iPad 3 Display Supply Constraints to Result in Early Shortages?

[cere]

Right. Because the iPad has real competition? No. If someone wants an iPad - they aren't going to buy something else.

Umm, yes, they do have real competition, just none of them have gained any traction yet. Maybe they could try holding back all of their stock to create lineups. If it works for Apple, it can work for them too!

And again, that is faulty logic. If you use that logic, then you would expect no lineups for iPhones, as Apple certainly has major competitors in that space. Yet the same line ups are there for iPhones. Sorry, your logic just doesn't work.

 

[uknowimright]

I would agree, but I do see differences between Apple throttling and Samsung throttling.

If Apple were to intentionally throttle supply, they face the very real, very immediate risk of losing sales. The assumed advantage of increase hype doesn't seem to exist and doesn't seem to be necessary given the continued success.

If Samsung were to intentionally throttle Apple, they would face the risk of losing Apple, but that risk would not be that high since so few other companies have the capacity. And for every sale that apple would lose if Sammy throttled them, Sammy would likely manufacture the display for whatever product the customer chose instead (if not the whole unit).

In terms of risk vs reward, it seems pretty clear that Sammy would benefit more. I am not saying Samsung is throttling, just that if it came down to which one would make more sense to do it, it would be Sammy.

so are Sharp and LG also throttling display production too? you know since the article does state that

the whole supply chain has failed to substantially ramp up the supply of QXGA panels

 

[lilo777]

Samsung will have more material for their commercials

 

[doboy]

Right. Because the iPad has real competition? No. If someone wants an iPad - they aren't going to buy something else.



And yet - Apple CHOOSES when to release a product. They could certainly produce MORE before beginning to offer them online and in stores.

Again - Apple has done it before. To what degree products get throttled is another matter.

And yes - even Apple can and does underestimate demand. But see my earlier point about choosing the release date. They know how long it takes to make X amount of units. They launch the products strategically balancing the desire to be out with a new product vs demand vs how many units they can have by ARBITRARY date they have chosen.

Sure they are choosing the release date, but they can't delay that forever especially when the previous product is getting old and people aren't buying them expecting a new product release. Remember this year there will be more competition with Win 8 entering the race.

 

[TallManNY]

Right. Because the iPad has real competition? No. If someone wants an iPad - they aren't going to buy something else.



And yet - Apple CHOOSES when to release a product. They could certainly produce MORE before beginning to offer them online and in stores.

Again - Apple has done it before. To what degree products get throttled is another matter.

And yes - even Apple can and does underestimate demand. But see my earlier point about choosing the release date. They know how long it takes to make X amount of units. They launch the products strategically balancing the desire to be out with a new product vs demand vs how many units they can have by ARBITRARY date they have chosen.

Yes, the iPad does have competition. Not great competition, but it does have competition.

Yes, Apple can delay introduction of the unit and build demand. While it does that it can (a) pay for storage keeping billions of dollars (yes that is the scope we are talking about) of equipment in a climate controlled and secure warehouses and (b) more importantly, watch its revolutionary high-tech device become less cutting edge every week. Do you think Apple would have been better off introducing the iPhone 4S in late December so it could have had on hand more inventory at the cost of sacrificing holiday sales? Should they hold off on iPad 3 until every Android tablet is running the next generation of Android operating system making those products better competition. If Apple has 10 million iPhones sitting in storage for a few months, how many of those boxes get snagged eventually and then really leaked?

Should they build up a few billion dollars worth of inventory all based on the current build model before shipping to customers for real world tests? A true fatal flaw could then be an even bigger financial disaster.

There are real costs and risks with building up inventory. Apple builds up a lot but what you are suggesting they do would be expensive and reckless.

 

[cere]

so are Sharp and LG also throttling display production too? you know since the article does state that

Samsung being the largest would have the biggest impact. Apple has been investing billions into Sharp for years to try to get their production capacities up. At the end of last year it was reported they invested around $1billion in Sharp just towards the iPad 3 display production.
http://online.wsj.com/article/SB10001424052970204452104577057300424392974.html (use google cache to read full article if you don't subscribe).

http://www.slashgear.com/apple-planning-1bn-sharp-display-investment-tips-analyst-17172323/

Apple is spending a lot of money, not just to buy displays but to increase the manufacturing capacity of their suppliers.

 

[PCClone]

I thought they have been building these since last fall? More BS?

 

[FanDroid]

What does make sense is that it takes a long time to make millions of brand new pieces of equipment and that demand for such equipment is at its highest when none of the demand has been satisfied (i.e., before sales start). So it is inevitable that there will be shortages for a high demand complex brand new piece of equipment when it is initially introduced. Apple would like to satisfy the demand as fast as possible, especially in an area like the iPhone and iPad where competitors are continuing to advance their products. Apple would like to sell you an iPad or iPhone as fast as possible so that (a) you don't buy a competitors product and (b) you can start the cycle of getting ready to buy a replacement in a year or two. Apple is not intentionally creating shortages.

And it's not just that. Component shortages gonna take a toll here. Take example of newer higher resolution display (if the pics turn out to be true). Since its density is something unheard of for the tablet market, newer process gonna decrease the yield of panels being produced. It won't just cost them money, more importantly it will cost them time until they can pile up certain quantity before having them panels delivered for assembly.

btw, I'm not buying much on how Samsung is throttling its panel business with Apple. In fact, both of them are good business partners. It's just that they can't really meet Apple's demand, both in volume and time constraint.

I thought they have been building these since last fall? More BS?

If they have those products ready much earlier then we should expect the leak of a full product, and those should be out of control (the ones happen until now seems like some kind of controlled leak).

Plus they don't have to make their contractors pay their employees for such long working hours. They can save a lot too.

 

[uknowimright]

Samsung being the largest would have the biggest impact. Apple has been investing billions into Sharp for years to try to get their production capacities up. At the end of last year it was reported they invested around $1billion in Sharp just towards the iPad 3 display production.
http://online.wsj.com/article/SB10001424052970204452104577057300424392974.html (use google cache to read full article if you don't subscribe).

http://www.slashgear.com/apple-planning-1bn-sharp-display-investment-tips-analyst-17172323/

Apple is spending a lot of money, not just to buy displays but to increase the manufacturing capacity of their suppliers.

you even read what you pasted?
in your own article it indicates that Samsung is not the largest supplier, they are getting more orders from Apple now but still not the largest

Samsung has doubled its iPad 2 screen production forecast from 1 million units to 2 million units, while LGD's forecast of 4 million units only yielded about 2.5 million units.

really the only thing you just proved is that Apple is quite satisfied with Samsung's production of the current iPad 2 display

 

[samcraig]

You don't know this, this is pure conjecture.

I do know this - it was also stated by a former Apple exec recently in an article which I unfortunately cannot locate. Frustrating.

Sure they are choosing the release date, but they can't delay that forever especially when the previous product is getting old and people aren't buying them expecting a new product release. Remember this year there will be more competition with Win 8 entering the race.

Never hurt Apple's iPhone 4S sales having a phone come out much much later than anticipated, now did it?

 

[cere]

you even read what you pasted?
in your own article it indicates that Samsung is not the largest supplier, they are getting more orders from Apple now but still not the largest

Don't make stuff up.

Apple's decision to use Sharp's LCD panels for the iPad comes as the company is also locked in a series of patent lawsuits with Samsung Electronics Co., one of its biggest suppliers of components including memory chips and LCD screens.

No where does it say Sammy is not the largest. All is it says is they are one of the largest.

really the only thing you just proved is that Apple is quite satisfied with Samsung's production of the current iPad 2 display

So satisfied they are spending billions so they can buy from someone else. Great logic there.

 

[JohnDoe98]

I do know this - it was also stated by a former Apple exec recently in an article which I unfortunately cannot locate. Frustrating.

Fair enough, I'll take your word on it, but if you do come up with the article, please do share.

 

[iEvolution]

No surprise here we are talking about new display tech and what looks to be a new processor and with how big of a company Apple has become it makes sense that there is bound to be shortages. Esp. with the lovers spat between samsung and apple.

 

[rockrigo]

Don't make stuff up.

No where does it say Sammy is not the largest. All is it says is they are one of the largest.

I didn't make it up, those numbers I quoted from your article
which is a higher number 2.5 Million (LG) or 2 Million (Samsung)

So satisfied they are spending billions so they can buy from someone else. Great logic there.

you pasted an article on the iPad 2 screen, which according to the article they like what Samsung is doing with that display tech compared to LG

you article about investing in Sharp doesn't say they will be reducing use or completely getting rid of Samsung either, that is an assumption you are making

had to log in from my work pc, forget it autologs into my old account

 

[siddavis]

People can vote this guy down all they want to, but the fact that this has happened on EVERY iOS device release since the original iPhone is pretty damning. There is nothing wrong with what Apple does here.....they get a ton of free press and create an even greater demand for their product along the way.

But let's not act like the significant shortage of 5 different iPhones and now 3 different iPads at launch is not a coincidence. Apple is one of the largest companies in the world. Either they are completely inept at getting their act together on the supply side or they are trying to ratchet up demand and build a frenzy.

I have a hard time believing the former is true.

You really have zero idea how a global supply chain works. You don't base your manufacturing capacity on the top 5% highest demand period. Doing so would leave you with very high capital structures, and a glut of inventory at the slow times. Stop spouting off as if you know how to run something so complex as a global launch of this magnitude.

 

[Burger Thing]

I think the point that is trying to be made is that this idea that Apple has a strategy to create demand and hype by intentionally under-producing products, and that Apple thinks this will lead to larger sales in the future is that this idea doesn't make any sense. What does make sense is that it takes a long time to make millions of brand new pieces of equipment and that demand for such equipment is at its highest when none of the demand has been satisfied (i.e., before sales start). So it is inevitable that there will be shortages for a high demand complex brand new piece of equipment when it is initially introduced. Apple would like to satisfy the demand as fast as possible, especially in an area like the iPhone and iPad where competitors are continuing to advance their products. Apple would like to sell you an iPad or iPhone as fast as possible so that (a) you don't buy a competitors product and (b) you can start the cycle of getting ready to buy a replacement in a year or two. Apple is not intentionally creating shortages.

Well said. But be careful. You are running in danger to make too much sense here. Especially for the *marketing experts* here.

 

[charlituna]

Because of the relative scarcity of retina displays compared to the huge demand for the iPad 3, if you can't get one online, you'd better stand in line the first day to get one or you'll be waiting until late April.

(There have been shipping delays in the past for people who ordered online - so the only sure way to get one when it launches is to camp out or stand in line)

If the displays were that scarce Apple would either not go retina or delay the launch.

Issues last year were high demand and reseller antics, not lack of initial parts

----------

How long did it take iPad 2 shipments to get to 4-5 weeks?

Only a few days but that was in midst of a multimillion unit launch

 

[cere]

I didn't make it up, those numbers I quoted from your article
which is a higher number 2.5 Million (LG) or 2 Million (Samsung)

I just don't see it in the articles I posted. Maybe my eyes are going. Can you quote it?

In any event, even if they are not the single largest supplier, they are still a huge supplier and would have a huge impact if they wanted to.

you pasted an article on the iPad 2 screen, which according to the article they like what Samsung is doing with that display tech compared to LG

you article about investing in Sharp doesn't say they will be reducing use or completely getting rid of Samsung either, that is an assumption you are making

Nope, not making that assumption at all. Just saying it would make sense for Apple to ensure they have alternatives, for a number or reasons. They could just go to another vendor, but they can't ramp up over night. If Apple were serious about having options, then they might invest heavily in alternatives to keep those doors open. Exactly as they are doing.

had to log in from my work pc, forget it autologs into my old account

I was sort of wondering.

 

[charlituna]

Line or Online!? What to do, what to do!?

You might want to wait and see what rules Apple puts in place. Because of the reseller games they might do the first few weeks as reservation only with zero walkins.

 

[gnasher729]

Well, if you are Samsung and LG and Apple has used their clout to get the best price from you and they are your main competitor, maybe throttling production is intentional. If you can't beat Apple on the product, limiting their stock, even more so than usually, might be calculated to give you some breathing room. Line ups have been good for generating hype, but imagine how much more Samsung is going to play up their "line ups are for lemming" message when they are able to increase the line ups to even more unreasonable levels.

But then who is making more money for Samsung? The guys building a million tablets? Or the guys building LCD panels for twenty million iPads? And whose bonus is on the line? If you are the guy building LCD screens, you will make sure you can deliver as many as possible, so _you_ make profit and _you_ get a bonus and you are not giving that up so the guy making tablets makes profit and gets a bonus.

 

[sulpfiction]

Your time must not be worth very much....

My time is very valuable. Just because I can afford to stand in line for a couple hours, enjoy myself, and then at the end have my new iPad 3 in my hand doesn't mean I'm wasting my time. In fact, I consider it time well spent!

 

[Burger Thing]

Samsung will have more material for their commercials

Hey lilo, what happened to the official Samsung announcement which you were hinting at a few months back?

so it is official then
that Samsung will beat Apple to the tablet market with "better than retina" screen ("retina" being a trademark is reserved for Apple and Samsung's resolution will be better than that of iPad 3).

I think the only official thing is, that the tablets Samsung recently presented were all meh

And therefor a retina display is all of a sudden useless in a tablet, right?

While the price hike maybe justifiable there is still a problem. Tablets are used primarily for just a few things: web browsing, social networking, TV/movie watching and gaming. It's not clear if higher resolution will benefit any of this. Games would do better but iPad's GPU will not be able to sustain reasonable frame rates for alleged new resolution (it's a desktop territory). There is no video content for this resolution. Web browsing and social media will benefit somewhat but not beyond what Android tablets have (1280x800). So, why would people pay extra for no benefit if they can buy an Android tablet with 1280x800 resolution for, say, $450?

Samsung doesn't have to come up with funny commercials. They have you to make the people laugh here

 

[doboy]

Never hurt Apple's iPhone 4S sales having a phone come out much much later than anticipated, now did it?

I wasn't trying to say that it would hurt the iPad 3 sales by delaying it. It may have hurt iPhone 4 sales as people waited for the 4S.

 

[apple.of.my.eye]

So tired of DigitTimes always negative reports.

 

[uknowimright]

I just don't see it in the articles I posted. Maybe my eyes are going. Can you quote it?

In any event, even if they are not the single largest supplier, they are still a huge supplier and would have a huge impact if they wanted to.


Nope, not making that assumption at all. Just saying it would make sense for Apple to ensure they have alternatives, for a number or reasons. They could just go to another vendor, but they can't ramp up over night. If Apple were serious about having options, then they might invest heavily in alternatives to keep those doors open. Exactly as they are doing.



I was sort of wondering.

hmmm I clicked this link that was previously on your post

http://reviews.cnet.com/8301-31747_...splay-orders-to-samsung-amid-lg-incompetence/