O2 Limiting iPhone 4 Orders to Existing Customers in UK as Rumored Display Shortages Cramp Supplies

[dumell]

But, so many people slam Apple for shortages or systems not being capable of a launch of this magnitude.

There are two different problems here: manufacturing and sales.

When it comes to manufacturing most competitors have solved this by having many models and a steady stream of smaller model launches resulting in a steady production rate throughout the year.

Apple has chosen the exact opposite and is causing a logistics nightmare by having one huge launch once a year causing a very uneven demand for manufacturing capacity. Others try to avoid this situation but despite the problems it does come with a nice marketing and publicity effect.

Apple could make everyone wait for six month, stockpile 35 million units and then release them all at once but that would make no financial sense. Apple could also by production capacity from Foxconn based on their peak demand although they would then have a lot of unused production capacity for most of the year and that makes no financial sense either. Or they could do what they do know which makes sense although those that have to wait for their unit are complaining for obvious reasons.

A different story is having their sales system go down when receiving 600 000 orders in one day (and now the number of models is really irrelevant, only the total volume is relevant). This is really because they have made the sales process quite complicated. I think this is the part they are now being criticized for.

 

[cvaldes]

Where I work, we make products that use off tool (ie production) components as far away as 1-2 years before volume production. They are not salable though.

(edited for brevity)

Apple reputedly makes dozens, even hundreds of prototypes.

Their steps are proto, DVT, EVT, PVT/Ramp, steady state production.

Without a doubt, Apple creates some prototypes using the design of existing models (assuming it's not an entirely new product line like iPad) with newer/different components (processor, display, camera modules, antenna, etc.). Clearly they will try new designs and ideas, with only a few things making the final cut.

Steve mentioned in the WWDC keynote address that the iPhone 4 was the product of 18 months of labor from many people. That sounds about right: proto about 18 months before ship date.

Thus, initial prototypes for iPhone 5 probably started at the beginning of this year, as the iPhone 4 was in PVT/Ramp. Somewhere in a lab in Cupertino, there are iPhone 5 protos.

 

[WilliamLondon]

There are two different problems here: manufacturing and sales.

You're misunderstanding what I'm saying. Actually it's been asking. What I'd like to know is the ranking of sales by manufacturer model. That's it. Nothing more.

The rest of what you said has to do with the model that Apple employs. I understand that fully. What I'd like to know is how many other manufacturers have volumes to deal with "of the iPhone level". Is it none, or is it many?

I think it's closer to none than many, but I was asking what are the rankings.

 

[Spanky Deluxe]

This is partly good news in that O2 are giving their customers first choice but it's bad news that you can't order online. So the only people who can get iPhones on launch day are those that take the day off work or those that are jobless.

 

[dumell]

What I'd like to know is the ranking of sales by manufacturer model. That's it. Nothing more.

Nokia 1100, a very cheap model, sold 200 million units during it's lifespan. The 700 USD high-end Nokia N97 sold 2 million during it's first three months on sale. Mid range phones end up somewhere in between.

But as stated, this focus on one model and a huge one-day launch event is very much an Apple thing. For example the 1000 USD Nokia 9500, their last Series80 phone, didn't have a launch date - they only mentioned a target month for when they might start shipping them and they did not build up any stockpiles for a single launch event but rather allowed them to start trickle down to stores around the world pretty much as soon as the production started.

Currently Nokia seems to have 66 models on the market in Europe. Ad to that those models that are exclusive to Asia and North America. That makes for more than one product launch every single week. Comparing one Nokia model at a time with Apple's single model of the year only tells us that Apple and Nokia does things very differently.

More interesting might be to look at a Nokia product range such as the more expensive N-series (media-phone) or E-series (business-phone) as all models within such a range are quite similar. This excludes cheaper "teenage" models such as the touchscreen Nokia 5800 XpressMusic and those infamous budget phones that sell for 50-100 USD (that can be bought for a few bucks trough installments or "subsidized" as operators call it).

A quick search with Google found numbers from 2Q2008: 10 million N-series devices sold and 2 million E-series sold during three months.

You might interpret this four ways:

1. Over all Nokia sells more phones than Apple in the iPhone price and feature -range
2. By stockpiling in advanced, Apple sells more phones once a year than Nokia in the iPhone price and feature -range
3. Apple only sells one model and Nokia many high end models so Apple is superior
4. I refuse to accept any Nokia phone as a smart phone and therefore Apple wins by default

 

[womble2k2]

For potential UK buyers of the 32 Gig iPhone, I have calculated total cost of ownership and actual cost per month (total cost of ownership / contract length) for each of the 3 UK networks that have released pricing. Where possible, I have also included Quidco cashback although ordering through Carphonewarehouse and Quidco gets the best cashback of £70.

O2 don't offer the best deals, so is this news really that bad?

If there is enough interest, I'll do the 16Gig version.

Phil

 

[matticus008]

You've completely ignored everything else in my post.

Sigh. No.

I understand that other manufacturers *may* choose to publish stats on various models. I understand that. But, as I pointed out, that doesn't mean the information is not available. I'm sure it's available, I just haven't seen it.

Again, it's proprietary information. You haven't seen it because it's not available publicly.

As for number of models, it is relevant. The reason is that different models require different manufacturing, and in many cases this will be different manufacturers. Not every model will have the same screen manufacturer, not every model will have the same CPU manufacturer, not every model will have the same battery manufacturer.

Exactly right, which is why comparing overall demand is irrelevant.

Nokia has at least a dozen times the manufacturing capacity that Foxconn's Apple lines do (and Foxconn overall is far larger than Nokia)...but that capacity is divided by a large number of models. Some lines can be retooled for product launches, but you can't divert your other orders for the sake of a new model, because at that point you're only shifting the crunch, not eliminating it. Having idle lines is an expensive waste that nobody voluntarily accepts.

The point of all this is that there are *few* products in the world that on day one of release have to release xMillion products? In phones, how many models ever sell 600K on pre-order?

Almost none.

I don't believe a Nokia 6301 is the same product as a Nokia N900. Different fabricators, different assemblers, and different launch schedules which don't require the same as the *one* iPhone version being released (only once per year).

Right, which is why the ability to supply a million units a day is meaningless if it's divided across 20 models, because only ~1/20 of that capacity is available for any given model, which would put Nokia in the exact same crunch if it ever had to deal with demand this high.

There isn't a handset manufacturer in the world that would be able to handle a product launch this size without shortages.

 

[sgibson]

Just a heads up that at least some O2 stores are happy to give out the microsims already. I picked mine up last night and they requested the number transfer for me and within five minutes I was using the new sim/microsim in my 3GS.

They didn't ask for proof I'd ordered an iphone 4 or even ID, beyond asking for address and name. A few people I know have already done this, but a couple of other stores won't hand them out until Monday. Probably worth giving them a call and asking if you can pick up your new one this weekend.

 

[yourstation]

Good business decision from O2 there to leave out new customers... NOT

Actually it is. Whenever a new non-exclusive product is launched that accelerates demand it is one of the times where a network can LOSE existing customers. In the past networks have given priority to new customers and locked out existing customers which has resulted in people moving networks just to get the new handset. This move prevents that and they will still be opening up to all in the coming weeks. Due to the shock shortages this move makes sense to me.

 

[twentyred]

Apologies if this has already been posted by someone...

I just called O2 (Platinum) customer services, about my 6 month early upgrade (due as of today). ISTR the Gold and Blue levels, depending how much you spend per month, offer 3 month and 1 month early upgrades.

I was told that for early upgrade promotions, I was NOT allowed to purchase an iPhone from an O2 or Apple store, only order over the phone, and only from launch day onwards(?!).

It seems O2 don't want their higher spending customers to get an iPhone sooner rather than later.

 

[iigsie]

The iPhone isn't, but there is a unique opportunity to own an essential iPhone 4 related domain name;
http://cgi.ebay.co.uk/www-orderipho...&pt=UK_Computing_Services&hash=item3cae17bb45

LOL

Imagine the Paypal/eBay fees on that mother

 

[iigsie]

Actually it is. Whenever a new non-exclusive product is launched that accelerates demand it is one of the times where a network can LOSE existing customers. In the past networks have given priority to new customers and locked out existing customers which has resulted in people moving networks just to get the new handset. This move prevents that and they will still be opening up to all in the coming weeks. Due to the shock shortages this move makes sense to me.

There's another side to this. I've ordered online direct from Apple sim free and will be moving networks to whoever offers the most/cheapest data. Which will probably be Tesco mobile. Still o2 yeah but 500mb from unlimited sucks.

Yep you pay more this way but you can move networks and are not stuck in a contract. I'd rather give that little bit extra to Apple than o2 over an 18 month period. I use my iPhone mostly for data, voice minutes are irrelevant.

 

[JackHobbs]

As a non O2 customer who hopes to be one soon I went to the Carphone Warehouse today to see about an Iphone 4 on contract. The nice man said that they are not reserving iphones just for O2 customers. The theory is that on Wednesday they will ring me and let me know if there are enough Iphones in that branch for me to have one on launch day. If not, I should have one before my PAC code runs out.

Much as I would love an iphone on Thursday, if I was an O2 customer I would be pleased that they were limiting their stock to current O2 customers. A little loyalty and customer service can go a long way.

Interestingly, Orange tried to frighten me with stock shortage as a reason to stay with them. Another stunning example of their superb rolleyes customer service. I am trying to pick a contract for the next two years, short term aims like having the phone on Thursday do not come into it. (Though I would love the phone on Thursday!!! but that's just me being childish)

 

[zengod]

This is a really daft decision on O2's part seeing as existing O2 iPhone customers will all be looking to leave O2 for the better deals elsewhere anyway.

They are also the ones that have already experienced O2's extremely poor 3G coverage and a complete lack of interest in doing anything about it.

I myself will probably bide my time for a few weeks and then go back to Orange after two years of lousy data signal since I moved to O2 just to get the iPhone.

 

[NightFox]

Why is everyone comparing this with the 3G S⃣ launch? The S⃣ was just an incremental upgrade from the 3G. I remember walking into Regent Street on launch day and being back out with my S⃣ in under 10 minutes, so to say that demand is 10x as high as hardly surprising. It would be much more interesting and relevant to compare the 4 launch to the original 3G launch.