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Apple Can't Keep Up With iPad Demand

Apple sold almost 5 million iPads around the world last quarter. But it still couldn't make them fast enough to meet demand.

Apple Can't Keep Up With iPad Demand

Steve Jobs introducing iPad 2

Apple sold almost 5 million iPads during its March quarter—and it still couldn’t keep up with the demand, company executives said during a quarterly earnings call on Wednesday.

CFO Peter Oppenheimer said the company has not been able to keep its preferred 4-6 weeks of inventory. "We sold every iPad 2 we could make during the quarter and would have liked to have ended the quarter with more channel inventory."

A total of 4.67 million iPads were sold—including both the older and newer models. The company recognized $2.8 billion on revenue on both iPads and accessories.

"The demand on the iPad 2 has been staggering," said Chief Operating Officer Tim Cook. "I wish we could have produced a lot more iPad 2s because there were a lot of people waiting for them."

Neither executive pinpointed the cause of the shortfall, deflecting questions about whether forecasting was the cause. They did say, however, that the shortfall was not due to the Japan tsunami, which they said had not impacted supply chains for any of their products, thanks to contingency planning.

The new iPad 2 was announced in early March and went on sale in the United States on March 11. It was in another 25 countries by the end of the month. Cook said the device will roll out to 13 more countries next week and "even more" by the end of the year.

Part of the demand is being driven by businesses. Oppenheimer said the devices are being adopted by the enterprise "at an unprecedented rate"—75% of Fortune 500 companies are either deploying or testing it, including, Oppenheimer said, Xerox, ADP, Boston Scientific, Estee Lauder, Rite Aid, and Disney.

The iPad is also making traction in the schoolroom. Schools picked up as many iPads as they did Macs last quarter, Cook said. "This was surprising to me," he said. "K-12 is even more conservative than enterprise in adopting new technology."

The iPads' performance in the educational market "really demonstrates what kind of opportunity there probably is there," he said.

Cook said Apple is suffering from "the mother of all backlogs" and will continue to crank out iPads as fast as it can. "I'm confident we're going to produce a very large number [in the coming quarter], whether that will be enough to meet demand I don't know," he said. "I'm not going to predict when supply and demand will come into balance."

Cook also did not offer a prediction on how many the company would produce or sell in the coming quarter.

E.B. Boyd is FastCompany.com’s Silicon Valley reporter. Twitter. Email.

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