Soaring iPad Sales Threaten Android Tablets

Apple fanatics, the kind of people that would stand in line for hours at the mere chance of getting an iPad 2, flocked to Apple Stores last Friday and over the weekend. Each was ready to drop hundreds of dollars for the great “entertainment” device of our age.

Call it iPad mania: iPad 2 sales are racking up at a torrid pace, with lines still stretching around the block at some Apple Stores. Backorders of online purchases continue to mount.

Piper Jaffray analyst Gene Munster figures sales could be as high as 500,000 units sold over the launch weekend en route to 5.5 million units this quarter. These are pretty lofty numbers compared to those of the original iPad, which was deemed a huge success with 300,000 units sold over launch weekend and 3.27 million in the quarter.

“Our checks [of the iPad 2] pointed to a shocking 100 percent stock-out rate across Apple/authorized retail stores just a few hours into the official launch Friday evening, contributing to what we believe was one of the company’s most successful product launches to date,” Deutsche Bank analyst Chris Whitmore wrote in a note.

So what did we learn from the iPad 2 launch? Well, for one thing, tablet competitors are worried over the iPad 2’s design and pricing.

The iPad 2’s thickness—only 0.35 inches—has Samsung shaking its heads. “We will have to improve the parts that are inadequate,” Lee Dong-Joo, executive vice president of Samsung’s mobile division, told Yonhap News Agency. “Apple made it very thin.”

Apple also priced the iPad 2 exactly the same as the original iPad, starting at $499. It’s an amazing feat considering that many analysts expected the original iPad to debut near $1,000 a year ago. Given Apple’s volume supplier contracts and demand forecasting ability, it’s unlikely any comparable tablet will match such a price.

Motorola’s Xoom tablet, for instance, starts at $599 with a two-year data contract. According to Lee, Samsung was planning to price its Galaxy Tab with the 10-inch touchscreen above the Galaxy Tab with the 7-inch screen. The latter currently costs $250 with a two-year data contract, and $500 to $600 without a contract. “We will have to think that over,” Lee says.

More than 80 Android tablets basked in the limelight at the Computer Electronics Show in Las Vegas earlier this year even though most haven’t shipped yet. That was only two months ago. Not only does the slim and powerful iPad 2 put Apple in the lead on the hardware front, but there’s also a year’s worth of maturation in the App Store.

At least one analyst thinks the great tablet war of 2011 may be over before it has even begun.

“This is starting to look like the iPod market, and Apple locked that up in about three years,” says tech analyst Rob Enderle. “They could lock this one up even quicker. In fact, given buying behavior, they may be close to locking it up now. This puts the other tablet makers, much like iPod competitors, in the margins addressing unique needs or as cheap iPad alternatives.”

Tom Kaneshige covers Apple and Networking for CIO.com. Follow Tom on Twitter @kaneshige. Follow everything from CIO.com on Twitter @CIOonline and on Facebook. Email Tom at tkanshige@cio.com