The Silly Demand Dance

Will the strategy of limiting supply to generate buzz ever end?  In this age of “Everything I want, I want immediately”, will people stand (or fall) for trickling distribution of an item that can’t get to market quickly enough? It seems that Apple is leading the category in anticipation through limited supply – with the latest example being the iPad 3 – oops, the new iPad. It just seems to be such a silly dance we do with Apple annually where the demand can’t be meted by the supply.

We smartly gave up on the clubs with the velvet-roped lines outside and barely anyone inside as we realized it was all about buzz.  But we’re still collectively mesmerized by Apple. When one of the largest distributors of devices continues to run out of product at launch, we put up with it for who knows what reason. I agree that their products are phenomenal, but do we all need to have them on day one?  Perhaps because of the Samsung ads poking fun at the people who wait in line at Apple stores for new product releases, many more people pre-ordered so they could have the product on the first day.  Alas, they have run out of those devices and cannot get them to consumers who didn’t get in on the first phase of pre-orders until the following Monday at the earliest. And, if you haven’t pre-ordered yet, don’t expect one to get to you for weeks.  The funny thing is that units are in the cities where they are supposed to be delivered, but were put on hold at the Fedex locations so that they would not be delivered until Friday.  A friend who pre-ordered early enough to get his set for delivery on Friday actually got an email saying that his product was picked up in the local Fedex hub and would be delivered yesterday – only to get a follow-up email that it was placed on hold for that Friday delivery.

Courtesy of Washington Post

From a stockholder’s perspective, I’m sure the demand and buzz is great as the price shot up $20 a share in the past three days of trading. This brings us back to the point of strategy.  Is it Apple’s strategy to greatly limit supply at the beginning to drive buzz and stocks higher?  Was it also their strategy to push delivery back on pre-orders to drive people to the lines when they recognized that people were getting wise and pre-ordering because they didn’t care to spend any more time in lines?

I don’t know that I buy the thought that it was unexpected or that the supply chain wait is a product of that demand.  They are releasing day and date in a few other countries – a reasonable excuse for greater demand. In this age, there are so many ways to gauge interest and projections based on numerous touch-points.  Additionally, with Apple’s finger on the pulse of their consumers could not have been this amazed about the demand for the product. Not having a sense that your product is going to be a huge seller doesn’t seem like a good business plan for me – especially for a company like Apple.

Sadly, other technology companies are following suit with limited supply and distribution – seemingly in order to build buzz.  Most recently, the demand for the Leap Pad left a lot of people without the holiday item they coveted.  I can more understand Leap Frog’s surprise about demand and its subsequent scale than I can Apple’s.  I don’t know that I give Leap Frog that much credit for playing off scarcity to build buzz, but who knows?

I do hope that Apple doesn’t pull the same thing if and when they ever release the iPhone 5 (June?) as the dance is getting pretty boring.  I can buy the excuse that you just can’t build enough units quickly enough.  I don’t buy the one of shock about demand.  The dance is just getting overdone.


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