With New iPad, Apple Has Supply Chain Problem

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Apple Inc. (NASDAQ: AAPL) has a habit of launching products that are quickly sold out. In the past, this probably boosted demand as consumers realized that desire for Apple's products was beyond belief. Better to stand in line for hours than wait for days or weeks to get a new Apple gadget.

Apple's new product invention machine may have slowed. Increasingly, Apple releases product upgrades rather than entirely new ones. This, in turn, may dampen demand as the "attraction of the new" wears away. Apple currently counts on buyers to look at its new mini iPad as a new product and not a small evolution of its larger stable mate.

Apple may have hit a period of low demand for the mini iPad coupled with low supply. A product that may not be readily available will have competition from those that are - the Amazon.com Inc. (NASDAQ: AMZN) Kindle and Google Inc. (NASDAQ: GOOG) Nexus 7. Potential Apple buyers for once can buy products very like Apple's newest and best.

According to DisplaySearch, Apple will have a severe supply problem with the mini:

As is typical, we expect the iPads to be supply constrained initially, especially the iPad Mini with its $329 price. The new low price point is expected to appeal to a wider audience and drive up demand. However, panel supply chain indications point to an even more than typical tightness in the market for the iPad Mini.

Apple had best hope that demand for what is really a derivative product is high, because some potential buyers apparently will find the mini iPad hard to find.

Douglas A. McIntyre


Filed under: 24/7 Wall St. Wire, Consumer Electronics Tagged: AAPL, AMZN, GOOG
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