Tuesday, April 20, 2010

Apple Says New IPad 3G Orders Will Arrive by May 7 (Update3)

By Connie Guglielmo

April 20 (Bloomberg) -- Apple Inc.’s U.S. customers who order the 3G models of its iPad now won’t receive the tablet computer until May 7, a few days later than expected, as the company clambers to meet demand.

U.S. buyers who ordered one of three 3G versions before yesterday will still get their iPad by the end of this month, as originally promised, Apple spokeswoman Natalie Kerris said. Those iPads will arrive on April 30, and the device will start selling at Apple’s stores at 5 p.m. that day, according to a statement from the company today.

Apple said last week that demand for the iPad was “far higher” than predicted, leading the company to delay international sales of the device by one month, until the end of May. Cupertino, California-based Apple sold more than 500,000 iPads in the first week after its U.S. debut on April 3.

“There’s a learning curve at play here,” said Shaw Wu, an analyst with Kaufman Bros. in San Francisco. “This is the reality of manufacturing.”

The iPad’s initial release only included models that run on Wi-Fi networks, starting at $499. The new 3G models connect to the Internet using mobile-phone carriers’ third-generation service, in addition to Wi-Fi networks, and will cost at least $629. Both types let users surf the Web, watch videos, listen to music and play games on a touch screen.

AT&T Inc., the carrier that will provide wireless service for the 3G models in the U.S., won’t start selling the devices in its stores initially, spokesman Mark Siegel said. The company won’t subsidize the iPad, he said.

‘Production Bottleneck’

Apple fell $2.48 to $244.59 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have doubled in the past year.

The company, which said on April 14 that demand will outpace supply for the next several weeks, may be struggling to get enough touch screens produced, according to ISuppli Corp.

Suppliers, challenged by the size of the display, may be unable to make usable screens in the quantities Apple needs, said Andrew Rassweiler, an ISuppli analyst in El Segundo, California. The 9.7-inch (25-centimeter) screen is made by LG Display Co., Samsung Electronics Co. and Seiko Epson Corp., according to ISuppli.

The iPad’s LED-backlit display is about 6 inches larger than the screen used in Apple’s iPhone. For the iPad, Apple opted for a screen technology called IPS, or in-plane switching, that the company says provides “crisp, clear images and consistent color with an ultra-wide” viewing angle.

“We understand that the yields on the display have been low and that they’re creating a production bottleneck,” Rassweiler said. “That they have been doing it for the iPhone for some time is great, but once you go to 9.7 inches, it is a much more complicated process.”

--With assistance from Amy Thomson and Arik Hesseldahl in New York. Editors: Nick Turner, Ville Heiskanen

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net