Aug 27

Iphone Fake Shortage Dumb Business Move Of The Week

The new release of the iPhone happened this week.

Apple decided a long time ago to go with LG Display located in South Korea to manufacture the IPS-based Retina display. Apple knew full well that production capacity in this South Korean plant was only a fraction of the 4 million units they need produced per month. In fact, the South Korean company told Apple that they will need to build out production lines and that wouldn’t happen until late summer and perhaps even as late as December of 2010.

Therefore being conscious of the fact that this South Korea manufacturer was not up to essential capacity thus far, why would Apple decide to release the iPhone at the same time in the Japan, UK, US, France, and Germany? Why not slowly bring it to market country by country over some months?

The reason is that Apple wanted to generate an artificial shortage to leverage 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.”

However here’s where matters get thoroughly ridiculous.

Apple has worn out this identical tactic over and over again and most recently even for the iPhone 3 last year. Therefore customers are wise to the whole fake scarcity craze. But further than that, Apple does not have market exclusivity like they had last year.

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

Google is currently activating 160,000 mobile phones using Android software each day or 4.8 million a month. The total amount is accelerating fast, having been set at 100,000 per day in the third week of May during Google’s annual conference. Part of the reason behind why is that the Apple iPhone is currently playing catch up to Android based smartphones. 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. Inside the next 2 months, 8 and 12 megapixel smartphones will be coming out on the marketplace.

So by Apple using the artificial shortage from their advertising playbook, they are really pushing more consumers over to Android based smartphones and we are seeing that by the reality that just in the last 4 weeks, the total amount of Android phone sign ups went from 100,000 a day to 160,000 a day. Good job helping your competitors Apple.

But it becomes yet more ridiculous.

Bernstein Research said that because Apple released the iPhone in five countries at once to produce a fake scarcity with the backlog in displays at the South Korean assembly plant, Apple will lose up to 40,000 units a week in sales due to the protracted false shortage they themselves created.

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


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