The tablet computer market is at "rising risk of a bubble burst" in 2011 as companies flood consumers with devices that compete with Apple Inc.'s iPad, an industry analyst said Wednesday.
The iPad dominates sales, having sold 15 million units last year. A new version, the iPad 2, goes on sale Friday in what many analysts believe will be a gangbuster debut, leaving other manufacturers with a pile of inventory for their tablets.
"The technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up, meaning actual shipments could fall well short of plan," J.P. Morgan analyst Mark Moskowitz wrote in a report to investors Wednesday.
He and other analysts expect tablet supply to outstrip demand by more than 17 million units, or 35.9% — which Moskowitz said "is not good."
Tablet makers, including Apple, intend to build 81 million devices this year, though realistically they will probably produce 65.1 million, Moskowitz wrote. J.P. Morgan pegged shipments at just 47.9 million.
Other than Motorola's Xoom and HP's TouchPad, other alternatives to the iPad feature "limited differentiation and unattractive pricing," meaning consumers are less likely to go for the wannabes, according to Moskowitz's report.
Lines for the iPad 2 will be shorter than for its predecessor, but sales will be higher, Piper Jaffray analyst Gene Munster wrote in a note to clients Wednesday.
Instead of just using its retail stores and Best Buy for the iPad 2 launch, as Apple did with the original iPad, Munster expects Apple to expand to shelves in AT&T and Verizon stores as well as Target and Wal-Mart.
As a result, the iPad 2 will sell 1 million units in fewer than the 28 days it took the first iPad to sell that many, Munster wrote.