IPhone Fake Shortage Dumb Business Move Of The Week

The Apple iPhone 4 was released this week.

Now Apple has known for sometime that production of the IPS-based Retina display used in the new device won’t ramp to the four million units per month Apple needs to hit its targets until the supplier South Korea’s LG Display increases production capacity in late summer perhaps even as late as December.

Hence being aware that this South Korea company is not up to essential capacity so far, why would Apple opt to release the iPhone at the same time in the US, UK, France, Germany and Japan? Why not make it available country by country over some months?

The explanation is that Apple wanted to create an artificial shortage to force the marketing hype over the new iPhone 4. Jay Leno said it best, “Give a man a fish and he’ll eat for a day, teach a man to fish and he’ll eat for a lifetime, teach a man to create an artificial shortage and he’ll eat steak.”

But here’s where things get really stupid.

Apple has abused this identical tactic over and over again and most recently even for the iPhone 3 last year. Hence customers are wise to the whole fake shortage fad. However more than that, Apple does not have market domination like they had a year ago.

Android based phones continue to slice deep into the iPhone’s market share.

Google is currently activating 160,000 mobile phones with Android software every day or 4.8 million a month. The total is accelerating fast, having been put at 100,000 per day in the third week of May during Google’s annual convention. Part of the reason is that the Apple iPhone is currently playing catch up to Android based mobile phones. The Apple’s newest smartphone currently has a 1 GHz CPU like the Google Nexus One had 8 months ago and worse, the new iPhone only has a 5 megapixel camera. In the coming 2 months, 8 and 12 megapixel smartphones will be hitting the market.

Hence by Apple using the fake shortage from their advertising playbook, they are in reality pushing more consumers over to Android based phones and we are seeing that by the reality that in the last 3 weeks, the number of Android phone sign ups went from 100,000 a day to 160,000 a day. Good job helping your competitors Apple.

However it becomes even more ridiculous.

Bernstein Research said that because Apple released the iPhone in five countries at the same time to make an artificial shortage with the log jam in displays at the South Korean fabrication factory, Apple could lose up to 40,000 units a week in sales owing to the extended artificial shortage they themselves spawned.

And that is why Apple receives this week’s stupid business move of the week.

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This entry was posted on Monday, July 19th, 2010 at 2:36 pm and is filed under Cellphones. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.