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Apple Product Production & Delivery

January 23, 2013

Apple Product Production-time is not necessarily the primary issue with delivery of Apple Products, its in predicting the incredible and increasing demand; Looking back three years, Wall Street’s best estimates before the release of the iPad was 1 million to 7 million units to be sold in its first year, which was released April 3, 2010. Fact is Apple SOLD to customers 25 million units, in the first year of the iPad. Today, 33 months later, Apple has sold over 85 million iPads. Thankfully, Apple totally ignores opinions from the Media and Wall Street "Analysts."

When Apple has to "estimate" the DEMAND for a new product or the next iteration of an existing product release, it has to be done say 12 months before that anticipated release date, an amazing challenge.

The rest of us as "Monday Morning Quarterbacks" can complement, complain, or criticize Apple’s success or its failure to predict the Incredibly Huge, and Increasing Demand…

It seems that, even with new iterations of existing products, like the iPad-mini, where "everyone thought" a version of the iPad, simply a "smaller iPad" would totally "bomb"…

In fact, iPad-mini has been selling at about 1,000,000 units a DAY, even in the first week of its release; and today if you order the iPad-mini on Apple.com, there is a full week before Apple can ship it to you, down from a 3 week delay, as the supply chain catches up with the huge demand…

Think of it, that’s a lot of buttons, screens, cases, batteries, radio components, camera lens systems, digital imagers, GPS units, gyroscopes, antennas, screws, chargers, all being machined to incredible specifications, and with 500,000 assemblers in China… where all the pieces are assembled to impeccable standards of quality and finish, software loaded, tested and cartoned.

In sum, the challenges with Apple’s Supply Line, even though Tim Cook is the world’s master of accomplishment in this arena, are several:

  1. Prediction of Product Acceptance and resultant Demand
  2. Prediction of delivery-time of Newly designed component fabrication, matching Apple’s very exacting standards, in sufficient quantities.
  3. Prediction of the final Assembly, where these three of these segments have to be Committed to financially and human resource-wise, perhaps a year or more, in advance of the expected product release…

Think of this, with Apple’s iPhone, with the recent iPhone-5 release, sales are exceeding 50,000,000 units per quarter, thats 200,000,000 units/year…

This represents 555,000 iPhones/DAY Delivered to Customers every day, 7 days a week, this represents actual iPhone SALES to folks, not boxes in warehouses, wishes, and dreams….

As a former Commercial Banker, in looking at Apple’s inventory-turn figures, an important component in profitability and efficiency, Apple rarely has more than 5-days of inventory-supply on-hand, Globally, including its Retail Stores, that’s how fast their products are grabbed off their shelves.

What a problem… APPLE struggles to make their Products fast enough, to meet incredible Demand, that is increasing 30% each year, every year, for many years.

That’s a GROWTH Company, trading at under 12x earnings, wow.
Tonight, 1/23/2013, APPLE reports at 5pm Eastern, its 12/31/2012 quarterly financial results. The Analysis are "all over the place" making their guesses, and Wall Street is "beside themselves’ trying to predict what the actual figures will be…

My Prediction, think BIG numbers, significantly in excess of Apple’s own Predictions.

JimW.

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