Apple denies creating artificial product shortages for hype

Posted:
in General Discussion edited January 2014
Apple does not purposely create artificial product shortages to garner free press and generate hype among consumers, executives with the company said during Tuesday's quarterly earnings conference call.



Speaking to analysts and members of the press following the release of the company's quarterly earnings report, Chief Operating Officer Tim Cook said Apple does not intentionally build a small number of units to generate hype. Gene Munster with Piper Jaffray prompted the discussion when he asked Cook why Apple is always running out of products after a launch.



"We do not purposely create a shortage for buzz," Cook said, adding that all of the company's suppliers are working hard to fulfill orders.



Apple has been faced with a shortage of iPhone 4 units after its launch in late June, and Cook said that the company has struggled to keep up with demand. "We are selling every unit we can make," he said.



The case was different with the iPad, though, which was a new product category where Apple was unsure how many they would sell. Apple initially planned to make a million iPads per month, a number that Cook said was far more aggressive than most believed Apple could sell in the first year.



The company announced Tuesday that it has already sold 3.27 million iPads since the device went on sale. But Apple was simply caught off-guard by the demand for the iPad, Cook said.
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Comments

  • Reply 1 of 41
    MarvinMarvin Posts: 14,625moderator
    Quote:
    Originally Posted by AppleInsider View Post


    Apple does not purposely create artificial product shortages to garner free press and generate hype among consumers, executives with the company said during Tuesday's quarterly earnings conference call.



    What happened to the response "are you nuts?". That seemed like a better answer to the suggestion that Apple creates a shortage for hype. They are having to crank out 1 million phones a week. That's hard for any single company to maintain.
  • Reply 2 of 41
    sinceresincere Posts: 42member
    Quote:
    Originally Posted by AppleInsider View Post


    Apple does not purposely create artificial product shortages to garner free press and generate hype among consumers, executives with the company said during Tuesday's quarterly earnings conference call.



    Speaking to analysts and members of the press following the release of the company's quarterly earnings report, Chief Operating Officer Tim Cook said Apple does not intentionally build a small number of units to generate hype. Gene Munster with Piper Jaffray prompted the discussion when he asked Cook why Apple is always running out of products after a launch.



    "We do not purposely create a shortage for buzz," Cook said, adding that all of the company's suppliers are working hard to fulfill orders.



    Apple has been faced with a shortage of iPhone 4 units after its launch in late June, and Cook said that the company has struggled to keep up with demand. "We are selling every unit we can make," he said.



    The case was different with the iPad, though, which was a new product category where Apple was unsure how many they would sell. Apple initially planned to make a million iPads per month, a number that Cook said was far more aggressive than most believed Apple could sell in the first year.



    The company announced Tuesday that it has already sold 3.27 million iPads since the device went on sale. But Apple was simply caught off-guard by the demand for the iPad, Cook said.



    Its not a shortage...its just the demand is so large...I think its hard to judge this
  • Reply 3 of 41
    bspearsbspears Posts: 147member
    I believe him but what would we expect him to say if they DID intentionally create the shortages to build hype. Yeah we do it?
  • Reply 4 of 41
    eriamjheriamjh Posts: 1,350member
    They sell frackin' millions of devices in a typical month. It's hard to build much more.
  • Reply 5 of 41
    jimdreamworxjimdreamworx Posts: 1,079member
    Consider the source of how this discussion started.



    That explains it.
  • Reply 6 of 41
    You see, I've been trying to tell you all this time. iFraudsters! Ripping us off versus the superior Android technology out there. Now let me find the camera app for my phone... I'm sure it's on the marketplace somewhere.
  • Reply 7 of 41
    qualiaqualia Posts: 73member
    What kind of moron thinks any company wouldn't want to make as much money as possible?

    "I want an iPad!"

    "No! Your money is worthless! It's media attention I want!"

    "Yeah, but you'll get media attention anyway. You're Apple!"

    "I don't care! I don't want to make money!"
  • Reply 8 of 41
    oxygenhoseoxygenhose Posts: 236member
    Quote:
    Originally Posted by bspears View Post


    I believe him but what would we expect him to say if they DID intentionally create the shortages to build hype. Yeah we do it?



    Its a stupid concept developed by stupid idiots online.



    If nobody is interested in a product, limited supply is meaningless.



    If everybody wants a product, why limit supply to create demand that's already there? You're just working against yourself, hurting potential sales and creating a vacuum for someone else to fill. There's no upside. This is basic business and economics, which tech journalists seem to lack the wits for.



    But trolls and peasants always want to see drama in every corner so they're always busy inventing little conspiracies. It gives their otherwise boring life meaning if there's an imaginary super-villain or illuminati group working toward their demise.
  • Reply 9 of 41
    irnchrizirnchriz Posts: 1,603member
    Maybe they mistook Apple for Nintendo.



    Of course, this really is a stupid mistake to make, seeing as Nintendo ship technology from the past where as Apple ship technology that others copy in the future.
  • Reply 10 of 41
    ghostface147ghostface147 Posts: 1,629member
    Yeah that's true about Nintendo. They suffered shortages for about 3 years on their Wii. Oh well. Apple will crank them out soon enough. Now about those white iPhone 4 models...
  • Reply 11 of 41
    haggarhaggar Posts: 1,568member
    Quote:
    Originally Posted by JimDreamworx View Post


    Consider the source of how this discussion started.



    That explains it.



    According to the article, "Gene Munster with Piper Jaffray prompted the discussion when he asked Cook why Apple is always running out of products after a launch."



    Did anyone specifically ask whether Apple purposely creates shortages, or did Cook offer that response on his own? And isn't Gene Munster considered one of the more respectable analysts when it comes to Apple?



    Also, certain memory manufacturers have admitted to price fixing. It is not unreasonable to ask about supply fixing.
  • Reply 12 of 41
    nicolbolasnicolbolas Posts: 254member
    Quote:
    Originally Posted by irnchriz View Post


    Maybe they mistook Apple for Nintendo.



    Of course, this really is a stupid mistake to make, seeing as Nintendo ship technology from the past where as Apple ship technology that others copy in the future.



    gonna say this is kinda trolly,



    but how was the NDS, NDSI, and NDS3D taken from someone else?



    how was the Wii on that hand?



    (on topic now)



    if Apple estimates they will sell 9.5m ip4's in the June and September quarters (http://www.appleinsider.com/articles...ey_driver.html)

    why would you expect them to have made more then 3 million for the first 3 weeks of the launch... when this is a third of what was estimated for the first few months of its release....
  • Reply 13 of 41
    haggarhaggar Posts: 1,568member
    Quote:
    Originally Posted by oxygenhose View Post


    Its a stupid concept developed by stupid idiots online.



    If nobody is interested in a product, limited supply is meaningless.



    If everybody wants a product, why limit supply to create demand that's already there? You're just working against yourself, hurting potential sales and creating a vacuum for someone else to fill. There's no upside. This is basic business and economics, which tech journalists seem to lack the wits for.



    But trolls and peasants always want to see drama in every corner so they're always busy inventing little conspiracies. It gives their otherwise boring life meaning if there's an imaginary super-villain or illuminati group working toward their demise.



    Then how do you explain Apple's pricing strategy for their Mac computers, and their refusal to build the so called "mid range minitower" that so many people want? Doesn't Apple want to sell Macs to people who are interested in buying them? Isn't Apple just "working against themselves" and "hurting potential sales", as you put it?



    But the typical response when it comes to Mac models and pricing is the inevitable car analogies and comparisons of Rolls Royce vs Pinto, how BMW doesn't care if not everybody gets to have one of their cars, etc.
  • Reply 14 of 41
    LOL. Piper Jaffray = IDIOTS. Just sayin'
  • Reply 15 of 41
    Quote:
    Originally Posted by oxygenhose View Post


    Its a stupid concept developed by stupid idiots online.



    But trolls and peasants always want to see drama in every corner so they're always busy inventing little conspiracies. It gives their otherwise boring life meaning if there's an imaginary super-villain or illuminati group working toward their demise.



    If that's what you need to believe in order to justify your Kool Aid induced fantasies.
  • Reply 16 of 41
    tt92618tt92618 Posts: 444member
    Quote:
    Originally Posted by Blackintosh View Post


    If that's what you need to believe in order to justify your Kool Aid induced fantasies.



    So let me clarify a bit. Are you suggesting that it is reasonable and logical to assume that Apple intentionally limits supply, and thus reduces sales... But it is 'drinking the koolaid' to belileve that they build and ship as fast as they can? That's certainly what it sounds like you are suggesting, given the context.
  • Reply 17 of 41
    sacto joesacto joe Posts: 895member
    Quote:
    Originally Posted by Haggar View Post


    According to the article, "Gene Munster with Piper Jaffray prompted the discussion when he asked Cook why Apple is always running out of products after a launch."



    Did anyone specifically ask whether Apple purposely creates shortages, or did Cook offer that response on his own?



    I'm not sure that was what Mr. Munster had in mind. My guess is that he was remarking on the conservative nature of Apple's "build" policies.



    And that's a good question. When they begin to ramp up, they must make a guess on how many to build. We know that for the iPad and the iPhone 4 that guess was way off towards the conservative end.



    Is Apple being just a tad too careful about not overbuilding for its launches of late? It kind of falls into step with their overly conservative guidance.



    And if Apple is guilty of being too conservative on its builds, isn't that kind of purposefully creating a shortage?
  • Reply 18 of 41
    anonymouseanonymouse Posts: 6,659member
    Quote:
    Originally Posted by Sacto Joe View Post


    ... And if Apple is guilty of being too conservative on its builds, isn't that kind of purposefully creating a shortage?



    No.



    And your assumption is that they are being conservative. Another possibility is that these products just can't be slam bang mass produced at whatever quantity anyone might want to name. The latter seems more likely.
  • Reply 19 of 41
    addicted44addicted44 Posts: 826member
    Quote:
    Originally Posted by anonymouse View Post


    No.



    And your assumption is that they are being conservative. Another possibility is that these products just can't be slam bang mass produced at whatever quantity anyone might want to name. The latter seems more likely.



    This claim from Apple detractors that Apple is deliberately creating iPad shortages is the funnies thing ever!



    Initially, these same people were claiming that it was just a "large iPod Touch" and no one will buy it. Those same people who were saying it wouldn't sell, and would be Apple's next Cube, are now slamming Apple for not being able to predict that it would be the fastest selling consumer device, EVER! (only to probably be overtaken by the iPhone).
  • Reply 20 of 41
    lilgto64lilgto64 Posts: 1,147member
    From a purely business perspective it does not make sense to satisfy the entire demand for a given product on the day of announce. Not only would that mean either a much larger manufacturing capacity or a huge stockpile before announced. Either way can you imagine the bad press Apple would get if it either A. Manufactured 10 million iPhones a day and sold only 9 million on the first day, and only 8 million on the second day and only 7 million on the next day etc etc - until they had sold 45 million units - and had a stockpile of 40+ million with no buyers or B. Had manufacturing capacity for say 1 billion units a year but only sold 1 million a year? There is also something to be said for ramping up production and learning from early units to improve later units. Imagine the questions that would be asked if 100 million units had been available on day one and they all had a defect like a bad antenna that required $ to fix.



    There are plenty of examples from every industry for example a car company that builds a plant to make 1 million units of a given model a year and cannot sell 50,000 the year the plant opens.



    Or imagine if the manufacturing was such that any design change had to remain in production for 4 years because the tooling was too expensive to change any more often than that.



    Also - consider the flip side - if the initial shortage was designed simple to generate heightened demand - what would be the value in perpetuating that shortage? If they were artificially limiting production - they could more readily adjust product to match demand to keep the supply only just a hair under demand to keep an edge but not to create any ill will for lack of availability.



    Maybe they should be more like Google with the Nexus One - and make several times more units than anyone wants to buy and then shut down the phone business altogether (or insert which ever product line you want here).



    I am just amazed that they manage to get anything built at all - the logistics of dealing with multiple component suppliers and manufacturing and shipping etc - and dealing with the rules and regulations of dozens of countries.



    I have heard that perception is reality but so must be mis-perception.
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