an iPad – and he’s American. Whenever I speak to anyone here in the UK – and I mean anyone – about tablets, I get the same response: ‘what’s the point?’”
Market watchers such as Gartner say Android will greatly increase its share from the current 17% of the tablet market over the next few years, but expect Apple to dominate for years to come despite more and better competition.
It’s unclear whether the reported cutting back of iPad 2 manufacturing might also be Apple’s way of paving the way for a ramp-up of iPad 3 production. Apple isn’t talking about iPad 3 yet, even though many others are and have offered up their vision of what the device might look like.
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