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Why Do Manufacturers Run Out Of New Products?

Posted By Tim On December 15, 2012 @ 12:00 PM In I've Always Wanted To Know... | No Comments

I’ve Always Wanted To Know:

Why do manufacturers run out of new products?

Answer:

It seems that more often than not, the latest product announced is out of stock for weeks and sometimes months after the official release date. If you want to own it, you have to pre-order or wait in line during the early AM hours in hopes of getting one of the few received that day at a store. So why does this happen? Why is it a manufacturer can run out of a brand new product? Is it bad planning? Is it something else?

The most important thing to understand about manufacturing electronics is sub-components (the parts that go into making the final device) are often not made by the company who assembles the finished piece. For example, an Apple iPad contains a display from Samsung, memory from Hynix, Broadcom Wi-Fi antennas, and many more components from a host of vendors. In order to assemble each iPad, Apple must make sure all of the parts are available and ready to be assembled by the factory doing the final assembly.

So it’s just a supply shortage? Well…sometimes. Many products are in short supply due to lack of finished sub-components, but it can also be a problem of final assembly. In the case of the iPhone 5 from Apple Foxcon, the company who does the final assembly, there have been reported delays due to the immense difficulty of assembling such a small device. The difficulty of assembly, or the lack of trained technicians or machines needed throughout the process, may cause a limited number of devices to be able to be produced per day.

So it’s just a manpower limitation? Well…not always. There is also a business need to start selling an item as soon as possible. Not only does it cost a lot of money to buy components and keep inventory while waiting for a release date, but if a competitor gets a leak of your product, they can beat you to market or improve their existing product in order to one-up your unreleased product.

So it’s just a financial/trade secret limitation? Well…there is one more possible reason, and this one’s the most disturbing of them all. Manufacturers can purposely limit the supply of a product to keep pricing high and get people talking about how something is sold out. Many people feel a lust for something they can not have, and knowing that an apparently popular piece of electronics is “sold out” makes it seem more desirable than it actually is. This kind of manipulation accusation was levied against Nintendo, when the popular Wii console was nearly impossible to find for months on end. Though Nintendo denied the accusation, there is always a question when demand outpaces production for such an extended period of time.

So what can you do if you want a piece of electronics that you think will be in high demand?

  • Pre-order when it’s announced.
  • Wait in line on launch day very early in the morning.
  • Check the stores it’s offered at randomly and get lucky.
  • Buy it on eBay and pay a premium (sometimes a lot) over retail price for a re-sold unit.
  • Wait and be content that a great item will still be great in a few weeks.

-Tim

Do you have a general technology or electronics question you always wanted to know like “How does a Microwave work?” or “Why do LED’s last so long?” Write me at Tim@WorldStart.com [1] and your question may be answered in an upcoming “I Always Wanted To Know.” For specific computer support questions ask our writers by clicking here [2].


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