iPhone5, the latest smartphone introduced by Apple has run out
of stock just a few weeks after the launching of the product which we usually
attribute to underproduction. Many of the companies have been facing this
problem due to the demand of the customers being not stable and unpredictable.
Underproduction is a situation where the supply that is produced is lesser than
the amount demanded by the customers. And in the article, it is written that
due to the demand of the iPhone5 are incredibly high where the initial supply
has been sold out just in a week. 2 millions of online pre-order and 5 millions
units sold out on the third day when it launched. They afraid that they need a
longer time for the next shipping which is estimates on week three or week
four.
As we can see the chart above describes the demand is increasing
and where the supply is not increasing. The D1 represents the demand before it
increases, and the S1 shows the supply and the D2 represents the new demand
that have increased due to some factors. The E1 is the new equilibrium after
the increasing of demand and when the demand is increase but the supply still
don’t move it will causes the underproduction which makes the line shift from
the D1 to D2 and meet at a E1 point as shown on the chart. If the price is
below the equilibrium it will cause the shortage and if the price is higher
than equilibrium it will be a surplus.
The demand of the iPhone5 is apparently very high because a
particular reason which I read on an article somewhere on internet. The
customers have been hold up their purchasing on the iPhone so long as they
heard the issues that iPhone5 will be released soon. Of course everyone wants
to be the one who is the most up to date so when iPhone5 is officially
launched, all of them will go for it so the demand that should be this amount
increased to that high amount. On the other hand, Apple Inc. who thought that
the demand would not be this high, they proceed on with the amount as they have
planned. As the result now, Apple Inc. is keep on chasing on producing the
iPhone5 to the level that they can control the quantity of the demand. As you
know, producing one unit of iPhone5 took a few months, and Apple Inc. has a
high requirement on the fact of their quality, like the screen and the chip all
must be assured in good quality which is same between one iPhone and another
iPhone, so they would do the best on producing even the demand is only one
iPhone.
If the quantity demand cannot be fulfilled, some of the customers
will find the second best alternative (opportunity cost) to deal with it, for
example : buying Samsung’s latest product, Samsung Galaxy S3 which is also Apple’s strongest competitor
that have a par or even better market value. Maybe some of the elders will
change their purchasing on iPhone into Samsung but most of the youngster who
are the biggest buyer will not change their purchase, so Apple won’t facing
something like overproduction where no one wants to buy the product.
But Jaffray and Munster, the analysts must have to lowering
their forecast on the sales of iPhone5 for September which before is at 27,2
million units to 25 million units. The supply constraints for the iPhone 5, lower
computer shipments overall, and the high percentage of new iPhone purchasers
who are not new to the platform all led analysts to expect reduced performance
from the Cupertino company.
In the fact Apple Inc. also try their best on matching with the
equilibrium point on next December with 49 millions units of production so the
sales on iPhone5 will be at stable position and of course hopefully everyone
can enjoy the new iPhone5 with the price that reasonable. And Apple Inc. would
take up a lot of work remember that there are still 170 millions post paid
subscribers coming off contract. I think the economy level on the Apple Inc. is
pretty good because the demand is still higher than the production that have
been made.
The price for the Iphone5 currently if we buy from local
operator at Singapore for 16 gigabyte is US$199, 32 gigabyte will be US$299, and
64 gigabyte is US$399 with two years contract signed. On the other hand without
contract signed will be S$948 (US$772) for the 16GB model, S$1,088 (US$886) for
the 32GB model and S$1,238 (US$1,008) for the 64GB model.
Actually the iPhone5 has changed the maps from Google Maps to
maps that created by Apple Inc. itself which has a lower quality rather than
the Google Maps. Maybe now still lack of many things like the new software
offers fewer details on it, the public transit still not as complete as Google
maps, and there are many misplaced landmarks on it. But in the fact, customers
doesn’t really put it as a serious matter, what they think is Apple is pretty
good enough on trying because they want to make everything originally from Apple
Inc. I said they would see this as short-term pain for longer-term gain.
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