Tobold's Blog
Saturday, December 14, 2013
Did iPad Air production planning go wrong?

I have a 64GB iPad 3. Since I have a lot of games installed on it, the biggest of which is 2GB, plus 8GB of music, lots roleplaying material in pdf format, and other media, I only have 8GB of memory left. Which really isn't that surprising if you look at the typical size of a PC hard drive full of media. Now a full solid state hard drive on an iPad is annoying: There is no way to increase it, and even just managing what is on it is a hassle, because you need to use iTunes on your PC for much of that. Now since I installed iOS7, the iPad 3 is also a bit slow. So I decided that I could use a new iPad Air 128GB, which would not only solve my storage and speed problems, but also be lighter to hold when watching videos, and have stereo speakers. Only problem: Nobody wants to sell me one.

I visited quite a lot of stores that sell iPads, and the story is always the same: They have piles of unsold iPad Air 16GB, but the 128GB is sold out and they have no idea when its coming back, and can't promise one before Christmas. Apple simply completely misjudged which version of the new iPad people would want to buy, and produced far too many of the entry models and not enough of the top of the range model. So why do more customers than expected prefer the most expensive iPad Air?

One factor is probably that this is the 5th generation of iPad already, so most customers either already have an iPad or another Apple product like an iPhone or iPod Touch. If you are aware of the inability to upgrade the solid state hard drive, the hassle of managing content via iTunes, and the typical size of media and other content, you know to stay away from the 16GB model. The 16GB model still outsells the bigger models, but not by as much as expected. It is perfectly fine if you don't plan on using it to store media and just have small selection of apps, but if you want to do everything with your tablet, 16GB is quite limiting.

But more importantly the market for tablets is split up, like many other markets for consumer goods: The stuff that sells well is either very cheap or very expensive, while there is not much demand for the middle of the range stuff. So if you are looking for good value for money in a tablet, you're going to buy an Android tablet for half the price of the cheapest iPad. And if are looking for a luxury tablet, you don't bother with the entry model iPad, but want a better one.

Fortunately I'm buying the iPad Air for myself, so I'm not bound by an artificial Christmas deadline. I assume even Apple is clever enough to read their sales figures and produce the models most in demand. So by next year the supply should have stabilized. Given the low cost of solid state memory, I'd sure hope that the next generation of iPads comes with more of it.

I hae the problem with the WIFI 64 GB version i try to get for a friend. Have an unfulfilled order at a huge authorized apple online shop, from November 5th.
(happy me i ordered my own on day one and got it 2 days later)
This is a pretty smug post. "Even Apple" can read sales? You kidding me?

"Even Apple" does know where it's bread and butter is. $1000 IPads isn't it.

You act like it's just so obvious that you should get more memory. I disagree. Seems like a waste of money to me, since with internet access you can stream all the music and movies you could ever need, and 16GB should be enough to hold enough entertainment for those rare occasions when you're just completely off the grid.

What you're doing is showing up to the car dealership and asking for the rarest, lowest selling option of a car, and then acting like Volkswagen screwed up by not having that at the lot, and instead have 20 of the most popular model.
The folks who want the luxury model (128GBs) would likely wait for supply to replenish, Apple won't lose their business, whereas the cheaper versions will have more throughput in sales, so therefore make more.

You can't point to something as sold out and say it was overwhelmingly popular, because what if each store only carried 1 or 2 128GB models, but 10 of the 16GB. Unless we know the shipment numbers of each model, you can't assume anything more than their supply constrained their sales of a particular SKU.

Granted, you are correct in suggesting they may have gotten their SKU balance off. Perhaps they should've focused more on the higher ends if they're sold out and the lower ends are not. That clearly indicates a supply glut of the 16GBs, and not enough 128GBs.
"Even Apple" does know where it's bread and butter is. $1000 IPads isn't it.

How would you know? Apple doesn't say how many they sold from each version. And even if they did, the numbers will be distorted by the fact that the $1000 version simply isn't available.

While I don't know if $1000 iPads are the bread and butter of Apple, I do know that their profit margin on the higher end model is much higher than on the lower end models, because they charge you very much for that extra solid state memory. So the high-end model might well end up the ones where Apple is making most of their profits with.
4c22cb52, I don't know what you're trying to prove with that article. Yes, the iPad Air is doing well for sales. But Apple is in theory still leaving money on the table because they miscalculated how many of each SKU to manufacture. If the 128GBs are sold out, you are now potentially losing money (in potential sales) because you are supply constrained. If Mary wants a tablet for Christmas, and she's optimizing for space, maybe she'll pick the Android tablet because it is available and the iPad Air of the right size is not.

Now, Apple, like any luxury product, has the benefit of mindshare, so they probably aren't devastated by this state. As I mentioned in the previous comment, people will wait for the iPad product, so in Apple's case being supply constrained isn't as big a deal as it could be.
Short version: Tobold is extrapolating from his personal needs to exaggerate demand for the product he wants.

For the extra $500 he laid out, a user in, say, the US, could pay for a hell of lot of movies on Amazon and then stream them, or subscribe to Netflix for 5 years. Or, for that price they could buy a Macbook Air, which is a far more capable device with even more memory than the iPad at the same price.

So basically the number of people who 1) need lots of storage space because they don't have access to good streaming sources and 2) really really want an iPad instead of a device that is barely larger yet much more useful is very small. His personal experience of having a hard time finding what he wants is being extrapolated into a far larger trend than it really is.

A 128G iPad is a low volume item that a retail outlet is not going to be very motivated to carry because they are expensive and most people would just order them from Apple directly, or off of Amazon, since that would be the sensible way to order it after a store or two told you they didn't have any. I don't know if Tobold went to an Apple store, as that isn't clear, but in the US non-Apple stores vending Apple products tend to get hosed on the rarer items.
This may not be all Apple; the retailers who placed pre-orders may have decided that cheapest is usually the correct answer for the holidays.

Most of the pundits and commenters say to get a small memory since everyone just streams. I.e., the low end being the biggest seller is not an unreasonable. That doesn't help me on planes and I do not want cellular charges. I ordered my 128GB on the Apple website right after it opened up and just picked it up at the local store a few hours later after it opened. After I got it, I sold my old one to Gazelle.

Ofc, I never really use retailers any more; 99% of my purchases are Apple, Amazon or Walmart. I just checked and the 128GB (wifi or cellular) are listed as shipping in 1-3 days from the US Apple Web site.

It's not just iPad but SSD in general. I have 128GB on a gaming laptop and SWTOR, Rift, Lotro, WoW , D3 are not svelte and all the Betas coming out. I could add an external drive but I have a laptop because I travel, so it is taking planning to make sure how things degrade gracefully when unplugged. (I am not a fan of Windows Registry.)

If you are willing to carry an alternate device, then I think you can carry an accessory like the $98 Seagate GoFlex and put 500GB of media on it that you stream to your iPad.


My theory is an increasing amount of things are leaving out the middle versus cheap or premium. You also see it in business a lot: industry leader multinationals can do well. Small local mom & pop can do well. Mid-size and regional is more problematic. In gaming, I see EA and ATVI doing fine and lots of 1-5 person [mobile] game companies doing well. In between, not so much.

@4c22: Last chance to moderate your tone and continue the discussion in a less aggressive manner.

Short version: Tobold is extrapolating from his personal needs to exaggerate demand for the product he wants.

Short version: Tobold reports from personal experience a trend he previously verified as being rather universal. See for example here. Or on various Mac/Apple forums.

Note that the Microsoft Surface2 also quickly sold out the 128gb version earlier this year.

If Apple wanted me to use the cloud instead of the solid state hard drive, then why do they only give me 5gb of cloud storage? 50gb costs 80 Euro a year. And all that streaming is only viable at home on your personal WiFi, while on travel you frequently have to pay a lot for WiFi access or data roaming.

So, other that your personal opinion, what data do you have that support your argument that there is no demand for 128gb tablets?
Best idea evar:

Really, I gifted it to a friend and its amazing what you can so with it.
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