Apple iPad 2 inflates tablet bubble
The launch of the new model Friday could spur a huge inventory pileup.
By Scott Moritz, TheStreet
Based on industry production estimates, 81 million tablets are scheduled to be manufactured this year, JPMorgan analyst Mark Moskowitz wrote in a research note Wednesday. That number is nearly twice the 47.9 million tablet sales estimate Moskowitz has for 2011.
Assuming tablet makers recognize they may have overestimated the opportunity and prudently reduce production plans by 20%, that would still create a surplus of 17.2 million devices -- or a 35.9% oversupply -- of tablets this year, according to Moskowitz.
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If true, this will lead to a terrific tablet pileup this year that could cause outfits like Apple, Acer, Dell (DELL), HP (HPQ), Motorola (MMI) and Research In Motion (RIMM) to suffer some nasty dents.
Moskowitz cautions that component suppliers like memory chip manufacturers may suffer the worst. And while Apple is assumed to take the largest chunk of tablet sales, other players will be forced into a price war to compete and clear out tablet supplies.
But to a large extent, the tablet market may resemble the quick rise and brutal fall of the netbook sector.
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Consumers are very status conscious in Asia, Africa and other emerging-market areas. This is especially true in China.
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