iPad Production Bottleneck

[topmounter]

Love it or hate it... Apple knows EXACTLY what they are doing.

If they dumped a bunch of iPads on the market out of the gate and satisfied the initial demand, then they'd be spending a gadzillion dollars on advertising to reach "normal" people now.

Instead, by 'managing' the supply of iPads and stretching the iPad "launch" over multiple months, as iPads get into the hands of the fanboys, bloggers and early adopters, they keep the buzz alive and do much of that advertising and marketing work for Apple.

Sure they probably would have sold more units during the first week if they dumped a gadzillion iPads on the market, but over the long-term they're going to sell way more building the reputation of the iPad as a 'luxury good' rather than a commodity piece of high-tech hardware that ends up in the bargain bin after six months.

Besides, after the iPhone, there is a certain expectation that Apple has to satisfy. The "media" and all the "Apple Haters" would have declared the iPad an unprecedented failure if supply exceeded demand in the first few weeks after the launch of each model.

 

[YayMayorBee]

I work in supply chain for a major company and back ordered product is large concern for a lot of US companies.

They is a huge shortage of ships for transporting product to the US. This is probably a primary contributing factor to the back order of iPads.

I currently have one on order and have to wait till June 1st.

 

[Anonymouslives]

They should be able to increase production to meet demand.

Yeah they need to get those low paid Chinese factory workers to be there more than just 24 hours a day, oh wait...

 

[MikhailT]

No it isn't that simple to "increase" production rate.

Apple is sourcing the parts from multiple factories from different sources at same time, a hold up on a single part can put back the production rate. Not every parts in iPad was a common part, there's a lot of custom made parts that have to be made from the ground up and it has to be quality tested constantly to make sure nothing changed from the original design spec.

Suppose a single factory is already at max production and can't make more parts, that means that Apple will be holding on excess parts from other factories waiting for that part. So, in order to increase production, the "slowest" link have to be increased first but if its not possible then there's no point of increasing production rate at other factories other than to hold an excess inventory.


Secondly, market prediction is impossible to predict. We're still trying to get out of a recession, believe me predicting the market demand in a recession is magic at best. So how can you predict how many people want an iPad right now?

 

[Battlestar]

No, if there were a viable competitor product available there likely wouldn't be a shortage.

You seem to want to make this a much simpler scenario than what really exists. So tell me about the successful launch of your million selling product...

Okay so if HP had bought Palm last year and released a Web OS based tablet 2 weeks after the iPad came out, there wouldn't be an iPad shortage now.

So what you are saying is that any other tablet would have sold so well that Apple would have sold substantially less iPads during the past 5 to 6 weeks.