Of Supply, Demand, and iPhones

Seems that Apple ran out of iPhones about an hour after online pre-ordering (which is exactly the same thing as ordering, by the way) began.

Immediately, the usual tweets and posts of outrage began, centering on two themes:

  • Apple is incompetent at forecasting demand
  • Apple intentionally constrains initial supply for publicity purposes

Which is true? Neither: Apple makes as many iPhones as it can, as fast as it can. You have to remember that each new model requires many new manufacturing methods, every one of which has to be extensively tested before each can be implemented and ramped up to full production capability—what’s more, this manufacturing QA and implementation has to be accomplished in the very short time between the day the device design is finalized and the day the device ships. And, in whatever time is left in that short period, Apple has to manufacture millions of devices on the brand-new production line. Meanwhile, demand for each successive design far outpaces the initial demand Apple has faced for the previous device.

So: new production methods implemented at scales larger than anything Apple—or anyone else—has done previously. I’m honestly surprised Apple can have as many millions of devices on hand as it does on roll-out day, regardless of the demand.

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