Early iPad 2 demand outstrips supply

'Hysteria continues', says analyst, as shipping delays mount for new tablet

Apple started selling its new iPad 2 earlier today through its online store, but shipping delays mounted as immediate supplies vanished.

The iPad 2 went on sale at 1 a.m. PT Friday at Apple's online store.

Demand quickly outpaced supplies, however, as Apple increased the time between ordering and shipping several times this morning, first to 2-3 business days, then later to 5-7 days and again to 2-3 weeks.

As of 9:30 a.m. PT, all models of the iPad 2 are backordered, and will ship 2-3 weeks after an order is placed.

Apple is selling six models of the iPad 2, three Wi-Fi only and another three that can connect to a mobile carrier's 3G data network. Prices start at $499 for the former and $629 for the latter, and top out at $699 and $829, respectively.

"They've timed it perfectly," said Ezra Gottheil, an analyst with Technology Business Research, talking about the supply of iPads. "They've built up some stock, but not too much. Not too little, either, that they'll be out long enough for buyers to lose patience waiting. And so the hysteria continues."

Last year, Apple touted 300,000 iPads sold the first day of its availability, a number that included several weeks of online pre-orders. Apple did not offer pre-ordering with the iPad 2.

Gottheil expects that iPad 2 sales will be significantly higher. "They will do better," he said. "Remember, the iPhone did better in the second and third and fourth iterations than the first. The usefulness of the iPad becomes more apparent as times goes on."

That momentum will include upgrading, as some iPad owners ditch the old model for the iPad 2. "For those for whom money is no object, or who have someone to whom they can hand down the [original] iPad, they'll upgrade," said Gottheil.

Last week, the gadget buy-back site Gazelle said that it had handled a record number of requests from consumers wanting to sell their iPads. Gazelle saw that as a sign that that Apple would sell a large number of iPad 2s, especially to people wanting to upgrade.

Apple will kick off in-store iPad 2 sales at 5 p.m. local time today, when its retail partners -- AT&T, Best Buy, Target, Verizon and Wal-Mart -- will also start selling the tablet.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed. His e-mail address is gkeizer@computerworld.com.

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