iPad 2s Are Being Held Back at Best Buy for a Promotion

Best Buy is acknowledging reports that its employees are holding back inventories of Apple's fast-selling iPad 2. But the electronics retail chain said it was doing so for an upcoming promotion, and insists its relationship with Apple is fine.

A series of published reports citing Best Buy employees said Apple was upset that customers were being turned away from the stores that are famous for their oversized yellow price-tag signs.

The Richfield, Minn.-based chain has about 1,150 stores and has managed to weather the recession, unlike competitors like Circuit City, which closed its stores, in 2009 but still sells online.

CrunchGear said employees at some Best Buys were keeping sales quotas and telling customers the iPad 2, which went on sale last month, was sold out when those quotas were reached. As a result, the report said, Apple is holding off on shipping more of the devices to Best Buy.

Best Buy didn't respond to our requests for comment by phone and e-mail as of publication on Friday, and Apple didn't respond to e-mails seeking comment.

'Great Partnership'

But BoyGenius Report on Friday published a statement from the retail chain saying, "Best Buy continues to receive iPad 2 inventory from Apple on a regular basis. As we've said previously, we are fulfilling customer reservations first. Our stores have been asked to temporarily hold non-reserved iPad 2 inventory for an upcoming promotion ... Best Buy enjoys a great partnership with Apple and we're delighted by customer response to iPad 2."

The blog said it independently confirmed that employees at two outlets were told to sell no iPads other than pre-orders, and it published what it said was an internal communication about the hold saying, "Can't tell customers we're holding them, either."

Last month it was reported that Apple told employees at its own retail stores to hold arriving inventory for sale the following day in an effort to better control supply and prevent hoarding by resellers.

Going Fast

Early reports suggest the iPad 2 may be a bigger hit than its predecessor. Taiwan-based manufacturing journal DigiTimes estimates 2.6 million of the tablets were sold in March. Apple sold about one million original iPads in the first month, beginning last April.

Retailers like Best Buy are an important component of the sales channel, said Susan Kevorkian, who tracks the mobile connected-devices market for IDC Research.

"Apple also needs to have a broad-based distribution strategy," Kevorkian said. "Traditional retail accounts for somewhat over half of units shipped into the channel. So although Apple's own stores and online stores are important components, especially because they are a beautiful showcase for the products, retailers like Best Buy and Wal-Mart are expected to be more important this year."

Best Buy's statement offered no details about its upcoming promotion. Apple sets limits on the price point for its products, but some stores offer incentives such as in-store gift cards or free accessories.