How Many iPads Are Enough?

The Apple (NASDAQ: AAPL) iPad 2 goes on sale today both online and in stores. Securities analysts and thousands of self-proclaimed Apple experts will await the weekend sales count like candidates who watch overnight returns to see if they will be elected county sheriff.

The median analyst estimate for iPad 2 sales is 500,000 for the Friday through Sunday period. Anything less will cause experts to say the Apple has lost its touch. Shares are likely to tumble Monday if that happens. The iPad may have 90% of the tablet market. ChangeWave research says that is not likely to change soon. iPad 2 sales may be a proxy for the health of the tablet business as much as they are for Apple’s future. The sentiments about the fortunes of Samsung, Motorola, and Hewlett-Packard (NYSE: HPQ), each of which has a tablet of its own,  may be damaged if the iPad 2 has weak sales. But, it is more complicated than that in the world of consumer electronics. Wall St. might take weak iPad 2 sales as a sign that other tablet makers will gain market share.

Apple has a strange history of running out of its new products. The Verizon Wireless iPhone 4 was sold out online less than a day after it was offered. Inventories of the first iPad fell low quickly. Analysts wonder whether Apple has bad supply chain management and a poor ability to predict consumer demand, or whether it holds back production to make new products appear to be unusually desirable.

iPad sales are likely to come in above projections. Apple has a way of beating expectations. The sales of the tablet over the next month will be more telling. The new iPad may not have “legs” beyond early adopters.

The potential hurdle for Apple may not be overcome by the impressive features and functions of the iPad 2. It has, perhaps most importantly, a powerful processor. Processing power has been a sore point with buyers of netbooks and tablets. Apple has addressed that. But, there are only so many $600 consumer electronics devices people want to own or can afford to own. No one knows what that number is. It may be affected by recent trouble in the economy and high fuel prices. Consumers have already begun to defer the purchase of cars and appliances, according to The New York Times. A tablet is less expensive than a car, but that may not matter if more and more Americans feel impoverished.

The sales of the iPad 2 may have nothing to do with whether the machine is better than its predecessor or its competition. Consumers may just have run out of money.

Douglas A. McIntyre