Apple Limits iPad Quantities to Boost Consumer Demand and Sells 25,000 an Hour

(MoneyWatch)  Retail has stock tricks of the trade. Apple (AAPL), a retail master, is using one -- the limited quantity game -- to full effect today. Limited quantities are supposed to create a sense of urgency in customers, and that's exactly what limiting people to two iPads is all about. The result appears to be sales of 25,000 iPads an hour.

Consider the steps that have led up to this pre-order stage:

• Rumors for close to two years about an Apple tablet device.
• Little tidbits, like filings for obvious Apple-style names like iTablet, left sitting for reporters to pick up, but with no direct trace back to Apple, which increased curiosity and coverage.
• Rumors about which content companies were partnering with Apple started to arise, and such rumors are often a result of Apple's own planting.
• The press started finding details about a meeting location Apple had set up that sounded in line with a product announcement.
• Finally the announcement came to a packed house, with an amazing amount of coverage and hype.
• There were rumors that parts shortages were going to keep Apple from releasing the product on time.
• Eventually Foxconn, Apple's contract manufacturing partner, denied them.
• The shipping date slipped from late March to early April.

From start to finish, the whole thing has the air of a carefully choreographed PR campaign designed to drive interest in the new product. This is classic Apple. That's why I think that today's announcement of only two iPads per person is a continuation of the hype. Look at what AppleInsider had to say:

In addition, AppleInsider has received word that the number of iPads shipped to each retail store location will be based solely on the number reserved for pickup at that store. In other words, fewer in-store reservations will mean a lighter stock of hardware.People familiar with the matter said store employees have been told to encourage customers to preorder to ensure that their retail location will receive a higher number of iPads for the April 3 launch. Allegedly there will be enough stock at each store to fulfill preorders, but if a store doesn't have a large number of devices reserved, there will not be many left over for those who did not preorder.

Why would Apple go to this trouble? For three reasons:

1. Limiting orders is like the follow-through on a tennis swing. Early on, Apple cultivated an air of scarcity and mystery and needs to continue the story just so it doesn't appear like hype, which could make future marketing efforts less credible to the public.
2. Apple faced mixed reactions among the press after the iPad launch, which was not good news for sales. Continuing the sense of scarcity and urgency means a bigger shot at a large initial showing, which can help create a sense of inevitability and band wagon effect for the ultimate acceptance of the product.
3. The iPad is something brand new for Apple (if you don't count the Newton years ago). Apple wants people to pre-order a device they haven't used and that friends and colleagues don't own. That means pulling out the stops to evoke purchasing desire.

The tactic sure seems to have worked, with sales apparently happening at up to 25,000 iPads an hour.

Product may be short for a week or so after the initial shipment, but I doubt that there is any real scarcity. Personally, I'll hold off until I can actually see a unit in person and get a sense of whether it does what I would want it to do or not before putting down my money.