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APPLE Economic Equation: Product Demand = Component Supply-lines || Product Fabrication Duration || Product Margin || New Release TimeTable ⭐⭐⭐⭐⭐ 🍎🍎🍎

June 8, 2013

Apple Releases a New iPhone, a New iPad, a New iPad mini, and Prices for the Prior Model Drops, This is Not News. What is News is APPLE Economic Engineering Equation.

1⃣ APPLE Economic Equation: Product Demand = Component Supply-lines || Product Fabrication Duration || Product Margin || New Release TimeTable. Apple’s CEO, Tim Cook is the Grand Master of This Complex Equation.

2⃣ Apple Releases a New iPhone, a New iPad, a New iPad mini, a New iDevice, and Prices for the Prior Model Drops, This is Not News. Lets talk first abot the iPhone. The iPhone5 is selling at the rate of say 10 Million iPhones/Month. Just before the Announcement of the iPhone6 for example, iPhone5 sales rates decrease, and prices drop somewhat, like 10% to help mitigate the potential sales volume decrease. This is not news, other than the reasons for the product pricing.

3⃣ Think About it. With Apple actually selling 356,000 iPhones every Day, balancing the equation of slowing down the iPhone5 component-pipeline, like differing Camera Modules, modifying the iPhone5 product assembly, in combination with increaseing the component supply-line for the camera-modules for the iPhone6, balacing these factors against the Clock, when the iPhone6 Announcement occurs… Now multiply this by hundreds of product components for each device… In Sum, Very Complicated, and all in effort to keep the Inventory-Turns very High.

4⃣ FYI, with my 3-decade tour as a Commercial Banker, I have never financed, nor heard of any major Enterprise capable of turning their inventory 190 times per Year; Very, Very Good is 20x, Average is 6-10x, 190x is simply unheard of, except for Apple. Everything at Apple is apparently Optimized, not only in the creation of their amazing devices, its Operating Systems, the Sales channels, every minute detail, every cubic millimeter of the internals of their iPhones, iPads, iPods, MAC’s… and apparently Apple’s Financial Operations too.

5⃣ Auto Dealers DROP Prices and increase Advertising generally because they may be "stuck" with excessive inventory on their Lots; Apple, on the other hand has the Opposite Condition.

6⃣ Apple Sells their devices at such Rapid Rates, almost as fast as FOXCONN can make the devices, Apple’s Physical retail outlets and Internet Sales, Sell the Devices; therefore, there is approximately only a 5-Day inventory-pipeline on average, as APPLE engineers the balance of Product Demand, Component Supply-lines, Product Fabrication. Apple’s CEO, Tim Cook is the Grand Master of This very Complex Equation.

🔢 Tim Cook represets our Modern Day Economic Business Man’s Einstein.

7⃣ Apple iPad 5 release date rumors have been flying around for months with the majority of these predictions being proved wrong, and this includes a number of blogs claiming Apple’s 5th generation iPad would launch in March/April thanks to insider sources, then we heard middle of this year thanks to industry insiders. It now seems pretty clear that Apple will deliver a new iPad 5 towards the end of this year and set the release date around one year since the last update.

8⃣ The iPad mini 2 is likely to launch around the same time and current users are clear on what they want, which top of the list for iPad mini features and iPad 5 features is multitasking. One of our readers simply said, “Dual screen for real multitasking, water and dust proof with quad core”. Do you know what you want from the new iPad 5 or mini 2?

9⃣ Expected new iPad 5 starts annual price drop – Apple’s official store never normally gives a discount, if they do it’s a tiny reduction, but the retailers looking at their iPad 4 stock will deliver a better price drop long before the iPad 5 release date. This is due to these retailers learning from experience that leaving a price drop too long could result in shoppers only wanting the latest model.

🔟 According to Mark Chubb, he has already heard about retailers cutting iPad 4 and mini prices this week, which over the past couple of weeks has included Walmart cutting $30 as an early taste of things to come. Retailers know delivering a small reduction around 5 months before iPad 5, or iPad mini 2, will help move stock faster and will help reduce the changes of being left with old models when the next-generation launch around October.

🔢 Not only are retailers like Walmart cutting the current iPad price, but they are also running down stock, according to Phones Review readers, which is supported by store employees stating, “64GB iPad stock is hard to come by”. We still have months to go before any new iPad will release, so in our opinion this is just retailers testing the water with small price cuts to make sure they clear all stock before October.

🔢 Bottom-line: retailers will be very tactical when it comes to price cuts and have a few years experience now when it comes to new Apple products launching, which can be very hard for retailers to predict considering Apple’s obsession with secrecy and last minute announcements for new products.

🔢 Would you purchase one of the current models if the price is right, or are you holding out for a new iPad 5 or iPad mini2?

🔢 No matter how you look at this picture, this Equation, Apple Wins. As the last iteration of the iPhone4 sells for $450 instead of $650, its cost to produce is about $200, then add operating expenses, the net profit margin is 35%. Yes a 35% Margin of profit was larger, say 55%, when the iPhone4 was first released.

🔢 Apple’s strategy, deliver the iPhone4 at $450/unit combined with a USA cellular subsidy of $449, giving the new to Apple Customer a 99¢ iPhone4. Not terrible for a device, the iPhone4, that has a mature, sustained, fine-tuned, segregated supply line. AND in the Meantime, is releasing a new iPhone5S, iPhone6, iPhoneX, for example, at the $650/unit combined with a cellular subsidy of $450/device, netting the upgrading Customer a $200 net in exchange for signing a 2year commitment for service.


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