Sounds reasonable, but the conclusion of the story didn't happen. It turns out that a pre-order received in minute 5 (and later) was pushed out to 4-6 weeks. How do we reconcile this?
Yes, that happens quite frequently, actually. Good luck!
cpsro wrote: »
Forget the intentional supply constraint theories. I believe Apple is making units as fast as possible (however slow it actually is and for whatever reasons), but the most important thing at this time is to get developers on board... to convince developers that the Apple Watch is The Platform of choice. With any new platform, it's a chicken-and-egg problem--apps vs. customers--and Apple is doing its darnedest to fertilize that chicken.
adonissmu wrote: »
Accept he is right. They even hinted at this several weeks ago. I received an email from Apple saying I should favorite my favorite watches to ensure they would be available for me to purchase when pre-orders became live. This was the only reason I favorited the watches I liked to begin with. I never favorited anything on their site before.
brucemc wrote: »
Sure. This is a brand new product for Apple (not the 8th release of an iPhone), and they have already shown it has quite an intricate manufacturing process. It is small package with a lot of new technology in it, assembled in this format for the first time for production, with also an entirely new process for creating the materials and cases.
Why would anyone expect that Apple "should have no problem to make millions"? Based on both Apple statements and rumours over the last 6 months (including the rumour on some less-than-perfect s/w for the review units), it is straight forward to see that Apple was under tight constraints for this April 24th launch. Limited supply (meaning say 100's of thousands, or maybe a low million, count) is what should be expected - not that 5 million of various SKUs were ready to rumble with no issue.
How many gen1 iPhone units were ready for launch day? Gen1 iPads?
dr millmoss wrote: »
Demand may be high, low or, middling; we can't really know. What we do know is that it exceeds supply, for now at least.
We hear about "production issues" for every new Apple product as manufacturing ramps up. Not only does that explanation cover a whole host of possible issues, it's also the norm, and certainly not unique to Apple Watch.
Tim Cook once called himself the 'Attila the Hun of Inventory'. Since then, at Apple, he has proven it. Read one of his quotes below (link provided also) and then tell me that this inventory control idea is a 'hypo-issue'. Note also the relationship mentioned below between the number of SKUs and inventory control. Does this not echo exactly what I'm saying here? Finally note the part in which Apple specifically delayed sales of iPad 2 in order to more efficiently manage inventory. Apple knows that a delayed sale to these early-bird customers (who are the Apple diehards) is not a lost sale, so they are going to bias their planning a little bit (just a little!) towards inventory control.
Tim Cook believes that when it comes to technology such as smartphones, tablets and laptops, inventory deprecates very, very quickly, losing 1-2% of value each week - “inventory is fundamentally evil” he says. "You kind of want to manage it like you're in the dairy business. If it gets past its freshness date, you have a problem."
In 2012, Apple was said to turn inventory every 5 days! And that was part of the reason the research firm, Gartner, placed Apple’s supply chain the best in the world, with Dell and Samsung ranking next in the electronics category, turning their inventory aprox. every 10 days, respectively 21 days.
Keeping as little inventory on hand as possible is very important. Why? Because of costs with warehouses and competitors possible hits. Technology manufacturers can’t afford to keep too many products in stock because a sudden announcement from a competitor or a new innovation could change everything and suddenly bring down the value of products in inventory.
Foreseeing sales levels accurately and not having excess inventory is absolutely crucial in the computer industry, especially when new products quickly cannibalize the old. Not having too many SKUs helps correct forecasting (in 2013, Apple had 26.000 SKUs, way less than other technology manufacturers).
Although Apple was always pushing to have fast inventory turnover, it made a change in 2011 of not rushing selling. The change was implemented with the launch of the ipad 2 and consisted of selling the much-awaited products the second day after they were delivered to shops, despite the customer ques in front. This measure was taken to make sure inventory tracking runs smooth and there are no errors to lead to inventory inaccuracies.
Demand is certainly high, but not high enough to exhaust 1-2 million units in under 5 minutes. That's what I observed online. Literally, within mere minutes (the model I purchased was at 4-6 weeks within 30 seconds, so I checked others too) the majority of models got knocked out of 4/24 delivery and into 4-6 weeks. No way they moved that many in 5 minutes. So I doubt that Apple had anywhere near that number ready to go, for whatever reason other folks want to dream up.
What was unique here, from my perspective, was the speed at which the supply slated for 4/24 delivery was exhausted. We are talking under a couple of minutes here across a broad range of SKUs. I saw this with my own eyes and was blown away. This was way, way faster than even the most successful online launches of iPhones/iPads that I have ever been involved with, so I think it naturally raises the question of "why". That's why I am grappling with this issue. I can't speak for anybody else.
Update: My sincere hunch is that high demand alone could not have caused this. There must have been significantly constrained supply also. To explain the constrained supply, I am fine with two notions that are not mutually exclusive: (1) there were significant constraints somewhere in the supply chain that could not be overcome, and (2) Apple significantly underestimated demand. I don't have to resort to some conspiracy theory related to number (2)... it could have just been an honest miscalculation. Given the rate at which the 4/24 stock was exhausted, I could even believe that both (1) and (2) occurred, but which one applied the stronger constraint, we'll never know..
I would also note the following: just as new Apple products have almost always been constrained, the comment sections here on AI have always been subsequently filled with discussion just like these. So it's just par for the course, I guess.
I want to throw some conspiracy theory stuff in here, and while I haven't any information to support it, here goes;
No Apple Watch store deliveries.
So, I'm Apple marketing, and I have yet another barrier to throw in front of analyst's besides burying the revenue with a bunch of other sources.
I make it useless to stake out Apple stores to obtain sales data on the Apple Watch. The only possible way to track Apple Watch sales would be following the delivery drivers around.
How valuable is that data? I would suggest important enough to guard.
I agree, probably not. But we have to admit that we are just guessing. I will admit to it anyway.
It wasn't five minutes. Some models were available for preordering as much as six hours later. I placed my successful preorder at 12:06 AM PDT.
I'll roll with this just for fun. Here is one piece of information that Apple never ever wants to become public, in my opinion: the number of ?Watch Editions sold.
That information getting out would be a lose/lose. If below some significant number, the pundits would lambast Apple for trying to sell them. If above some other number (probably lower than the first one) the patrons won't feel the product makes them "special" enough. There's no good number to please the pundits and the patrons simultaneously. The profit is going to be so insanely sick on those things, that Apple is going to have to bury all of the AppleWatches into the "Other" category on financial reporting just to make it that much harder to detect the profit margin of the ?Watches, and the Edition in particular.
don't forget the inventory reserved for non-Apple retail stores.
And I doubt ALL MODELS were sold out in under 5 minutes. Most just the hot models like the Edition and Link Bracelet.
I know, sometimes I don't even pay attention to myself.
I like what you've done with this; i recollect that Tim already announced that they would be burying it, for competitive reasons, but screwing analysts is quite fine too.
One other piece of data would be the number of iPhone upgrades driven by the watch, and especially, the number of switchers driven by the watch.
I didn't say all models were out in 5 minutes, just that a majority of them were. Well, I probably shouldn't really use the word "majority", because I didn't look at them all. This is what I did: within 30 seconds of the Apple Store reopening, I was at the order page specific to the watch I wanted, and the delivery time was already at 4-6 weeks. I was shocked by this, but finished the order anyway. Didn't take more than another minute. Then, because I was amazed, I spent the next several minutes marching through all of the ?Watch Sport and some of the ?Watch models. In and out took no time at all for each model. The majority of the ones that I looked at were already in the 4-6 week category. And these would have been the most popular ones (the lower priced ones).
So, no. I'm not believing that Apple had 1 million ?Watches ready to go coming into this event.
Which was your model, if you don't mind my asking?
It's my understanding that there aren't enough third party resellers of ?Watch to really amount to a large number, even summed up all together. Is that incorrect?
Again, I didn't say all models, and furthermore what I was looking through were all of the ?Watch Sport and some of the ?Watch models, the ones that logically will move the highest units.
Sure, it's fun to screw analysts, but what I really meant was this: if you don't bury the ?Watch category in some larger (and preferably ambiguous) category, the outsized margins associated with ?Watch Edition would make it possible to reverse-engineer the number of units. If that number gets out and it is not small"ish", the Edition customers are not going to be happy. Of course, the pundits will attempt to reverse engineer this number anyway, and they may have some success. But that's completely different from a public acknowledgement from Apple or even a readily deduced fact.