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itguy05

join:2005-06-17
Carlisle, PA

Damn Man - iPhone is on a Roll!

»www.macrumors.com/2012/10/18/iph···3q-2012/

iPhones made up 46% of Verizon's smartphone activations in Q3. 650k iPhone 5's in, what 1.5 weeks of September?

Thats just crazy!


Mike
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Limited supplies too.

What is the statistical trend for each major (single digit) release and the S?
Expand your moderator at work


Jackarino
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reply to itguy05

Re: Damn Man - iPhone is on a Roll!

My god


Nezmo
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3 edits
reply to Mike
said by Mike:

Limited supplies too.

What is the statistical trend for each major (single digit) release and the S?

Same question for other manufacturers. And is that number for a new product release good? I don't know.

BTW, the limited supply thing is old and bullshit in my mind. It's contrived/planned so they can say 'sold out.' Those last two words create more demand. Funny how marketing works and how people think.

Before the Monday morning economists jump all over me and tell me that satisfying demand would reap more $$$... that's not how this model works. So yes, demand is higher than supply and that's not really in dispute. But how much additional demand is only known by Apple.
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skeechan
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It's not old and BS. FC has admitted their production problems stem from the major PITA it is to assemble the phone not to mention labor unrest.

»blogs.wsj.com/digits/2012/10/17/···hortage/


Nezmo
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said by skeechan:

It's not old and BS. Hon Hai has admitted their production problems stem from the major PITA it is to assemble the phone.

»blogs.wsj.com/digits/2012/10/17/···hortage/

What was the excuse for every other prior iPhone and iPad release?

Please.
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Irrelevant. The fact is if the could have made more, they would have sold more. Way more.

What you are claiming is artificial scarcity, and it isn't. This is natural scarcity due to lack of capacity. Simply put, the resources to meet demand do not currently exist. Huge difference.


Nezmo
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said by skeechan:

Irrelevant. The fact is if the could have made more, they would have sold more. Way more.

My comments are not irrelevant. Apple has NEVER satisfied the demand. It's planned. Maybe the issues you cite are real but they are contributing factors if so, not the only reason.

I'm not arguing against that there's more demand than supply but Apple knows what the demand will be and has NEVER met it. A company with the resources they have can't make sure they meet demand? Laughable. They are master manipulators and marketeers.
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skeechan
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The only benefit to artificial scarcity is to raise the price. The price is what is regardless of supply which is why there is a shortage. With artificial supply, the only benefit would be from a new equilibrium price, much higher than under normal conditions. You would thus have no shortage but the phones would be selling for $1500 each instead of $700.

Your claim of artificial scarcity has no basis in fact nor logic. Apple would be leaving tens to hundreds of millions on the table with artificial scarcity at the current price.

Publicity is meaningless if you are promoting a product you are restricting the supply of. Great, people want it, and can't buy it. That isn't smart marketing and no one at Apple is that stupid. Apple is the marketing benchmark.

There is zero intention of limiting supply. No conspiracy. No black helicopters.


Nezmo
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said by skeechan:

The only benefit to artificial scarcity is to raise the price. The price is what is regardless of supply. Your claim of artificial scarcity has no basis in fact nor logic. Apple would be leaving tens to hundreds of millions on the table with artificial scarcity at the current price.
...

And what is your proof that Apple is leaving "tens to hundreds of millions on the table." Like me, you are speculating. We can agree to disagree but your comments are just like mine - an opinion.

For the record, I don't wear a tin foil hat like most around here. I just have common sense and a good feeling when I'm being snowed.

This is just like the planned leaks Apple does prior to a launch. That's how you create a buzz. Like you said, Apple is the marketing benchmark.
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skeechan
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It's not opinion, it's first semester economics. There are substitutes in this market as the gShills continuously point out. Delays in availability result in lost sales. Not everyone is willing to wait 3-4 weeks and the longer they wait the less likely they are to impulse buy and more likely to comparison shop both leading to lost sales.

If Apple could have had 10M units in the channel they would have done it. Foxconn simply couldn't do it with their production lines.

There is nothing to be gained from a shortage and everything to lose. The longer the delay the more lost sales as mentioned. The more lost sales the more lost sales from complementary items such as cables and apps.

They try to start early enough to get product into the channel and Foxconn simply couldn't do it. Foxconn gives their production estimates so Apple schedules their releases based on that. When Foxconn drops the ball Apple is stuck with shortages and a choice to delay foreign release of the product to keep channel inventory for the US. Beyond that, they simply have to wait for Foxconn to catch up.

No one is planning ahead of time..."let's limit supply to ensure a 3-4 week backlog for weeks on end while maintaining the same price". No one is that dumb.


Nezmo
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So you know FC says when they'll be ready and apple follows? You don't think Apple tells them when to be ready? Which is it? I have no proof either way but I suspect the latter.

The gain to be had from this tactic is to create more demand. Apple does not have to worry about the crowd that will buy the product even if they have to wait weeks because they will wait regardless (eg, the folks you see saying I'll buy it before specs are out, etc). What they care about are those on the fence. And the latter won't go elsewhere as Apple is careful not to delay supply too long and many see the 'sold out' as "dang, it must be fanstastic so I'll wait and buy it."

You said it, Apple are master marketeers. I think the production issues at FC are real (BTW, the employing 14-year olds is disgusting if true) but that is only part of the picture in my opinion.

BTW, what is a gShill?
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4 edits
Of course Apple works out the schedule but when Foxconn has an unforeseen problem, S goes south.

There is no gain from artificial scarcity. All buyers won't wait regardless and competitors will respond accordingly with their substitutes (the next big thing is already here).

If Foxconn could have delivered 10M units first week, Apple would have been much happier. No one desires shortage except for Apple's competitors. Master marketers work day and night to ensure EVERY buyer can get the devices (place strategy). FYI, marketing isn't just advertising, it's the entire process of identifying and filling wants...fulfilling wants being the ultimate goal.

Think about it...what would have been better for Apple...5M unit sell out and 3-4 week backlogs, or 10M in first week sales and a 1 week ongoing backlog for 2 weeks followed by no backlog (supply matches demand). Obviously it is the latter.

What you are suggesting would work for "limited edition" items. Say Apple initially released a limited edition iPhone for $1500, 2 months before general availability. Artificial scarcity supports the high price, gouging those who MUST have it now. But there is no benefit from keeping the price low and just having shortages. There is no marketing benefit.

It's like Ray Ban. Ray Ban was available everywhere for $30 until Ray Ban was bought by Luxottica. They took Ray Ban off the market for about a year and reintroduced them with artificial scarcity and again Ray Bans are $100+. The benefit is from raising the price. It wouldn't make sense to have artificial scarcity while still charging $30 bucks. Even if the intent is to build exclusivity into the brand, the benefit isn't the exclusivity, it's the higher price that exclusivity can command. Yet Apple isn't making an attempt to reprice the iPhone based on this exclusivity. It's the same $200-$400 like everything else.


dirtyjeffer
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reply to skeechan
said by skeechan:

It's not opinion, it's first semester economics. There are substitutes in this market as the gShills continuously point out. Delays in availability result in lost sales. Not everyone is willing to wait 3-4 weeks and the longer they wait the less likely they are to impulse buy and more likely to comparison shop both leading to lost sales.

If Apple could have had 10M units in the channel they would have done it. Foxconn simply couldn't do it with their production lines.

There is nothing to be gained from a shortage and everything to lose. The longer the delay the more lost sales as mentioned. The more lost sales the more lost sales from complementary items such as cables and apps.

They try to start early enough to get product into the channel and Foxconn simply couldn't do it. Foxconn gives their production estimates so Apple schedules their releases based on that. When Foxconn drops the ball Apple is stuck with shortages and a choice to delay foreign release of the product to keep channel inventory for the US. Beyond that, they simply have to wait for Foxconn to catch up.

No one is planning ahead of time..."let's limit supply to ensure a 3-4 week backlog for weeks on end while maintaining the same price". No one is that dumb.

QFT.
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ptrowski
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reply to skeechan
We all speculate so no one knows for sure, but apple does love to hype the "can't keep up with demand" pat on the back all the time. One or two releases, maybe. They also know that people will wait for the phone and a small percentage will find something else. Apple fans can be loyal to a fault, so having an artificial scarcity does work. Apple could easily find other companies willing to build plants, lines etc to manufacture for them. It's a gold mine.
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There is no way on earth that Tim Cook, an expert in supply chain, takes any pride in Apple not being able to deliver product. There is no hype from being sold out only bad PR from not being able to deliver product. The hype is people lined up around the corner...not from walking out empty handed. And with limited devices in the supply chain, there is no in store traffic from it (where users can be upsold) and no impulse buying.

There is ZERO benefit from artificial scarcity when you don't raise the price and in that case there is negative benefit both in lost primary sales and lost sales on the complementary goods.

Apple fans will buy it whether it is scarce or not. No hype. Non-Apple fans will go elsewhere rather than wait. No hype.

Again, there is no benefit unless they raise the price. When they leave price where it is, they simply leave money on the table if they induce artificial scarcity.


Mike
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Yeah there is.

Hype.

If you have a rare product that is supposed to be amazing, people are going to fiend over it.

It's a lot better if people are going crazy over limited supply than having a store full of retail boxes.
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bbarrera
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This is just nutty. Wall Street Journal quotes Foxconn rep ""the most difficult device that Foxconn has ever assembled." Apple sells more in the opening weekend than any other cellphone launch, by far. Yet on this thread we are too believe they are artificially limiting production. Come on, its not like anyone is capable of mass producing phones on the scale of say M&M's candy at over 400 million a day. Get real people.


Nezmo
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reply to itguy05
Okay, I'm wrong, you're right.

Now explain why Apple cannot EVER meet demand on ANY iPad or iPhone release. As for the comments about stringent manufacturing tolerances on the 5 causing problems... if Cook is the supply chain whiz he's supposed to be why did he allow that kind of thing to cause a kink in meeting the demand they knew they would have. If the dollars are more important then don't impose those silly tolerances (it's not a freaking Swiss watch) and remove that constraint.

I am just trying to understand why this genius company cannot meet the demand they create. The reasons given so far don't seem reasonable to me.
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4 edits
reply to Mike
There is no benefit to "hype" in itself. Benefit comes from revenues. You don't hype a product you are already selling out of. You make as many of the damn things as you can and get them to market. Anyone think they need to sell out in order to hype an iPhone. It's the most overhyped device on the planet...long before release day. Apple doesn't need to scheme artificial scarcity to promote their device.

No units = no revenues. No units /= hype. No units = lost sales. NO ONE is surprised by a first week sell out. There is ZERO hype from a first week sell out, or a second week sell out. By the 3rd week it is simply frustration.

You would be right if the few units that were available were selling for $1500 per...then sure, there is the benefit to artificial scarcity.

No one is going "crazy". They simply walk out of the store empty handed or with an S3 box in a bag.

Boxes sitting in retail doesn't mean anything. Turnover does. You can have shelves full of boxes if you have high inventory turnover. It's infinitely better to have boxes in retail than zero boxes in retail.
The former means revenue, the latter doesn't.


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reply to Nezmo
Because demand always exceeds their sales expectations. 5M units was a record for handsets, yet it is speculated that actual sales could have been 8-10M had the supply been there.

Initial demand is higher than ongoing demand. They have to control fixed costs in the short term. They get as many units into the channel as is reasonable to preserve unit margins, not to generate hype.

andychrist

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reply to Nezmo
said by Nezmo:

Okay, I'm wrong, you're right.

Now explain why Apple cannot EVER meet demand on ANY iPad or iPhone release. As for the comments about stringent manufacturing tolerances on the 5 causing problems... if Cook is the supply chain whiz he's supposed to be why did he allow that kind of thing to cause a kink in meeting the demand they knew they would have. If the dollars are more important then don't impose those silly tolerances (it's not a freaking Swiss watch) and remove that constraint.

I am just trying to understand why this genius company cannot meet the demand they create. The reasons given so far don't seem reasonable to me.

The new iPad. The only lines were before the Apple Stores opened for business and started selling them, just about nobody had to walk away empty handed. There were plenty and it was considered a great triumph for Tim Cook.


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The new iPad was very well stocked at launch. The eBay scalpers had to line up and return them back to Apple because there was no shortage.
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Mike
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reply to skeechan
If you're in the Apple system, why would you leave? Someone handed me an iPad mini.. uh I mean a S3 today and it's half phone half kindle. Too big.

Theres your reality distortion field in effect.

If you have a predictable base that can only grow, then your stock price is going to be insane.
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