Why Apple never has enough new iPhones

“The big letdown from Apple’s product announcement last Tuesday was news that its most desirable new gadget, the iPhone X, can’t be pre-ordered until late October and won’t start shipping until November. Even then, analysts are predicting supply shortages,” Christopher Mims reports for The Wall Street Journal. ” Dealers in Hong Kong expect to sell the phones at a $300 to $400 premium in the first weeks they’re available.”

“You’d think after years of hard-won experience, tech hardware companies could deliver goods when and where there’s demand—especially at Apple, whose chief executive, Tim Cook, made his name as an operations maestro,” Mims reports. “Are these shortages some kind of Machiavellian marketing play? Calculated risk management? Or is it the case that manufacturing millions of complex electronic gadgets, and distributing them globally, is really hard? It’s likely a bit of all of these.”

“The pre-order mechanism, where customers signal their intent to buy a product before it starts shipping, provides early data that is essential to predicting demand for a gadget and distribution of demand across its various configurations—both notoriously difficult to forecast.,” Mims reports. “Apple may well be facing its biggest demand-forecasting challenge since the original iPhone. While Apple has empirical data on demand for new iPhones, it’s harder to know what proportion of orders will be for the iPhone X versus its somewhat less pricey new siblings, the iPhone 8 and 8 Plus.”

Apple's iPhone X. Say hello to the future.
Apple’s iPhone X. Say hello to the future.

 
Much more in the full article here.

MacDailyNews Take: More likely, in Hong Kong, the units int he early weeks of iPhone X will sell at double Apple’s asking price or more.

There is no way for Apple’s supply chain to make enough iPhone X units to satisfy demand. The iPhone X will be one of the more difficult Apple products to get initially and that supply/demand imbalance could last for many months.

Good luck on pre-order night!

12 Comments

  1. One way to pre order and pretty much get it, especially if you need more than 2 units, is to order through the stores business department. They have allotments just for business.

  2. NO ONE sells or ever will sell OLED phones in the quantities that Apple will- and no one can make those qualities fast enough. Add to that there’s basically only one supplier for OLED screens (i.e., Samsung) and you’re looking at bottlenecks for a quite a while (add to that the fact that Samsung is both a supplier AND competitor, so maybe they don’t want to make so many screens- thus limiting what Apple can sell).

    There’s just a limit as to how many widgets you can make when they’re that complicated.

  3. Simple question…

    Why not start iPhone X pre-orders on 9/22 but keep delivery to 11/3?

    Of course this would only really matter in the situation where Apple is NOT already making as many iPhone X as they possibly can.

    It would do nothing for the situation where Apple is artificially constraining supply and/or hedging production for fear of increasing their inventory turns.

    I suspect neither of those issues are actually in play.

  4. I was listening to Rush last week, he’s a big Apple fan, speculated that his iPhone X preorder might not be delivered until May. Perhaps a bit of hyperbole, but I don’t doubt that orders placed later than the first few hours won’t be delivered until 2018. If Ming Chu Quote is right and they’re making just 10,000 units a day, even if they triple their output that’s only around 1 million units a month. Demand is easily 10 times that, if not much more.

    I think I’ll probably just upgrade from a 6+ to a 7+ now and save $200 off of the 8+ and get a 128gb version that is plenty for me. I will certainly try to preorder an X just to sell it to cover my upgrade. The time difference in Europe means it’ll be mid-morning when the fun starts.

    1. Orders placed after the first few hours of the pre-order period could very likely be looking at deliveries in 2018. However, I doubt that orders placed in the first week will take until May.

      If Rush waits until Christmas to order he might not get his until February. I don’t expect iPhone X models to be sitting on store shelves waiting for someone to walk in and buy them until March or April and maybe not until May.

      1. We’ll have to wait and see, but the X may turn out to be the most sought after (and hardest to get) Christmas present ever. Tickle-Me-Elmo on steroids. Apple will be tens of millions of units short to meet demand this year, they probably hope (correctly) that most people will settle for an 8.

  5. Happens every year and generally Apple are selling more units in the first few weeks with each new release.
    Ramping up production is not easy. Apple and their partners are probably the best at doing this.
    The reality is that it is almost impossible to meet pent up demand for a new product. The iPhoneX will be constrained for some time given the new tech and extraordinary interest in this.
    I’ll be getting the new phone but fully expect to have to wait for it. It’s not the end of the world and like most Apple products well worth waiting for.

  6. I wish these people would stop trying to compare the production of iPhones to the production of gumdrops. It’s not even close to being the same thing. I’ve never heard people complain about Ferrari not pumping out cars as fast as Toyota can pump out cars.

    Most of the people who complain about iPhone X shortages probably don’t know if it’s Samsung slowing down production by not being able to produce those OLED displays fast enough. Yields may still be low. I don’t think anyone should be blamed. There is always going to be a limit to how fast some high-quality product can be produced. No one is going to die because they didn’t get their iPhone X soon enough. Be patient like Tesla buyers who pre-ordered their cars. Tesla cars not being delivered on time is a common practice. Why Wall Street doesn’t constantly bust Tesla’s chops for late deliveries, I have no idea.

    Besides, for a product that’s supposedly too expensive for most people to buy there’s no point in rushing it if it’s going to be collecting cobwebs on a shelf. /s

  7. One factor to bear in mind is that new iPhones can only be built at a finite rate. Therefore Apple ( via Foxconn ) has to get massive production lines operating at high volumes several weeks before launch so that many millions of devices are ready for when the new device goes on sale.

    As we’ve seen in recent weeks, there are almost daily leaks from the factories revealing exactly what is in production. If Apple decided that the way to cop[e with demand was to start mass production earlier, then the product leaks would start even earlier and there would be few surprises left for the launch event.

    Whatever Apple does about this, there’s a significant downside. They have to strike a complex balance between supply vs demand, early production vs product leaks, building excitement vs frustration and also balance massive free publicity with the risk of making customers wait too long to get their hands on them. If Apple announced forthcoming products earlier and left a longer gap before units were available to buy, more units could be ready for sale on the first day, but rivals would have longer to come up with copycat devices mimicking some aspects of the new product.

    It’s not an easy balancing act and most of us might prefer that Apple favoured certain aspects more than others and we’d all disagree on exactly what should be done, but overall, Apple has made a pretty good judgement.

  8. What’s the news here ? ….. Apple inc. designs, develops and releases products when they are ready, not to anyone else’s schedule or expectation. When they are finally released, they are lusted after across the planet, so how the hell could they ever make enough!!

    LOL

  9. These are fake shortages. It’s the game of supply and demand.

    Make fake shortage, get press that the item sold out and is going to be sold out or hard to get, builds desire and demand.

    It must be good if it’s sold out and people are ordering and waiting.

    It’s basic commerce and people fall for it, EVERY TIME.

    This phone has been in the works for MANY months and they have time to build PLENTY of phones

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