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Crisis: iPhone 5 fends off inventory issues, Android tempt, 4S buzz

Crisis: iPhone 5 fends off inventory issues, Android tempt, 4S buzz

iPhone 5 arrives as the third consecutive Apple product launch in which Apple forgot to bring the product upon its release date. Fresh off its iPad 2 and iPhone 4 launches in which initial inventory was weak and shortages persisted for months until reaching equilibrium, the iPhone 5 is once again arriving in limited initial quantities even as Android phones arrive in higher quantities than anyone even seemingly wants. The sidekick iPhone 4S is then set to clean house, not just because of its cheaper price tag but because it’ll actually be available.

The move from Apple is the better of two unappealing scenarios. The first is to delay the iPhone 5 until after the holidays for the sake of building up enough initial inventory to make for a fully loaded release date, in early 2012. The other is to launch the iPhone 5 now with weak availability, so as to give hope to those iPhone lusters who may otherwise be tempted by Android in the interim, with the cavalry arriving in 2012. The decision to move now leaves Apple chewing through a number of contingency plans…

First up for Apple comes in the form of deciding whether to allow the iPhone 4S to surface alongside an under-represented iPhone 5 or not. The shortage, as claimed by 9to5mac, will leave customers seeking the iPhone 5 with a choice of buying the cheaper iPhone model or going home empty handed and waiting for the iPhone 5 to arrive in quantity. That leaves Apple in the catch-22 of wanting to book an iPhone sale now rather than later, and certainly wanting to book an iPhone sale rather than losing that sale to an Android vendor, but also preferring that the customer end up with an iPhone 5 for reasons of profit margin and flagship status (Apple has long made it clear that its bargain-bin models such as the Mac Mini are not among its proudest products). By holding back the 4S until 2012 and leaving the current iPhone 4 on the low end, Apple could tilt the balance so that most would-be iPhone 5 buyers who can’t find one will be persuaded to wait until they can find an iPhone 5, while those who absolutely must have an iPhone right now can settle for the 4 without storming out angry at the lack of any available model. The 4S would then surface early next year, right around the time the iPhone 5 arrives in sufficient quantity so as to ensure anyone who wants the 5 can have one; the 4S would then exist strictly for those who can’t or don’t want to pay iPhone 5 piercing, as opposed to being a substitute amid empty shelves. But even that plan may not work…

One of the key cogs is that the iPhone 5 and iPhone 4S are supposed to be triple-compatible with the otherwise incompatible networks of Verizon, AT&T, and newcomer Sprint. By holding back the 4S, Apple wouldn’t be able to put a bargain bin model into the hands of Sprint customers. So scrapping that notion, Apple is back to rolling out the iPhone 5 and 4S together next month despite the lack of inventory for the former. In the past, Apple has worked around weak initial inventory by killing off online preorders for the iPad 2. Thus far a handful or carriers worldwide have held their own iPhone 5 preorders, but Apple itself has made no indication as to whether it’ll do so itself. By disallowing preorders, one hundred percent of the available inventory goes to retail stores for launch day. The move doesn’t magically generate more iPhone 5 sales, but it does mean a greater percentage of those who stand in line on release date end up going home with one, thus altering the perception (and anger level) surrounding such “shortages.” Either way, Tim Cook has another mess on his hands if the inventory issues are indeed accurate…

Apple’s new CEO is also the company’s long time supply chain guy, and he’s been widely praised for locking up components such as solid state memory years in advance. But Apple’s penchant for innovation means ever-shifting hardware designs requiring not only new kind of materials (who really saw an all-glass iPhone 4 coming?) but also new manufacturing processes. That leaves the door wide open for factory efforts to produce unexpected results. It’s why the white iPhone 4 took forever to come to market. And it may explain why the iPhone 5 now faces the prospect of arriving in lower quantities than anyone inside or outside Apple would have hoped.

[Thanks: http://www.beatweek.com]

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