iPad 3 Display Supply Constraints to Result in Early Shortages?

[Rogifan]

Apple will sell record units whether or not they hold back inventory. Why is this so hard to understand? At the end of the day (or quarter) it becomes a wash because after the initial "throttle" - the inventory opens up. In the meantime, Apple not only gets press for their launch - but even more "value" because they devices are so hard to come buy. People waiting in long lines. Etc.

I say people are naive to think otherwise because Apple has done it in the past with great success.

I also find it amusing that people think that what I'm stating is anti-Apple in anyway. It's not. Their marketing and sales strategy works year after year and so does their press machine.

In one of the TV documentaries on Steve Jobs one of Apple's European execs who was responsible for iPod sales/marketing basically admitted this is what they did. All in the name of creating a 'buzz' around the product and creating demand. Now I'm not sure they need to do this with iPad as the demand is already there.

 

[ugahairydawgs]

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.

Oh good grief. Apple playing the surprised card that the demand of their product is so high is about as unbelievable as the shocked look Taylor Swift gets on her face every time she wins a music award.

And I say this as someone with two iPhones, an iPad, a MBP, a Mac Mini, and 2 ATV2s in his house. I get that the reflex action for many is to feel compelled to come to Apple's defense anyttime someone says something remotely close to critical about the company, but in the end it doesn't change anything. They build the hype for their products and they are very good at it.

This is just one of the ways they do it.

 

[cere]

hmmm I clicked this link that was previously on your post

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

Sorry, I never posted that.

 

[bbeagle]

Oh good grief. Apple playing the surprised card that the demand of their product is so high is about as unbelievable as the shocked look Taylor Swift gets on her face every time she wins a music award.

Are you going to be the same person who laughs at Taylor Swift when she doesn't get any awards some year. 'Duh! Your songs suck. You should have known you'd get nothing.'

And you'll be the same person who laughs when someday an Apple product doesn't sell more than the previous product. 'Duh! We knew all along Apple products were overpriced - Apple deserves to lose money.'

 

[ugahairydawgs]

Are you going to be the same person who laughs at Taylor Swift when she doesn't get any awards some year. 'Duh! Your songs suck. You should have known you'd get nothing.'

And you'll be the same person who laughs when someday an Apple product doesn't sell more than the previous product. 'Duh! We knew all along Apple products were overpriced - Apple deserves to lose money.'

I'm not sure I really follow you there (mostly because I don't think you made a coherent point). I never said what Apple is doing is wrong or that I am against it.

I'm just calling a spade a spade.

 

[j-traxx]

Seriously, are you high?

seriously, if he was, "it may be one of the two or three most important things he's ever done in his life."
which is admirable.

 

[taylortm]

Nintendo is the only real example

So, I know I'm late to the party here. Couldn't check the rumors until my (West Coast) lunchtime today. And I'm sure I'll get panned further since I don't have any citeable references. But as I'm reading this back-and-forth as to whether or not Apple "plans" these shortages, I really am laughing out loud.

They're not planning them. They may be accounting for them -- as in, "We know it's going to happen... what should we do about it?" But it's not part of their strategy.

Guranteed: they would LOVE to announce "We sold one bajillion iPads during the first weekend." They would love to have revenues and profits NOW, as opposed to later.

There is no tangible benefit to having lines around the corner at every mall with an Apple Store. Sure, it's cute. It gets press (not sure for how many more product launches). But it's a backlash nightmare that has deleterious effects on their product's overall goodwill.

The guy (sorry... should've quoted... now I don't remember who it was) that said they can't plan for their heaviest 5% of demand has it right on. If you are Apple, the only way to ensure "no lines" and "no backorders" is to make sure you have "way more" than you hope to need/sell. That means running the mfg lines for a longer time and, effectively, STALLING the launch date.

There's no (sound) business reason for doing so. Even if you know you'll continue to sell through over the next few months (and so you're not worried about "leftover" product), the fact is that you are still racing "time to market." You want that launch date as soon as possible. From a supply chain perspective, "possible" happens when you can meet XX % of anticipated demand. Again, waiting until you can meet 110% of anticipated is just plain dumb.

Think about other (non-Apple) products you buy. Do you ever get excited about something (a TV? a camera? a piece of audio equipment maybe?) and read about it before it launches? Out of those non-Apple products you can think of, how many are in "short supply" when they launch? I'd say most.

The only true example of a manufacturer "holding back" is Nintendo and the freakin' Wii. I "got it" (as in -- understood) the first year. The whole artificial demand thing was "cute," at best. But they kept doing it through TWO MORE holiday seasons. It was ridiculous how many people I knew that were surprised -- then frustrated -- then downright ticked off that they had so much trouble buying a two-year-old product.

Okay. I'm done.

TL;DR, I'm sure. Sorry. I'm an occasional poster but this thread got me "over the hump" to post.

 

[GeekLawyer]

Online Ordering may be just as...unpleasant

Well, my experience with the 4S certainly paints a vivid example of that unpleasantness.

As I recall, the online ordering for the original iPad was relatively painless.

 

[taylortm]

Well, my experience with the 4S certainly paints a vivid example of that unpleasantness.

As I recall, the online ordering for the original iPad was relatively painless.

Yeah. For comparison purposes, here are my recent experiences.

iPhone 3G -- Horrible
Got there at about 6:00 AM on launch day. Line was about 300 people long. We all remember the crashing AT&T servers. That line didn't move AT ALL for 2 hours after the original group of people made it into the store. By 11:00, I had moved up about 50 people's worth of space. Gave up. Went to work. (After all, how long could a "morning doctor's appt" reasonably last?) Came back after work -- after calling and being ASSURED they would stop the line when the store closed but they would serve everybody. They closed at 8:00. Then they came out at 10:00 and told us to go home. LAME. Back at 5:00 AM the next day. Had my phone by 10:00. Total of 3 trips, 14 hours.

iPhone 4 -- Better, but still bad
Decided to be "smart" and order online this time. Servers were crashing. Finally got order in around midnight. Shipping delay was 2-3 weeks. Considered waiting in line. Decided against it. My two pals waited at different stores. Both had online reservations. Both waited over 8 hours. (They thanked God they had iPads -- they watched 3 or 4 movies while waiting.) My phone eventually arrived (on time).

iPad 2 -- Best experience of all
Waited up until online ordering started. Watched the coverage of the Japan Tsunami. There were scares that So Cal would get some waves. Traded importance of getting my family to high ground vs. getting my order in. Opted for the latter. iPad SHIPPED on Launch Day. So I wasn't the first guy in town to have it. But it came to my office after I watched its journey every hour on FedEx.com. Super painless. That week of shipping was tough. But I'd do it that way if I were getting an iPad 3.

 

[optophobia]

Yeah. For comparison purposes, here are my recent experiences.

iPhone 3G -- Horrible
Got there at about 6:00 AM on launch day. Line was about 300 people long. We all remember the crashing AT&T servers. That line didn't move AT ALL for 2 hours after the original group of people made it into the store. By 11:00, I had moved up about 50 people's worth of space. Gave up. Went to work. (After all, how long could a "morning doctor's appt" reasonably last?) Came back after work -- after calling and being ASSURED they would stop the line when the store closed but they would serve everybody. They closed at 8:00. Then they came out at 10:00 and told us to go home. LAME. Back at 5:00 AM the next day. Had my phone by 10:00. Total of 3 trips, 14 hours.

iPhone 4 -- Better, but still bad
Decided to be "smart" and order online this time. Servers were crashing. Finally got order in around midnight. Shipping delay was 2-3 weeks. Considered waiting in line. Decided against it. My two pals waited at different stores. Both had online reservations. Both waited over 8 hours. (They thanked God they had iPads -- they watched 3 or 4 movies while waiting.) My phone eventually arrived (on time).

iPad 2 -- Best experience of all
Waited up until online ordering started. Watched the coverage of the Japan Tsunami. There were scares that So Cal would get some waves. Traded importance of getting my family to high ground vs. getting my order in. Opted for the latter. iPad SHIPPED on Launch Day. So I wasn't the first guy in town to have it. But it came to my office after I watched its journey every hour on FedEx.com. Super painless. That week of shipping was tough. But I'd do it that way if I were getting an iPad 3.

I guess everyone's experience is different.
My iPhone 4 online ordering was painless AND I got it a day before launch since they shipped it EARLY

 

[taylortm]

I guess everyone's experience is different.
My iPhone 4 online ordering was painless AND I got it a day before launch since they shipped it EARLY

Yeah. You were somewhat fortunate to get an order in early. But you were SUPER lucky to get the day-early thing.

I definitely saw that happening (jealously) with some of my pals... either day-of or day-before receipt of phone. And the fact that I didn't get my order in until back-order time was (obviously) my own fault. I had tried right away when online sales started. But the combo of my company's lame internet connection and Apple's server load were just too much for me to bare. The worst part -- 100% my fault -- was that I underestimated the impact of "just waiting" until bedtime to get back on and try again. Poor me. I know.

Surprisingly, I lived through all that and am here today to share my uber-interesting stories with all of MR.com!

 

[Wild-Bill]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

No supply constraints. Apple will do what it always does - create FAKE supply constraints in order to stimulate demand.

 

[SBlue1]

uh oh, time to search for the sleeping bags.

 

[cere]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)

No supply constraints. Apple will do what it always does - create FAKE supply constraints in order to stimulate demand.

Such a brilliant plan. It's a wonder everyone isn't doing it...

 

[ChrisTX]

UGH, I was hoping to use up some gift cards to best buy, and get mine there. I know Apple is always the best place on launch day so I'm hoping for a preorder!

 

[AppleScruff1]

Of course there will be shortages. It has to be intentional to happen over and over again with each iPhone and iPad. Otherwise they would make sure they had sufficient stock at launch. It's all part of the hype and the media will give them free advertising which helps feed the frenzy.

 

[charlituna]

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

Unlikely. Apple doesn't warehouse tons and tons of stock because of the security risks. So they probably didn't start production until Jan 1 if that.

THat they don't warehouse in huge amounts is also why they will likely run out opening weekend and we'll see a good 2-3 weeks of scare stock as new stuff arrives and sells right off.

----------

Of course there will be shortages. It has to be intentional to happen over and over again with each iPhone and iPad. Otherwise they would make sure they had sufficient stock at launch.

They have no way of knowing how much 'sufficient' is. Even if they go with last year every year has been higher and higher. Even if they doubled last year that might not be enough depending on the features in the new product

 

[AppleScruff1]

Unlikely. Apple doesn't warehouse tons and tons of stock because of the security risks. So they probably didn't start production until Jan 1 if that.

THat they don't warehouse in huge amounts is also why they will likely run out opening weekend and we'll see a good 2-3 weeks of scare stock as new stuff arrives and sells right off.

----------



They have no way of knowing how much 'sufficient' is. Even if they go with last year every year has been higher and higher. Even if they doubled last year that might not be enough depending on the features in the new product

So they know that they don't have enough to go around, that was my point. Being sold out on day one is very lame, IMHO. They have nowhere near enough inventory, yet they add more sales outlets and countries to the strained supply? And they don't realize this? It's done to keep interest high and they've been doing it for years. It's brilliant marketing. They don't have to spend a dime and they get outstanding publicity.

 

[mazz0]

OMG really?

Sarcasm aside, mine will have to wait, cos I just bought one of these:

http://www.kenwoodworld.com/uk/Prod...Chef-and-Major/Titanium-Chef-Kitchen-Machine/



God I hate the smilies on this forum...

 

[samcraig]

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 5_0_1 like Mac OS X) AppleWebKit/534.46 (KHTML, like Gecko) Version/5.1 Mobile/9A405 Safari/7534.48.3)



Such a brilliant plan. It's a wonder everyone isn't doing it...

I think you're missing the point. The plan only works when there is actual demand. And if/when you have the premier product.

Everyone can't do it because not every product has the kind of demand that Apple does. Apple capitalizes on that demand and shorts the supply to create an even bigger frenzy.

And it works - look at all the people who will order online and wait in line to make SURE they get one. When someone is told they might not get something they want - that makes them want it all the more. Apple won't hurt for sales because in a short time, it's a wash and everyone who wants one will get one. But for a few weeks - if they can hold inventory back - it creates a frenzy. It creates more buzz both in the press - and out on the street/in homes when people proudly show off their iDevices as being "one of the lucky ones" who got it first.

You can't buy that kind of publicity - but you can "rent" it by delaying SOME profits out of the gate. But at the end of the day - as long as you open up the floodgates before the end of the quarter - the $$ is the same.

 

[cere]

I think you're missing the point. The plan only works when there is actual demand. And if/when you have the premier product.

Everyone can't do it because not every product has the kind of demand that Apple does. Apple capitalizes on that demand and shorts the supply to create an even bigger frenzy.

And it works - look at all the people who will order online and wait in line to make SURE they get one. When someone is told they might not get something they want - that makes them want it all the more. Apple won't hurt for sales because in a short time, it's a wash and everyone who wants one will get one. But for a few weeks - if they can hold inventory back - it creates a frenzy. It creates more buzz both in the press - and out on the street/in homes when people proudly show off their iDevices as being "one of the lucky ones" who got it first.

You can't buy that kind of publicity - but you can "rent" it by delaying SOME profits out of the gate. But at the end of the day - as long as you open up the floodgates before the end of the quarter - the $$ is the same.

Seriously, your argument is that, at best, "the $$ is the same"? That begs the question, if there is no benefit, since the money is the same, why do it?/ Just to piss people? You guys can't even say there is a tangible benefit to doing this. It makes no business sense. It pisses people off. And the best you can say is it generates buzz that results in the same money? Great, so they have lower launch sales, upset customers, costs for warehousing stocks for extended periods of time, but they do it so they can get no additional money.

Like I said, brilliant.

 

[samcraig]

Seriously, your argument is that, at best, "the $$ is the same"? That begs the question, if there is no benefit, since the money is the same, why do it?/ Just to piss people? You guys can't even say there is a tangible benefit to doing this. It makes no business sense. It pisses people off. And the best you can say is it generates buzz that results in the same money? Great, so they have lower launch sales, upset customers, costs for warehousing stocks for extended periods of time, but they do it so they can get no additional money.

Like I said, brilliant.

It's ok. I've come to realize that the negative reaction to this practice is most likely because people don't like to admit that they've been manipulated. No worries.

 

[foiden]

Not a surprise. If millions of folks want to get such a device on first day, there will be shortages. Who in the world can manufacture that much quantity, have it out so quickly and just a year after the last product? There's no need to drive up demand. It's already there.

 

[cere]

It's ok. I've come to realize that the negative reaction to this practice is most likely because people don't like to admit that they've been manipulated. No worries.

Nice thoughtful response.

Don't let facts or reason get in the way of nonsensical fantasy.

 

[samcraig]

Nice thoughtful response.

Don't let facts or reason get in the way of nonsensical fantasy.

Right back at you