A quick, non-expert take on the analyst note from Brian White of Cantor Fitzgerald, who writes, according to Barron’s Tiernan Ray:
We had hoped the iPad mini with Retina Display would launch today (11/22) in mass volume at Apple Retail Stores; however, availability seems to be limited to the certain stores in NYC. At the very least, we believe Apple must make the new device available in mass for Black Friday (11/29), and this appears possible given the early launches in NYC.
Now Brian White has more in the note (just click the link), and he isn’t focusing exclusively on Black Friday sales, but let’s take a look at just that for purposes of this blog post. “Black Friday” is always “critical” for retailers. But it’s not like Apple will hold back supply just to say it had a decent showing for Black Friday – and who’s to say what commentators, who can’t possibly see the whole picture, will call a “decent showing” anyway? At this rate, it seems unlikely that Apple will be able to accumulate enough supply for in-store sale with such a supply/demand imbalance, not without intentionally redirecting Personal Pickup supply to just one day.***
As it so happens, Apple’s quarter isn’t determined by one shopping day, to say nothing of the entire year. Don’t forget how constrained iPad mini was this time last year – Apple was quoting ship times of two weeks for all iPad mini versions. And I don’t remember the first-gen iPad mini being much of a failure, even though the retina version is the one everyone’s been waiting for. Ship times aren’t quite as long this year, with 5-10 business day estimates as of now. Notably, the iPad mini retina (Wi-Fi) also first-stage-launched in China – that wasn’t the case last year.
It’s highly unlikely that iPad mini retina will be discounted for Apple’s annual sale. And don’t expect discounting by any retailer anytime soon. So call it a double whammy because of the lack of Black Friday incentive? Not really, considering Apple’s market power (for now), release cadence, and the supply/demand situation. What’s more important is that Apple “shows up” for Black Friday. There may not be many to buy in stores, but at least they can be bought or ordered online. And don’t forget, as important as they are, there’s “only” about 250 US Apple Stores anyway – there will eventually be many, many more points of sale. Of course, that’s just looking at points of sale in the US – which itself is a subset of the Americas sales geography – and that entire geography accounted for only 37% of sales last quarter and just about the same 37% of sales in the year-ago holiday quarter…
In theory, Apple “should be better” about having “enough” supply for major product launches. In theory, Apple “should” be spacing out its major products better, rather than having a repeat of the late 2012 logjam where so many of Apple’s products were launched in a 3-month timeframe. In theory, inability to meet demand may spur disappointment, delay a purchase, prevent a purchase, or, in the worst-case scenario, cause the purchase of alternatives.
Well, that’s not Apple. Not to say that Apple is flawless by any means, or that it’s the “best” way (whatever that’s supposed to be, as if most people have any clue on how to advise a $160B company that’s doing quite well without our advice, thank you very much). But this is just the way Apple operates until we see a change.
As they say in the “Intention” video – it takes time, and only Apple knows when a product is ready for launch. If Apple’s major product launches will now be clustered closer to the holiday quarter – well, it could be worse, just as long as the supply and demand will allow for meaningful YOY growth in that quarter. And releasing meaningfully better products on a roughly once-a-year basis probably isn’t as easy as Apple makes it look. Apple is well aware that it can improve its ability to meet demand, and it’s beyond obvious to state that Apple increases production capacity over time.
And as for competition – that’s just how it is. “Lost sales” happen, I’m sure more than a few people “can’t wait any longer” and buy a non-Apple product (which raises the question of how loyal an Apple customer the person would be in the first place), but now and then, a competitor loses sales to Apple. Apple didn’t sell 150M iPhones in fiscal year 2013 without taking a few sales from Blackberry, Nokia, Windows Phone, and even Android along the way (though Apple surely picked up a number of first-time smartphone buyers in addition to the replacement cycle buyers). Maybe it’s better just to think in terms of growth – something Apple remains committed to – and simply subsume “lost sales” as a natural side effect of competition – even when the buyer could have any of the products under consideration the moment the credit card is swiped.
***Which would be kind of dumb in my opinion, since it increases buyer frustration and lengthens lines on one of the craziest shopping days of the year. I doubt Apple will go that route.