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Do Shorter Lines Mean iPad Demand Collapsing? Not So Fast

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More outlets and more online availability may be tamping down the frenzy at Apple's stores.

Shorter lines at Apple stores for the launch of the latest iPad may not mean demand for Apple's new product will come up short.

Instead the ability to pre-order Apple's new iPad nine days in advance of retail availability -- which wasn't an option last year -- may be reducing the size of the crowds lining up outside Apple's stores for the new tablet computer, Daniel Ernst at Hudson Square Research wrote in a note to investors Friday.

Lengthening delivery times for online orders, rather than long lines, may be a better indicator of demand at this point:

We  believe retail supply of  the new iPad will very likely be sold out by the  close of this weekend, and we note Apple is currently quoting a 2 to 3 week  delivery time for online orders of the device.    We  believe an increasing percentage of Apple product launch purchasers are pre-ordering on line.

Other factors that should cut down on the size of the lines for the latest iPad that Ernst didn't note:

  • More Apple stores -- a new outlet at Grand Central Station in New York, for example, is probably siphoning demand away from Apple’s flagship Fifth Avenue location;
  • The morning chill -- The latest iPad goes on sale at 8 a.m.; last year, Apple outlets began selling it at 5 pm, giving shoppers all day to line up.

The result: Ernst found there were just 550 people in line at five locations in Connecticut and New York, compared to the 2,300 people who lined up at those locations for the iPad 2 last year.

Of the twenty people Hudson Square Research spoke with, all but three already owned an iPad. Last year, 69% of those waiting in line already owned one of the tablet computers.

No surprise, Apple has sold more than 55 million iPads through the fourth quarter of last year. Ernst estimates Apple will sell 12 million iPads this quarter, and 60 million during fiscal 2012.