iPad Production Bottleneck

[Battlestar]

They have changed the ship lead times from 5 to 7 days to 7 to 10 days and the overseas lauch deliverly for new pre-orders is now June 7th.

Are they still having problems getting the touch screens or is it something else that is holding up production?

[wombat888]

My guess is int'l demand was on the high side of what they planned for.

[diabolic]

I think the overall demand is higher than they expected. It's not that easy to flip a switch to make them faster.

[Battlestar]

They should be able to increase production to meet demand.

[diabolic]

Originally Posted by Battlestar

They should be able to increase production to meet demand.

Depending on a lot of factors, it may not be possible to do it quickly. If they are anywhere near maxing out their current fabrication and assembly capability, setting up an additional factory wouldn't be easy. It's not necessarily as easy as just ordering more.

[poloponies]

Originally Posted by Battlestar

They should be able to increase production to meet demand.

It's not the Ford Motor Company circa 1950 when they controlled the manufacture of all the individual component and stockpiled them in warehouses; they contract for a given range of product over a given period and their supplies are geared to match that output (the old "just-in-time" delivery). So unless production of every part can be ramped up for simultaneous delivery it's not an easy thing to "just make more."

[sracer]

Originally Posted by Battlestar

They should be able to increase production to meet demand.

How did you come to that conclusion?

[northernbaldy]

wild assumptions

[Battlestar]

So what you are saying is that they totally blew their market reseach estimate of demand?

Typically a company that size would have the ability to ramp up production by twenty precent or initially holds production back by twenty percent.

The only conclusion that one can come to then is that Apples market research analysts are inadequate.

[sracer]

Originally Posted by Battlestar

So what you are saying is that they totally blew their market reseach estimate of demand?

Typically a company that size would have the ability to ramp up production by twenty precent or initially holds production back by twenty percent.

The only conclusion that one can come to then is that Apples market research analysts are inadequate.

Where are you getting your 20% figure from?

And yes, it is possible that Apple severely underestimated demand. It is possible that they anticipated that initial demand would be greater than the level of stabilized demand 6 months out... and were unwilling to invest in the ability to deliver at the initial demand levels when that capacity would go unused 6 months later.

There are quite a few possibilities that resulted in what appears to be a temporary shortage.

[openendstraight]

Why should Apple worry? The people that do not have them will wait, after all if you want one, it is your only option.

[wombat888]

Market research is not as precise as people like to think.

Apple probably did research and came back with a range of possible demand. Based on that range, they had to decide whether to build enough to meet the highest likely demand, or to build fewer.

The advantages of building fewer are:

- quicker to market
- lower potential costs if sales are poor

The advantages of building more are:

- greater potential quick revenue if sales are strong

Apple cannot build more iPads per day than they can receive screens per day (and other components, but screens are believed to be the bottleneck).

They are probably at pretty close to the max, if not the max, so the easiest way to have better supplies at launch would have been to delay launch.

The other option would be paying a greater than linear amount to get the supplier to ramp up production (in some cases, this can require buying or building a new assembly line) and then ramp up iPad production (which again may require buying or building an assembly line). It doesn't necessarily cost 20% more to build 20% more iPads, it may cost 50% more.

So if you make too many, you probably delay launch and you certainly lose money you've invested in parts and manufacturing.

If you make too few, you end up with people clamoring for the device (which is good) but unable to hand you their money until the device shows up (which is bad).

In that scenario, the smartest option is to bet on medium to low sales relative to your projections, because it's less painful to deal with being wrong than if you overbuild. In fact, it's arguably a positive, as it helps create buzz and a sense of a successful product launch.

[dacreativeguy]

Apple sold a million units already... in a month! I'd say that they are likely building these things as fast as possible. Either be patient, or stop by a store. When I wanted to pull the trigger last week, one store was out but another had plenty. The store that had plenty, didn't have any cases though. I went back to the first store a few days later and they had just gotten a shipment of all the different cases. So you can get lucky.

[Buck987]

Originally Posted by Battlestar

They should be able to increase production to meet demand.

your joking...right?

you can’t possible know anything about production issues

[pooryou]

'Should' is hard to argue with, what's tough to know is whether they 'can'.

[nj-mac-user]

Let's not forget, these aren't G.I. Joe's where a million can easily be made in a day. With any product like a computer or a car that has many parts it takes time to manufacture and assemble. It would've been silly for Apple to have had 10 million produced by launch just in case there happened to be very high demand. Even when we knew what the ipad was after the keynote and before it actually launched many were very skeptical with exactly how successful this thing would be. So to think they must've underestimated market demand is silly because nobody knew. For goodness sake, how many people swore they weren't getting one until they actually played with one?

Just like with the Nintendo Wii, people will wait to buy one because they really want one despite there having been competition (Xbox 360 & PS3). Difference is, the ipad doesn't have competition and people will purchase multiple per family.

[Harmush]

Where did you get this international 7th june information?

apple site in UK says 28th may still!!

i'll break down if it is 7th june. i can't wait longer!!



EDIT: I notice now. the NEW ipad pre-orders. lucky i pre ordered on monday and mine should still arrive on the 28th.

[johnnymg]

Originally Posted by Battlestar

So what you are saying is that they totally blew their market reseach estimate of demand?

Typically a company that size would have the ability to ramp up production by twenty precent or initially holds production back by twenty percent.

The only conclusion that one can come to then is that Apples market research analysts are inadequate.

That's some conclusion there Einstein.

[Durious]

Originally Posted by Harmush

Where did you get this international 7th june information?

apple site in UK says 28th may still!!

i'll break down if it is 7th june. i can't wait longer!!

Go to the UK pre-order page you'll see "Ships by June 7th" across all models. The main page says May 28th cause that's when it's available in the UK and will be delivered to those who pre-ordered early.

(Edit--- I seen you re-editted afterwards lol)

[diabolic]

Originally Posted by nj-mac-user

So to think they must've underestimated market demand is silly because nobody knew. For goodness sake, how many people swore they weren't getting one until they actually played with one?

If you believed much of the tech press before launch it was going to be a colossal failure.

[Battlestar]

Originally Posted by johnnymg

That's some conclusion there Einstein.

Apple is lucky that a the present time there isn't a viable competitor product avaible. If so the people who have to have everything now would be looking at the alternative.

[Chupa Chupa]

Originally Posted by Battlestar

Are they still having problems getting the touch screens or is it something else that is holding up production?

Do you have a cite to validate that tid bit or is that just an unsubstantiated rumor?

Reality is, the iPad, unlike the original iPhone, was effectively launched worldwide. That naturally puts a constraint on availability even with good supply of all parts. If Apple had launched only in the U.S. and delayed international availability for 6 months there likely would not be any problem walking into an Apple store and buying whichever one you wanted. As-is a week or so wait online is really no big deal. Just compare to the Wii where there was a months or longer wait for a long time.

Originally Posted by Battlestar

Apple is lucky that a the present time there isn't a viable competitor product avaible. If so the people who have to have everything now would be looking at the alternative.

Apple's real luck is in having competitors that can only copy it's products, and not real well either. Android is mostly successful because it's on other carriers besides ATT.

[BroadcastDoc]

Originally Posted by Battlestar

Apple is lucky that a the present time there isn't a viable competitor product avaible. If so the people who have to have everything now would be looking at the alternative.

No, if there were a viable competitor product available there likely wouldn't be a shortage.

You seem to want to make this a much simpler scenario than what really exists. So tell me about the successful launch of your million selling product...

[jamesryanbell]

Originally Posted by sracer

How did you come to that conclusion?

Because any responsible company needs to REALLY, REALLY be on top of things and be able to make it happen. I expect a LOT.

[dacreativeguy]

Originally Posted by Battlestar

Apple is lucky that a the present time there isn't a viable competitor product avaible. If so the people who have to have everything now would be looking at the alternative.

There is no luck involved at all. Apple does a really good job in delivering products that people want to buy. They usually aren't the first to market, but watch all the mistakes that the early players make and build their products with the best features.

1. iPod - Several companies had 2-3 years on Apple, but didn't really execute. Apple came along and blew the competition away.

2. iPhone - Palm and Blackberry owned the smartphone market for years... until Apple got into the mix.

3. iPad - How long have crappy tablets been out there with a shoehorned Windows OS? Apple figured out that people don't want (or can't use) a full OS in a touch screen device. 1M people have agreed so far.

The funny thing is that all of the early players that Apple shuts out eventually copy Apple's ideas to compete.