What's wrong with this year's supply?

[MrBukey]

Not sure what this has to do with my post. I was only correcting the person I quoted because they said its usually a 2 week gap and its not.

Because the context of this thread is that something is wrong with the supply....

The person you quoted explained that there's usually a two week gap, and that this time there's only one.

You showed that it's usually 9-10 days, not two weeks....

I was showing that that is still longer than a week - plus then there's other variables that compound the lead time, eg the more variations the less "relative lead time" per variation - and 7 days being less than 9-10 days is relatively actually a lot less, so "it not normally being 2 weeks" and "9-10 days" is still, actually, considerably more than 7 days (in the scheme of things).

So I provided a perfectly valid reply to your post in the context of this thread.

 

[GoingDark]

Apple takes a financial hit on

I think Apple genuinely underestimated demand this year.

I don't think they underestimated demand at all. They knew exactly what demand was, and purposely undersupplied the market. They in fact predicted this when they said they weren't going to release first-weekend sales figures, breaking with years of tradition. In their statement to NBC, Apple specifically said: "...we know before taking the first customer pre-order that we will sell out of iPhone 7."

Apple knew exactly how many iPhones it was going to sell - all the iPhones it supplied. So this isn't a case of Apple being surprised by the demand. The fact that they won't release numbers means they know the number supplied was low.

HOWEVER...It also isn't the case that Apple is artificially holding back supply to gin up hype or create the illusion of hot demand. Ideally I'm sure Apple would like to have an iPhone available for every person that wants one, and this "fake demand" theory is both silly and bad business.
The truth is Apple got bit hard with the 6S and had to draw down inventory because of a supply glut - the channel was stuffed with 6S inventory that nobody wanted to buy. That costs Apple a lot of money.

The problem is that demand is always highest at initial release, but you can't just spin up factories/machinery/workers/etc. to fulfill that demand for a few weeks and then make them disappear when the demand goes away in a month. You need to set up your supply chain for how many devices you're going to make over the course of the entire year. Apple is simply being very careful to avoid the oversupply issue they ran into with the 6S. They figure that Apple loyalists will just wait until October or November anyway, so why take the risk? It's not like they're going to lose those sales to a competitor - people who pre-order are generally die-hard fans who won't just buy a Samsung if their iPhone is delayed by 3-5 weeks.

 

[Mlrollin91]

Because the context of this thread is that something is wrong with the supply....

The person you quoted explained that there's usually a two week gap, and that this time there's only one.

You showed that it's usually 9-10 days, not two weeks....

I was showing that that is still longer than a week - plus then there's other variables that compound the lead time, eg the more variations the less "relative lead time" per variation - and 7 days being less than 9-10 days is relatively actually a lot less, so "it not normally being 2 weeks" and "9-10 days" is still, actually, considerably more than 7 days (in the scheme of things).

So I provided a perfectly valid reply to your post in the context of this thread.

Ah okay, thanks for clarifying. Make sense.

 

[MrBukey]

Apple takes a financial hit on

I don't think they underestimated demand at all. They knew exactly what demand was, and purposely undersupplied the market. They in fact predicted this when they said they weren't going to release first-weekend sales figures, breaking with years of tradition. In their statement to NBC, Apple specifically said: "...we know before taking the first customer pre-order that we will sell out of iPhone 7."

Apple knew exactly how many iPhones it was going to sell - all the iPhones it supplied. So this isn't a case of Apple being surprised by the demand. The fact that they won't release numbers means they know the number supplied was low.

HOWEVER...It also isn't the case that Apple is artificially holding back supply to gin up hype or create the illusion of hot demand. Ideally I'm sure Apple would like to have an iPhone available for every person that wants one, and this "fake demand" theory is both silly and bad business.
The truth is Apple got bit hard with the 6S and had to draw down inventory because of a supply glut - the channel was stuffed with 6S inventory that nobody wanted to buy. That costs Apple a lot of money.

The problem is that demand is always highest at initial release, but you can't just spin up factories/machinery/workers/etc. to fulfill that demand for a few weeks and then make them disappear when the demand goes away in a month. You need to set up your supply chain for how many devices you're going to make over the course of the entire year. Apple is simply being very careful to avoid the oversupply issue they ran into with the 6S. They figure that Apple loyalists will just wait until October or November anyway, so why take the risk? It's not like they're going to lose those sales to a competitor - people who pre-order are generally die-hard fans who won't just buy a Samsung if their iPhone is delayed by 3-5 weeks.

I agree with you regarding creating a sustainable supply chain. Not with the "too much 6S" stock, and not with the "purposefully undersupplying the market" though. The 6S will still get customers, there's a lot of people that will want that phone instead (cheaper entry, warranty replacements, insurance replacements, because it has a 3.5mm headphone jack, etc).

All market analysis - based on the same form factor and features coming - placed demand at a low for this iteration of the iPhone. There are more variations and more launch countries. There was only a week between launch and pre-orders, and pre-orders and release... And it appears manufacture may have started late.

Yes, Apple said that they knew that before taking the first pre-order that they'd sell out. Unless they'd seriously stockpiled that was ALWAYS going to be the case. As they explained, they know it's a popular product and it's not possible to build a sustainable supply chain AND meet pre-order demand. Therefore publishing such figures is pointless from an investor point of view (and that is the only real reason they do so, because it is an investor metric).

 

[ck3801]

My guess is Apple move launch up by one week to capitalize on Samsung's exploding phone. Sounds good in the boardroom, but bad in reality, as we have seen

 

[MrBukey]

My guess is Apple move launch up by one week to capitalize on Samsung's exploding phone. Sounds good in the boardroom, but bad in reality, as we have seen

Or they make a smaller gap because analysts said that the 7 wouldn't be as popular, plus they're employing good manufacturing practices like Lean and Sigma 6, etc - to create a more sustainable supply chain and have their manufacturing partners employ people at a steadier rate rather than hire and fire more often?

 

[Mlrollin91]

Or they make a smaller gap because analysts said that the 7 wouldn't be as popular, plus they're employing good manufacturing practices like Lean and Sigma 6, etc - to create a more sustainable supply chain and have their manufacturing partners employ people at a steadier rate rather than hire and fire more often?

This. Then the Samsung issue occurred which put more strain on inventory. Apple announced that this was going to be the first weekend where they don't report numbers. Signifying the weak outlook. Then the Samsung recall went into full swing. I think they were caught off-guard with inventory.

 

[Newjackboy]

But also less variations, and less launch countries so less complexity (all info at launch of each model):

iPhone 4s: 1 size, 2 colours, 3 storage variations, 2 modem types = 12 variations for 7 countries.
iPhone 5: 1 size, 2 colours, 3 storage variations, 2 modem types = 12 variations for 9 countries.
iPhone 5S: 1 size, 2 colours, 3 storage variations, 4 modem types = 24 variations for 10 countries.
iPhone 6: 2 sizes, 2 colours, 3 storage variations, 3 modem types = 36 variations for 10 countries.
iPhone 6s: 2 sizes, 4 colours, 3 storage variations, 4 modem types = 96 variations for 12 countries.
iPhone 7: 2 sizes, 5 colours, 3 storage variations, 4 modem types = 120 variations for 25 countries.

So less different types of raw materials, less storage space per specific same variation raw materials (or more storage space for same variation raw materials), more capacity for manufacturing same variations, more storage space for completed same variations, more capacity for all forms of shipping of same variations, more capacity for all retail and carrier storage for same variations.....

9 - 10 days is still also considerably less than 14 days in the scheme of things - and then you have launch to pre-order and pre-order to release....

That's some decent homework you did there

 

[MrBukey]

That's some decent homework you did there

Lol. Took about 15 minutes. Trying to show that sometimes it's not all conspiracy theories and Apple (or anyone else) out to get you. Sometimes things do actually have a logical explanation.

Spending some time to explain logical explanations and critical thinking vs blame culture to me is worth it. Sometimes on the face of something, something sounds right. Try and break it down, and it falls apart... The more people that critically think, the better the world becomes?

 

[LIVEFRMNYC]

Just guessing here, but probably cause this cycle is mostly built in finance payments from carriers and Apple. People don't have to lock themselves in 2 year contracts or pay in full.

 

[jk4lebron23]

In my opinion they have purposely constrained shipments. Apple knows they will not get the record numbers this time around and it's all designed to not look bad to investors. Apple won't even be releasing the sales numbers - that says it all!

Next year practically everyone on 2 year contracts who had a 6s or older will be due an upgrade. Apple will deliver an all-new iPhone to ensure those customers tie themselves to Apple for another period. Guaranteed.

Yeah there's no way they purposely constrained supplies because that's a horrible business strategy when they know tons of people will buy them regardless of it being a big update or not, pair that with a lot of people doing next, AUP, etc. now ends up with a lot of people getting new phones every year instead of every two years.
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Lol. Took about 15 minutes. Trying to show that sometimes it's not all conspiracy theories and Apple (or anyone else) out to get you. Sometimes things do actually have a logical explanation.

Spending some time to explain logical explanations and critical thinking vs blame culture to me is worth it. Sometimes on the face of something, something sounds right. Try and break it down, and it falls apart... The more people that critically think, the better the world becomes?

Logical explainations are unheard of on here! Haha everybody loves and hates Apple all at the same time and wants to think Apple is trying to screw them over. Sometimes all it takes is a little thought and things make sense...too hard of a concept for a lot of people I guess!