[bunderbunder]

Not to mention that having the production capacity to meet initial demand on a popular product would be an huge waste of money.

Best case scenario, a week or two after launch, the vast majority of that capacity would be sitting idle after the initial rush is over and the purchase rate tapers off. Worst case scenario, the product isn't as popular as you anticipated and you've got a big ol' writedown to deal with. (Atari anyone? Blackberry tablet?)