iPod shortage strikes again
News Story here
Classic Apple, can't keep up with demand
Quote:
Amazon.com has sold out of Apple Computer's 20-gigabyte iPod digital music player and Best Buy is in short supply amid surging holiday demand.
Amazon, the world's biggest Internet retailer, said it ran out of the $299 model, which holds 5,000 songs, as well as the $249 iPod mini in four of five colors, spokeswoman Molly Ingle said.
Best Buy, the world's largest electronics retailer, said it won't get more 20-gigabyte iPods to stores before Christmas.
"We're making and shipping iPods as fast as we can," Apple spokeswoman Natalie Kerris said without providing specifics.
Amazon.com has sold out of Apple Computer's 20-gigabyte iPod digital music player and Best Buy is in short supply amid surging holiday demand.
Amazon, the world's biggest Internet retailer, said it ran out of the $299 model, which holds 5,000 songs, as well as the $249 iPod mini in four of five colors, spokeswoman Molly Ingle said.
Best Buy, the world's largest electronics retailer, said it won't get more 20-gigabyte iPods to stores before Christmas.
"We're making and shipping iPods as fast as we can," Apple spokeswoman Natalie Kerris said without providing specifics.
Classic Apple, can't keep up with demand
Comments
if a company can't learn this for years and years... i mean dang, thare is something wrong at the top level.
Edit: By the way the same retailer has minis down as discontinued if you were wondering.
Originally posted by Gene Clean
well, since its christmas period and the demand is at least double the normal/expected one, lets cut them some slack. but as they are a company that has a hot item right now, they need to learn to cover future holidays properly with the iPod and whatnot. they need to remember that they're not the elitist company anymore; now they're mainstream, and its the consumers that dictate the conditions to a large extent, and not Jobs & Co.
if a company can't learn this for years and years... i mean dang, thare is something wrong at the top level.
there is a continuous demand for iPods so it is difficult to stock pile them. There always selling them, i think parents will just learn to buy iPods before December in future!
By the way, my original iPod is still going strong on its original battery. I wish it would die so I'd have an excuse to buy a new one.
Originally posted by Gene Clean
well, since its christmas period and the demand is at least double the normal/expected one, lets cut them some slack. but as they are a company that has a hot item right now, they need to learn to cover future holidays properly with the iPod and whatnot. they need to remember that they're not the elitist company anymore; now they're mainstream, and its the consumers that dictate the conditions to a large extent, and not Jobs & Co.
if a company can't learn this for years and years... i mean dang, thare is something wrong at the top level.
Well, they are selling like 4M this quarter...and they sold something like 700,000 same time last year?
Originally posted by D.J. Adequate
Hmm, our local compUSA still has piles of both the HP and apple iPods. Maybe I should stock up and sell them on ebay?
By the way, my original iPod is still going strong on its original battery. I wish it would die so I'd have an excuse to buy a new one.
buy more songs then you have an excuse to upgrade to a bigger hard drive - or take lots of photos!
Originally posted by MacCrazy
buy more songs then you have an excuse to upgrade to a bigger hard drive - or take lots of photos!
I don't think my wife would buy that excuse.
Originally posted by Chris Cuilla
Well, they are selling like 4M this quarter...and they sold something like 700,000 same time last year?
We don't know the exact numbers for this quarter. But they sold 2M for the last one, and as I've said, the christmas season causes the demand to go up at least two times the normal, so they should have gotten prepared for that.
Open a new production line maybe?
Originally posted by D.J. Adequate
I don't think my wife would buy that excuse.
my girlfriend wasn't happy when i bought a 60GB iPod photo to replace my 30GB iPod. However, she calmed down once I gave my old one to her! (Bribery always works)
Originally posted by Gene Clean
We don't know the exact numbers for this quarter. But they sold 2M for the last one, and as I've said, the christmas season causes the demand to go up at least two times the normal, so they should have gotten prepared for that.
And quite obviously they were. Shortages are fewer and further between (and later) than they were last year (and they are selling twice as many).
Open a new production line maybe?
Just like that?
It is obvious they have upped their capacity. They expected to sell between 3-3.5M this quarter. It sounds moer like 4M...they (again) underestimated, yet they are still doing a pretty decent job meeting demand. Providing supply is a tricky balance. Sure, maybe they could bring another factory online...but at what cost?
Perhaps to produce another million? But what if demand is only about 4M...then they have excess capacity...which is bad. The best place to be is to be exactly meeting demand...perhaps just a little behind...MAYBE just a little ahead. If I had to pick (especially on a product like this one)...I'd pick being (slightly behind). Why? Psychology. A product that is IN demand has a tendency to INCREASE demand.
Originally posted by Chris Cuilla
And quite obviously they were. Shortages are fewer and further between (and later) than they were last year (and they are selling twice as many).
Obviously they weren't, since there are shortages. In economics, a shortage means not enough product(s) to satisfy the demand.
Just like that?
As this seems to be irony, and I'm not being ironic at all, lets just put it aside for a moment.
But, to continue with the conversation, a production line does not equal a new factory. A new production line means an expanded factory + more employees. It means less human resources to things that are not in high demand, and more resources to things that are in high demand. Pretty simple economics.
It is obvious they have upped their capacity. They expected to sell between 3-3.5M this quarter. It sounds moer like 4M...they (again) underestimated, yet they are still doing a pretty decent job meeting demand. Providing supply is a tricky balance. Sure, maybe they could bring another factory online...but at what cost?
Sure they upped their capacity, but to what extent? Its been a year or more since iPod became the hottest mp3 player in the market, and they still can't keep up with the demand.
They usually underestimate - and this is a serious problem they have. With all that money spent on R&D they should have a better idea of what is going on in the market. That's why there are focus groups, economists, lessons learned from previous quarters..
Perhaps to produce another million? But what if demand is only about 4M...then they have excess capacity...which is bad. The best place to be is to be exactly meeting demand...perhaps just a little behind...MAYBE just a little ahead. If I had to pick (especially on a product like this one)...I'd pick being (slightly behind). Why? Psychology. A product that is IN demand has a tendency to INCREASE demand. [/B]
They should have produced more before the Christmas season and not worry about new factories and their costs now.
A product that is IN demand does INCREASE demand, but a product that's IN demand for years and still can't keep up with THE demand, is, economically speaking, destined to lose a percentage of the potential buyers, albeit, a small one.
Psychology too. If I have to wait 2 months for an iPod (random figure), and the Christmas is here in 10 days, should I, or should I not wait for the iPod? I wouldn't, since I need to give the present in Christmas, not in 2005.
But, euphorically speaking, its good that they have such a high demand that they can't keep up with it. It makes you miss those pre-iPod periods when Apple had a low demand and still couldn't keep up with it... lol.
Originally posted by Gene Clean
Sure they upped their capacity, but to what extent? Its been a year or more since iPod became the hottest mp3 player in the market, and they still can't keep up with the demand.
It seems that many are being extremely critical of Apple's inability to ramp up production fast enough. It's obvious that those with this view have never been involved with such a process first hand.
When sales sky-rocket and production needs to grow at non-linear rates, organizations are put in extreme upheaval. Increased production can mean additional warehouses are needed. Which means that inventory and accounting software needs to be rewritten to work in multiple locations. Even if merely expanding a storeroom at a single location, there are huge difficulties. Parts are stored in new locations, staff is new, purchasing managers need to rework their leadtime on orders. Additional layers of management are needed to handle many more employees. The shipping companies involved with supplying the factories must rework their schedules and staffing. Perhaps plumbing and electrical systems aren?t up to the capacity required by increased volume at a single location. If this is true, government permits can take a while to allow for new power transmission equipment. This list could go on forever!
The point is that even when anticipating extreme growth in production volume, there is a maximum rate at which production can be ramped up. Pushing the pace often leads to poor decisions, like building a single cafeteria for workers? and then later realizing that lunch periods must be lengthened so that employees can make it from their stations to the lunch room and back within the allotted time.
Apple's suppliers have likely done an excellent job of managing the production of iPods. Or at least... nobody here has enough inside info to support a claim otherwise.
Originally posted by Gene Clean
Obviously they weren't, since there are shortages. In economics, a shortage means not enough product(s) to satisfy the demand.
I really think the shortages are being overstated here. I checked again last night, and CompUSA has every size of iPod available--both Apple and HP branded. The same with Best Buy. So at least where I live, no one is going without an iPod that wants one.
Has anyone here actually tried to buy one and couldn't? Or is it all just speculation.
Originally posted by Gene Clean
Obviously they weren't, since there are shortages. In economics, a shortage means not enough product(s) to satisfy the demand.
Thanks for the economics lesson.
But, to continue with the conversation, a production line does not equal a new factory. A new production line means an expanded factory + more employees. It means less human resources to things that are not in high demand, and more resources to things that are in high demand. Pretty simple economics.
1. Okay...a new or expanded assembley line. Still not always as easy as you seem to think it is. What if they are operating at maximum capacity? Then they must consider the marginal costs of expanding their capacity against the marginal gains in revenue. They may have done this math and computed correctly that losing a few thousand sales was a worthwhile risk compared to losing more $ in terms of excess inventory and manufacturing capacity.
2. They are people not "human resources".
3. Simple economic theory...but then reality sets in.
Sure they upped their capacity, but to what extent? Its been a year or more since iPod became the hottest mp3 player in the market, and they still can't keep up with the demand.
1. Neither of us knows how much they've upped capacity (beyond the fact that they now have the ability to deliver nearly 4M wheeas last year they ran out of gas near around 2M.
2. Neither of know to what extent they are unable to meet demand (or if they really are having problem.)
lessons learned from previous quarters..
And I'm saying they did learn. Again we don't know how far short (if at all) they really are. But clearly, if they expected to sell 2M this year (as last year) they would have been way under-forecasting the market. For all we know they have matched supply to demand quite well...perhaps within a few 10's of thousands. If they were off by 100,000, and they sell 4M...that is an error of about 2.5%. Pretty decent predicting in my book.
They should have produced more before the Christmas season and not worry about new factories and their costs now.
1. How do you know they didn't?
2. How do you know they are right now?
A product that is IN demand does INCREASE demand, but a product that's IN demand for years and still can't keep up with THE demand, is, economically speaking, destined to lose a percentage of the potential buyers, albeit, a small one.
Yes, and this the art of marketing, economics, production and planning. All of which are complicated matters. Apple sold out completely (was unable to meet ALL demand) last year. What happened this year? Even more demand! And by the way...it's only been two years of this level of demand.
Psychology too. If I have to wait 2 months for an iPod (random figure), and the Christmas is here in 10 days, should I, or should I not wait for the iPod? I wouldn't, since I need to give the present in Christmas, not in 2005.
1. Perhaps you'll have to buy something else?
2. Perhaps, knowing this was a hot Christmas item, you should have planned further ahead?
But, euphorically speaking, its good that they have such a high demand that they can't keep up with it.
Yes. Quite a rare position to be in as an Apple fan.
P.S. Maybe this isn't even a problem with Apple at all, but with Amazon and Best Buy (as the article states) and their purchasing and planning departments!
Now a PS2, that I can't find. But I could easily have bought an iPod tonight, but instead bought my wife a new washer and drier. It was our anniversary, and I'm such a romantic. There's nothing like a major appliance to say "I love you dear, and I'm out of clean socks."
But I think the iPod shortage is a myth.
Originally posted by D.J. Adequate
I got a chance to check Circut City, and a local furniture store called RC Willey. Both had large stocks of iPods.
Now a PS2, that I can't find. But I could easily have bought an iPod tonight, but instead bought my wife a new washer and drier. It was our anniversary, and I'm such a romantic. There's nothing like a major appliance to say "I love you dear, and I'm out of clean socks."
But I think the iPod shortage is a myth.
Apple Mini Store in Stanford today....loaded with all models.
Don't know about this shortage. But they were selling a ton, especially accessories. I saw more people buying iPod accessories than anything else.
Originally posted by Chris Cuilla
Thanks for the economics lesson.
It was not a lesson. It was just to demonstrate a point I was making.
1. Okay...a new or expanded assembley line. Still not always as easy as you seem to think it is. What if they are operating at maximum capacity? Then they must consider the marginal costs of expanding their capacity against the marginal gains in revenue. They may have done this math and computed correctly that losing a few thousand sales was a worthwhile risk compared to losing more $ in terms of excess inventory and manufacturing capacity.
Nothing is easy. But the words 'too hard to do' should not be in a company's vocabulary if it pertains to do-able things and, most importantly, if that company wants to be a successful one.
There is no long-run maximum capacity. A company may be bound to a limited capacity in the short-run, but their capacity should be expanded in the long run. Everything is fixed in the short-run, including the production capacity, but nothing should be fixed in the long-run, with the exception of, perhaps, salaries (by long-run, it is meant a fiscal year).
2. They are people not "human resources".
Obviously, we haven't heard the economic terms yet. Human resources may also mean knowledge, ideas, management, physical labor, etc.; all of which are a result of, or pertain to, people. But to make it clear, I meant, employees, otherwise known as, personnel. This may range from the package guy, up to the Division manager, so, lets not make it sound like I was being 'harsh' by using a term that is not offensive at all.
3. Simple economic theory...but then reality sets in.
And you know that reality... how? The reality is that the demand for the iPod is going up and up and up... no matter if its Christmas or Eid or whatever. You know what this begs for? Adequate Supply.
1. Neither of us knows how much they've upped capacity (beyond the fact that they now have the ability to deliver nearly 4M wheeas last year they ran out of gas near around 2M.
True, true, and neither was I denying the fact that they are much more prepared then, say, 2 years ago.
2. Neither of know to what extent they are unable to meet demand (or if they really are having problem.)
Well, the current demand may be pumped up by the Christmas season, and it may not reflect the actual, real-term demand out there. But, since some of the largest retailers/online stores, don't have them in stock, there are 2 options:
1. Not enough supply from Apple.
2. Not enough stock in these respective companies.
The first one may not be the case now, but the second one relies on the first one, so if its the second one, the first one may have a finger in all of this.
And I'm saying they did learn. Again we don't know how far short (if at all) they really are. But clearly, if they expected to sell 2M this year (as last year) they would have been way under-forecasting the market. For all we know they have matched supply to demand quite well...perhaps within a few 10's of thousands. If they were off by 100,000, and they sell 4M...that is an error of about 2.5%. Pretty decent predicting in my book.
Well, it is good predicting. But the general idea here is not just this Christmas season or this quarter, but their chain of supply taken as it is, in total. I am, by no means, bashing Apple. I just want to discuss about their supply.
1. How do you know they didn't?
How do you know they did?
2. How do you know they are right now?
How do you know they aren't?
Yes, and this the art of marketing, economics, production and planning. All of which are complicated matters. Apple sold out completely (was unable to meet ALL demand) last year. What happened this year? Even more demand! And by the way...it's only been two years of this level of demand.
Why was Apple unable to meet ALL demand last year? The exact same problem they might (to be correct here) have this year. Their supply strategy is not (as far as I can tell) the strongest part of the company. Or their economists/predictors are just not up for the task.
1. Perhaps you'll have to buy something else?
A classic example of Apple losing 1 customer due to supply constraints. Isn't this what we are debating here? WHY lose this 1 (and perhaps, many more) customer[s]? I very well know I can buy something else, but that is besides the point. The point is: I will be forced to buy something else, because of this particular reason. Theoretically speaking, of course.
2. Perhaps, knowing this was a hot Christmas item, you should have planned further ahead?
Perhaps the customer should not worry about this which are internal problems of the company? Perhaps I should not worry if there are enough iPods in the market? Perhaps I made up my mind on the 24th and I want to get it on the 25th? Surely, the producing company needs to plan ahead of the Christmas season, not me. Now, if its something imported [in terms of actual country of origin] and rare in the entire world, I might as well worry. But iPods are neither rare, nor hard to find. So, why does the customer need to worry about it?
Yes. Quite a rare position to be in as an Apple fan.
We are all adjusting. Do you see the discussions? We would have discussed why Apple was unable to GET demand a couple of years ago, now we discuss why it's not able to MEET demand. A U turn. And I'm happy for it.
P.S. Maybe this isn't even a problem with Apple at all, but with Amazon and Best Buy (as the article states) and their purchasing and planning departments!
It is all interlinked, but Amazon and Best Buy are not the only places that lack iPods in their stock. Otherwise it woldn't be such a big deal [if it is].
P.S. Just to be clear: this is not a discussion on which Apple store or thirdy-party store is loaded or not with iPod, this is a discussion about Apple, the company, and its strategy of supply and predictions of the market.