Jobs is No Dummy When It Comes to iPhone Supply And Demand
Yet another quote from Steve Jobs talk at the Wall Street Journal D Conference. In addition to verifying the iphone will probably ship the end of June, he offered this response when asking about whether there be enough iPhones in the pipeline to satisfy demand?:
“I don’t know, I hope not,” Jobs said
Steve Jobs and Apple are no dummies. They know that the worst thing to happen to the iPhone would be Apple Stores and AT&T stores jam packed with iPhones in stock. The best thing to happen would be mass hysteria, people camping overnight to wait in line, and desperate measures on eBay.
So now we know Steve Jobs understands supply and demand. But from a PR perspective, does it make the most sense to actually admit to it? Jobs’ quote can be interpreted to mean, supply will be intentionally held back to encourage demand. It’s one thing if demand exceeded manufacturer’s expectations at launch but when a CEO admits to hoping there will be a shortage, we may have something different going on.
“The best thing to happen would be mass hysteria, people camping overnight to wait in line, and desperate measures on eBay.”
Thats just not true. Initally, the best thing that could happen for Apple (as is true for all supplying firms) is for Apple to produce as many iPhones as people are willing to purchase at the set price.
Apple has fixed the price of the iPhone before releasing it. Thus, there are X number of buyers willing to buy the iPhone at that price right now. If Apple does not produce X number of iPhone to meet that demand, it will be missing out on the remaining revenue. Its that simple.
Obviously, if Apple cannot efficiently produce X iPhones to sell at the current price, it should not do so, but I doubt that is the case. I also do not buy the argument that a “mass hysteria” will help iPhone sales in the future.
We are talking about a $600+ smartphone. Granted, its an Apple product, but these factors lead to one conclusion. I believe that virtually everyone who will buy the iPhone already knows about it and already wants it. This includes early-adopters, Apple fans, and any technology-savvy user. Thus, a purposeful supply shortage will not bolster demand in any significant way.
I sort of saw Jobs’ statement in a different manner. I think he was implying that despite Apple’s efforts to supply as many iPhones as possible, the demand is so great as to still exceed their best efforts.
Of course, the fact that that quote is completely out of context helps as well. Jobs was asked three questions and he answered all three sequentially. You presented a somewhat modified form of one question and the answer to two of the questions. Which rather changed the meaning of everything.
It was something more like this:
Mossberg: When are you planning to ship? Like the last day of June? Will it be available in volume?
Jobs: Late June… I hope not! I hope so!