Apple said April 14 that it had delivered more than 500,000 iPads during the tablet PC’s first week of general release, exceeding the company’s internal predictions. The demand reflected by those sales, coupled with “a large number of preorders for iPad 3G models for delivery by the end of April,” has led to a postponement in the iPad’s international launch.

“We know that many international customers waiting to buy an iPad will be disappointed by this news,” read a statement posted on Apple’s Website, “but we hope they will be pleased to learn the reason—the iPad is a runaway success in the United States thus far.”

Apple had previously announced, during an April 8 news conference at the company’s Cupertino, Calif., headquarters, that about 450,000 iPads were sold in the first five days. During that conference, Apple CEO Steve Jobs also said about 600,000 iBooks and 3.5 million applications had been downloaded by new iPad owners. Those 450,000 iPads included the 300,000 units sold by midnight on April 3, the device’s first day of general release.

According to a March 29 research note from Morgan Stanley, Apple could ship as many as 8 million to 10 million iPads in 2010, and sell around 2 million of those. “Near-term, we believe the iPad will target the sizable sub-$800 consumer notebook market, which equates to 30 million units in the United States and 120 million units globally,” analyst Katy Huberty wrote. A robust application ecosystem, paired with strong interest in TV shows and e-books offered specifically for the iPad, could potentially increase the device’s sales momentum.

Research company iSuppli has also suggested that Apple could sell as many as 7.1 million iPads in 2010.

Blogger and analyst Daniel Tello, in conjunction with members of InvestorVillage’s AAPL Sanity forum, calculated in early March that Apple might have sold 120,000 iPads during the device’s first day of preorder availability, March 12, and that 69 percent of preorder customers were gravitating toward the WiFi-only version of the device.

Apple will face a wide variety of tablet PC competitors later in the year, including a device by Hewlett-Packard that features a combination of inward-facing VGA Webcam and outward-facing 3-megapixel camera for video conferencing and image-taking. The HP Slate will retail for between $549 and $599, and will run Windows 7. Similar devices, including a much-rumored Google Android tablet, may also try to make a competitive differentiator out of featuring a camera module, which is not included in the current version of the iPad.

The iPad may also run the risk of breakability. In an April 9 e-mail to eWEEK, Aaron Vronko, co-founder and service manager of Michigan-based Rapid Repair, predicted that 5 to 10 percent of the devices would fail due to “accident-related causes” each year.

“Physics are not in the tablet’s favor,” Vronko wrote. “While the fragile parts of the iPad are no less durable than their iPhone counterparts, a 10-inch and 24-ounce device is just a much bigger target for accidental collisions and generates many times more force in a fall.” Competing device manufacturers, however, do not have access to the voluminous life-cycle data from the iPhone and iPod Touch that Apple could use to make the iPad more durable.

Resource:
http://www.eweek.com/c/a/Mobile-and-Wireless/Apple-Delivered-500000-iPads-In-First-Week-Pressuring-Supply-402820/

The new clause was almost certainly targeted directly at Adobe, whose popular, though arguably inefficient Flash plug-in has been locked out of Apple’s mobile platforms. A major feature of Adobe’s new Flash CS5 is the ability to package Flash projects as iPhone apps- a process which now goes against the iPhone Developer Agreement. As a result, apps created in this manner can (and will) be rejected from the App Store and Adobe just spent the last year or so of Flash R&D for nothing.

While section 3.3.1 was more than likely directed at Adobe, the question is, will other third party SDK’s be taken as collateral damage? PhoneGap, a cross platform mobile development suite, which lets users write apps for iPhone, Android, and Blackberry in JavaScript and HTML claims that their contacts at Apple have assured them their tool is not in violation. Another popular third party SDK, Ansca’s Corona, which allows users to write iPhone games in Lua- again seems like it should be out of bounds- though a blog on the company’s site claims Apple has not given them the cease and desist. In fact, none of the third party SDK’s I could find, such as MonoTouch, GameSalad, or Unity3D- all seemingly in violation of Apple’s new Terms of Service- have announced any bad news regarding iPhone OS 4. So what gives?

Well, the truth is, unlike Flash CS5, most of the aforementioned SDK’s produce 100% Objective-C code- they are more pre-compilers than true compilers. However, the vague wording of Section 3.3.1 could mean that if Apple ever wanted to pull the trigger, they would be well within their bounds to ban any or all of these third party iPhone SDK’s. Although there is something to be said about the added inefficiency and possible lack of UI uniformity of a translation layer, since they haven’t done so already I find the possibility of Apple banning such tools outright unlikely. This was, after all, probably a specific jab at Adobe in Apple’s quest to make Flash obsolete. If Apple were to expressly ban all third party SDK’s, however- from the standpoint of 99% of all iPhone developers, nothing will change. These tools are more for people coming from other development environments and those already used to XCode and Objective-C will continue to code as usual.

Despite the understandable optimism of the various SDK’s blogs- we may not get a true sense of the fallout until April 22- the deadline to agree to the new Terms of Service for an iPhone Developer Account. Even then, iPhone OS 4 is still in beta, and therefore subject to TOS changes until it is officially released in June.

Resource:
http://www.pcworld.com/article/194275/collateral_damage_iphone_os_4_developer_agreement_fallout.html

Materials for the iPad, which went on sale on April 3, include a touch-screen display that costs $95 and a $26.80 processor designed by Apple and manufactured by Samsung Electronics Co., according to El Segundo, California-based ISuppli.

Analysis by ISuppli indicates that components of the lowest-priced, 16-gigabyte iPad amounts to 52 percent of its retail price of $499. That leaves the iPad on par with other Apple products, including the iPhone 3GS. A high-end 64-gigabyte version of the iPad, which retails for $699, contains components that cost $348.10, according to ISuppli.

Much of the iPad’s component costs went toward making the device appealing to use, said ISuppli principal analyst Andrew Rassweiler, who supervised the “teardown” analysis of the product. More than 40 percent of the iPad’s cost is devoted to powering its touch-screen display and other components of the computer’s user interface — “what you see with your eyes and what you feel with your fingers,” he said. The distinctive aluminum casing on the back of the device contributed about $10.50 to cost of materials.

Apple spokeswoman Natalie Harrison declined to comment on ISuppli’s findings.

Teardown Analysis

Research firms conduct so-called teardown analysis of consumer electronics to determine component prices and makers and to estimate profit margins. The estimate doesn’t include costs for intangible items such as software development, advertising, patent licensing or shipping. In February, ISuppli had estimated that the least expensive iPad would carry a $219.35 cost of materials.

Once it took one apart, ISuppli found more silicon chips than it had expected to power interactions with the iPad’s 9.7- inch screen.

“Because of the sheer scale of this device, we’re seeing more here than we expected,” Rassweiler said. Apple uses three chips to control the iPad’s touch screen, for example.

Over time, Apple may have leeway to combine many of the iPad’s electronic components, or integrate them into the display, Rassweiler said.

“We’ll see a lot less silicon required to make them work,” he said.

Pricey Touch Screen

Apple, based in Cupertino, California, rose $1.06 to $240.60 at 4 p.m. New York time on the Nasdaq Stock Market. The shares have climbed 14 percent this year.

The most expensive component in the iPad is its touch- sensitive, custom-manufactured screen. South Korea-based LG Display Co., Samsung and Japan’s Seiko Epson Corp. make the LCD display, according to ISuppli. Taiwan-based Wintek Corp. makes the glass overlay necessary to detect touches of users’ fingertips. The screen’s special design makes it about twice as expensive as those used in comparably sized netbook computers, according to Rassweiler.

LG spokesman John Taylor didn’t return a call seeking comment. Wintek spokesman James Chen, based in Taiwan, and an Epson spokesman couldn’t immediately be reached for comment. Chris Goodhart, a spokeswoman for Samsung, declined to comment.

Flash memory chips, obtained from various suppliers including Samsung, account for $29.50 in costs on the 16- gigabyte model, $59 in the 32-gigabyte version and $118 in the 64-gigabyte model, Rassweiler said. These chips push the cost of manufacturing the 32-gigabyte version of the iPad, which sells for $599, to $289.10. They boost the cost of the 64-gigabyte version, which sells for $699, to $348.10.

Samsung Processor

While Apple designed the main processor in the iPad, Rassweiler said South Korea’s Samsung built the chip for Apple and also supplied a memory chip attached to it for a combined cost of $26.80, a difference of $9.80 over the previous estimate of $17.

“We believe that this chip was designed by PA Semi,” Rassweiler said, referring to the chip company that Apple acquired in 2008 for $278 million. “But the markings make it look like a Samsung chip.”

Other chips found in the iPad also proved more costly, and more numerous, than original estimates. Broadcom Corp. supplied a chip that cost $8.05 and handles both Bluetooth and Wi-Fi wireless data connections, as well as two others that together cost $3.70 and are used to control the touch screen. Texas Instruments Inc. provided a chip used to help control the touch screen at a cost of $1.80, while Cirrus Logic Inc. supplied an audio chip that cost $1.20.

Bill Blanning, a spokesman for Broadcom, didn’t return a message seeking comment. Kimberly Morgan, a spokeswoman for Texas Instruments, and Bill Schnell, a spokesman for Cirrus, declined to comment.

–Editors: Tom Giles, Stephen West

To contact the reporter on this story: Arik Hesseldahl in New York at arik@businessweek.com.

Resource:
http://www.businessweek.com/news/2010-04-07/apple-ipad-s-components-may-cost-260-isuppli-says-update1-.html