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Tight supply of iPhone 3GS?

Just noticed that the Apple online store now says it takes 1-2 weeks to ship an iPhone 3GS. I think this just changed from 5-7 days shipping.

Is Apple having supply problems again with the 3GS model?  Or perhaps Apple is saving supply for a China launch? Or using production capacity to make iPod touches?

via tight supply of iPhone 3GS? | The Mac Observer Forums.

The news today that Foxconn can only produce iPhones at the rate of about 4 million per month shows how constrained Apple’s production is. Demand is far, far higher.

The discussion about iPhone vs. Android share is usually framed around questions of demand or distribution, but may really be a question of production capacity right now.

  • Iphoned

    That's a bummer Apple they still can't meet demand (if that's really true) that's not that dramatically higher then last quarter when there were no supply issues. :-(

    btw. the latest Google PM revelation – Androd is not optimized for tablets. Bad news for the first wave of Andoid tablets?
    http://tech.fortune.cnn.com/2010/09/10/googles-hu

    • Tom

      Do you know when android 3, Gingerbread, is due out?

    • Priit

      That's a bummer indeed. Apple had problems meeting iPhone (3GS) demand a year ago. They didn't learn absolutely nothing, except now they have supply problems with absolutely everything. And Tim Cook continues to mumble about "problem that is good to have". Yes, you sell half the items you could, your biggest competitor outsells you and you just sit there and scratch your head for a year. Somebody should get fired for this everlasting "good problem".

      Or is there suddenly shortage of factories? I have heard that Foxconn is not the only one. I have heard that there's 60 Android models and lot of Nokia models which got manufactured somewhere in quite large quantities :-)

      • pk de cville

        FWIW, it is a problem that's good to have.

        Apple's exceeding all of their most optimistic internal projections. FoxConn is building a factory capable of making an additional 200k phones a day. (Cuurently at 137k a day, going to potentially 337k/day.

      • famousringo

        Expanding production capacity isn't as easy as you think. It's not just Foxconn's assembly capacity, every supplier in the chain has to be able to meet the expanding demand. It's not like Apple can ship phones without a WiFi chip or a proximity sensor.

        As I understand it, manufacturing agreements include terms that make it relatively easy to increase production by about 100% if the new product turns out to be a hit, but if you want more units than that things get very challenging.

        Take the example of Nintendo, another Foxconn customer. The Wii enjoyed widespread sellouts for about two and a half years after launch, and it was a much simpler device to manufacture and saw no new SKUs during this period. IIRC, Wii production peaked at around 3 million units per month. Neither Nintendo nor Foxconn was incompetent for failing to meet demand for 2.5 years, demand was simply so enormous that it broke the weakest link in the Wii's supply chain.

      • yowsers

        Actually, there is a shortage of factories…if you're making state-of-the-art electronic devices with top quality parts and tight tolerances.

        Of course, if you're churning out lesser quality builds with cheaper materials, there may be no shortage.

        This just posted: http://www.macrumors.com/2010/09/10/profile-of-fo

        Production lines, and even more so factories, aren't necessarily purchased and gotten up and running like fast food franchises. I haven't been in electronic manufacturing, what I have seen was motor oil and lubricant plants and production lines — these plants have been in operation going on 40 and 50 years, and adding production lines, and keeping them up, is tricky and a never-ending challenge. I imagine it's more so for electronic devices.

        I see a lot of bytching about the supply issue (I do it myself when I have to chase around for an iPhone), but I think this is coming from people who haven't seen all the advanced planning, support and enterprise resources required to build and shift production.

      • RattyUK

        "That’s a bummer indeed. Apple had problems meeting iPhone (3GS) demand a year ago. They didn’t learn absolutely nothing, except now they have supply problems with absolutely everything."
        Prlit you really aught to learn to suppress you fanboy enthusiasm. As a shareholder I really don't care how long it takes to fulfill 3gs orders. I am far more interested in Apple fulfilling the 137,000 iphone 4 orders a day. So calm down.

        "Or is there suddenly shortage of factories? I have heard that Foxconn is not the only one. I have heard that there’s 60 Android models and lot of Nokia models which got manufactured somewhere in quite large quantities"
        yup I am certain that the 21 OEMs that are trying to take iOS down are very happy that their profit share is not approaching Apple's 50%, Please do some research and when you grow up it would be great to have you back in the debate.

      • David Chu

        @Prlit
        Managing supply and production is very difficult and Apple is easily one of the best in the business. Their inventory turnover numbers are often at the top of the industry.

        It's not just factories that are a limiting factor, but supply and competition for parts. Apple does a good job forecasting and pre-ordering in bulk, but forecasts can only be so accurate.

        For more info, I suggest reading into Dr. Demming, the founder of lean manufacturing. The greatest capital risk a company faces is unsold inventory because the value of inventory decreases over time and represents invested capital that has not been converted into cash.

        If you are a shareholder, you should be very happy at the disciplined approach Apple takes with their supply lines.

      • EricE

        "Or is there suddenly shortage of factories?"

        I don't know that it's so much a shortage of factories, but probably more a shortage of factories that are good enough to produce something as technically complicated as the iPhone, and to Apple's standards (still not white iPhone, eh?). Very few phones feel or look like an iPhone – it's not a subtle difference at all. It's not hyperbole that the iPhone is often referred to as a "work of art" – compared to just about everything else it is.

        I'm sure there are plenty of production lines. What would be more interesting is to see the percentage capable of producing a device like the iPhone 4 or iPad in as cost effective a manner. Again the article that refers to Foxconn's CEO as the Henry Ford of electronics isn't exactly hyperbole either.

        If it was as easy as getting angry, firing someone and hiring another supplier I think they could have done that already :)

  • Grwisher

    Another shipping lead time that has increased is for the Apple TV. It started off originally as shipping in September. My friend said that yesterday it was 2 to 3 weeks and today I noted that it has increased to 3 to 4 weeks (i.e. no more September shipments).

  • yet another steve

    For quite sometime after the iphone 4 launch, the 3GS was "ships within 24 hours." I happened to notice this fact myself recently.

    Apple has some serious "high quality" problems.

    It would be interesting to speculate where in the supply chain the constraints are.

    History has shown that Tim Cook is every bit as good at what he does as Steve Jobs is at what he does…. but my gut feeling is that demand is just overwhelming.

    Still lots of "its about to be over for Apple" stuff coming from analysts. Same article they wrote about the ipod year after year after year.

  • Priit

    Well, it's been 5 months of iPad now, still not even rumors when it will be available for example in Scandinavian Apple Stores (?), but we do have a rumor http://www.appleinsider.com/articles/10/09/10/app… that first generation iPad's lifetime may be less than a year, as a typical iOS device has.

    So what are your bets, gentleman, will Apple make a "good record" of discontinuing a product (or announcing next generation product) before that product had chance to be freely (in stock of brick&mortar shops) available on all typical (let's say computer) Apple markets?

    • http://www.asymco.com asymco

      Next iPad will ship next spring. That's my bet. They will maintain a one year cycle on the product.

    • Yowsers

      I was thinking they might do it June/July, but that would step on the next iPhone rollout, which I doubt they'd do (too much on the plate given how big the iPhone releases are).

      Most likely it'll be spring, and they'll mimic the iPhone tactic of having a new release paired with the immediately prior version at a reduced price. This will pressure the competition even further on pricing.

      The problem I foresee with that scenario is that a $400 last gen iPad (for example) could remain very popular such that finding manufacturing capacity for both 2010 and 2011 versions will be very problematic.

      Apple is taking no prisoners this time.

    • Yowsers

      Forgot to mention, but I'm struck how 2010 has been a helluva year for Apple, hasn't it? I don't recall a year with such drama and product launches before. This may be a storied year for them (notwithstanding antenna-gate) — you've got to wonder how it must be behind the scenes pulling all this together. Production managers at MSFT, NOK, Dell, HP must be slack-jawed watching it. Most companies would love to have one product launch equal to the iPod revamp, let alone the iPad or iPhone release.

      Ok, back to the regularly scheduled programming…

    • David Chu

      Why does it matter?

      The iPad is going to sell like hotcakes anywhere it goes up for sale. The iPad OS doesn't even support that many languages right now and there is still a lot of overseas demand.

  • Rob Scott

    Demand for Apple products is amazing. People who never touched an Apple product before are clamoring for iPhones and iPads. Its a very good problem to have for both Apple and its partners. As a customer it can be frustrating as launch dates keep being pushed out and product sellouts are common place.

  • Niilo

    I was thinking about this post while walking the dog this morning.

    This is not just a demand story. But also supply.

    This could just be a reflection of the currently extremely tight component supply environment, something which is affecting all manufacturers roughly equally and which will ease in 2011.

    OR

    This could also be indicative of Apple having problems scaling up. As smartphones go through their S-Curve, as GSM phones did in 1997-2000 will they have to learn some of the hard lessons that the old guard did back in the day?

    http://www.ftpress.com/articles/article.aspx?p=12