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Apple sees strong demand for iPod shuffle

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By LC Angell

Contributing Editor
Published: Tuesday, January 18, 2005
News Categories: iPod shuffle

Due to strong consumer demand for its new iPod shuffle, Apple’s online store now has a wait of two to four weeks for the device that was just introduced last week. “The backlog of orders comes not quite a year after the introduction of the iPod mini sparked a six-week wait when ordered online. There is a two- to three-week wait for the $99 iPod shuffle, which holds about 120 songs, while customers face a wait of three to four weeks for the $149 model, which has double the capacity, according to the Apple Web site.”

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Comments

1

Mine just arrived about an hour ago via FedEx. When I ordered it Friday morning, I saw there was a 1- to 2-week ship time, so I didn’t expect to see it anytime soon. However, I received an email from Apple on Sunday saying my order had shipped Saturday night. Low and behold, the shuffle arrived today. I haven’t had the chance to tinker with it yet, but know it will be a great addition to my iPod family!

Posted by Podkin in Raleigh, NC on January 18, 2005 at 12:03 PM (PDT)

2

Hey Podkin, was yours a 512 or a gig shuffle? i ordered my gig shuffle 2 hours after it was announced but it still says shipping on the 27th of January. The suspence is killing me, haha!

Posted by jasontho in Phoenix on January 18, 2005 at 12:24 PM (PDT)

3

Question, if sales area good as I think they are why doesn’t Apple’s top sellers list show this. I always wondered how ofter this list was updated. It’s been a week and the new items still don’t show in the top sellers list.

Just wondering.

Posted by TheArranger in USA on January 18, 2005 at 12:30 PM (PDT)

4

Something I just thought of—would they ever make it possible to stick the iPod shuffle into the AirPort Express for “beaming” to a stereo.  I’m not even sure if it’d be worth it, but just a thought.

Posted by Gatsby003 in New York on January 18, 2005 at 1:12 PM (PDT)

5

“Because of demand” or “because we didn’t make enough”?

There are two ways to spin it. If you say it’s due to demand, then it makes it look like a big hit and everyone will want one. If you say because of low-supply, then it makes Apple look bad.

But I have confidence that it’ll be a hit. I’m just glad you don’t hear those “for $100 more, you can get 4 more gigs AND a screen!”

Fishes,
narco.

Posted by narco in Burbank on January 18, 2005 at 2:15 PM (PDT)

6

You know Dell takes a lot of flack for its sometimes unimaginative low-end boxes but one reason it has been so mind-bogglingly successfull over the past couple of decades is that it executes flawlessly.

You generally don’t hear about Dell customers waiting weeks or months for hot products - Dell optimizes its supply chain and channel distribution so as to deliver within days.

This has two effects: the first is that Dell can realise that cash revenue sooner and can re-deploy it within the supply chain, thus increasing Dell’s return on shareholder equity. The second is that it enhances Dell’s organic market growth: instead of waiting endlessly for hot products, its customers have already *got* the product and are using it, thinking about more purchases, and evangelising others to buy.

Dell’s awesome execution is one of the reasons it has eclipsed Apple in unit sales volume and revenue growth - Apple has *always* been notoriously bad in timely delivery of its hot products. Frequently, in a panic, Apple’s channel is so starved that Apple has to semi-individually air-freight low-margin products from Asia to satisfy demand.

Not only does this lower profits, but it antagonizes its channel resellers, who are starved for product and often exist in a state of cold war with Apple, especially when preference is given to resupplying Apple’s direct and retail channels.

Posted by Demosthenes on January 18, 2005 at 2:29 PM (PDT)

7

When has Dell released an exciting product, for which demand could be difficult to predict? When has Dell released a product like the Mini that sold so well the limiting factor was the worldwide supply of a certain size of hard disk?

Predicting demand for version 1.3.5.1 of yet-another-PC-tower-that-does-the-same-things-as-the-last-one just isn’t a parallel situation.

And you seem to be assuming Apple made very few Shuffles. It’s possible they made a lot AND they’re all being bought.

Posted by Nagromme on January 18, 2005 at 2:43 PM (PDT)

8

Also, to say Apple is “always” late on delivery ignores all the times nobody remembers because there WAS no delay.

The only way that logic works is like this: Define a “hot product” as one for which demand exceeds supply and there are delays. Therefore Apple (and every company) is “always” bad about delivering hot products. smile

But when you talk about Dell’s “hot products” I think you mean something different from the iPod phenomenon with all its press and mindshare.

Posted by Nagromme on January 18, 2005 at 2:49 PM (PDT)

9

Demosthenes, you’re such a friggin’ troll.

Posted by Quoth_the_Raven in Herndon, VA on January 18, 2005 at 2:54 PM (PDT)

10

Apple did make a ton to begin with because they guessed demand would be high with the shuffle, and they were right. They are gonna sell like mad.

Posted by FluidG4 on January 18, 2005 at 2:58 PM (PDT)

11

“Demosthenes, you’re such a friggin’ troll.”

And he’s not a very good one at that.

Iraqi information Minister laughable.

Posted by deepfriedd on January 18, 2005 at 4:02 PM (PDT)

12

Such hostility! I made no representations about the merits or demerits of any single Dell or Apple product! Instead as I stated it is in the nature of Apple’s poor execution to often fail to benefit fully from an individual product.

You will not find it difficult to prove that market battles, campaigns, and even wars have been won or lost primarily because of logistics. Amateurs discuss single products while professionals study logistics.

I have owned both Apple and Dell stock for nearly 15 years now. The Dell stock has appreciated several hundred-fold, making me quite rich along the way. After 20 years the Apple stock is now, even after the recent run-up, worth just about the same cost to purchase when the past value of the money is compared to today’s value and weighted against a 10-year T-bill return. Nonetheless, I continue to hold Apple stock, and to hold Apple accountable for its many mistakes and mis-steps, because I hold a certain fondness for it. Apple did, after all, give me my first real job.

Apple Market Cap: 28.58B
Dell Market Cap: 100.12B

Apple ROE: 10.37%
Dell ROE: 51.48%

The kicker for me is how much confidence do the execs in Apple and Dell have in their company?

Apple % Insiders: 1.47%
Dell % Insiders: 9.62%

Apple % Net Shares Sold: 35.6%
Dell % Net Shares Sold: 9.7%

Apple’s insiders are dumping their shares almost as fast as they can grant them. This hasty and value-destroying dilution has been remarked upon in the press:

http://www.fool.com/News/mft/2005/mft05011317.htm

Apple has been one of the worst in recent history at transferring wealth from shareholders to employees through the liberal use of stock options. Share dilution was a sky-high 6.6% last year. Expensing options would have sunk earnings by more than 35% in 2004.

Posted by Demosthenes on January 18, 2005 at 6:53 PM (PDT)

13

For the record, I for one don’t assume you are trolling smile

But jumping from criticism to criticism could make you SEEM that way. You started with delivery time, then abandoned that and went on to other things instead—like insider shares, which are a bit off-topic regarding Shuffle demand. I defended Apple on demand/delivery issues, explaining why Dell is not a true parallel, and you responded instead about people discussing your views on product merits—which nobody mentioned.

This creates the impression that you are trying to get attention, or trying to sound knowledgeable even if there’s no clear point other than a general sense of “Dell beats Apple, by any means I can come up with.” That does come off as troll-like on the surface, and unfortunately detracts from very valid (if not always relevant) points that you have to share. I hope people will still consider your points about Apple product demand, and mine as well. Regarding stocks, I have no points to make, as I own no Apple stock, nor Dell smile I do however, doubt your “kicker” suggestion that Apple execs lack confidence in Apple. And I also doubt, again, that Dell is a true parallel case.

Posted by Nagromme on January 18, 2005 at 7:35 PM (PDT)

14

Did anyone happen to view the Apple Australia website after it was updated with the iPod shuffle? They messed up the pricing of all the iPod’s bar the shuffle, listing American pricing making most products around 1/2 price! Wish they would have honoured it when I went to my local Applecentre…....

Posted by DeadDial in Australia on January 18, 2005 at 7:47 PM (PDT)

15

glad i got mine from compusa

i preordered it sat night and was here monday afternoon i love it
forget the internet go for the hard copy plus compusa has a cheaper warrnty

Posted by BIGP in Texas on January 18, 2005 at 7:50 PM (PDT)

16

explaining why Dell is not a true parallel

I appreciate your explanation, but I I do not think they are equivalent. Like most companies, Dell makes very little profit, if any, from shifting “version 1.3.5.1 of yet-another-PC-tower”. Dell makes most of its money from SANs and enterprise support. But the vast volumes of product do serve to grease the wheels of Dell’s supply chain.

Shifting lots of product is usually good for this - it opens doors. Witness Apple’s new prominence in a lot of retail channels that had abandoned it, mainly thanks to the iPod and the HP deal. However, Apple has had similar 2-4 year hit products before but has an undoubted abailaity to somehow wrest defeat from the jaws of victory. Similarly the shuffle represents a great chance for Apple, but it also could upset a lot of retailers denied easy access to it. That’s my point - out-selling your demand is a two-edged sword.

Retailers in the US are usually less vocal about suffering under Apple’s product allocations, but they are not so timid in foreign markets, such as Australia, about Apple’s Dell-ization (which is pretty ironic consiering the tone of the comments here!).

———————————————-

Resellers spent 2004 in a state of cold war with Apple, after the vendor went flat-out to shift sales to its online store with a price-matching policy.

Apple gives its own direct sales top billing on its website, labelling them the “safest and most convenient place to buy Apple products”.

Mr Connor said affluent customers were attracted by the convenience of online shopping.

A source close to the Apple channel, who asked not to be named, said the company was slowly but surely pushing towards a direct sales model.

“I think they’ve been going that for a while now,” he said. “They see themselves on the Dell model.”

Posted by Demosthenes on January 18, 2005 at 7:52 PM (PDT)

17

“Similarly the shuffle represents a great chance for Apple, but it also could upset a lot of retailers denied easy access to it. That’s my point - out-selling your demand is a two-edged sword.”

Your point seems to have changed yet again, but I agree, this is a bad time for many Apple resellers.

Posted by Nagromme on January 18, 2005 at 8:48 PM (PDT)

18

Parallel:

PocketPC.  Dell makes the hottest ones on the market, and they sell more of those than Apple sells computers…well, almost.  smile

And you never have to wait to to a fake shortage designed to build hype.

*cough*

Posted by stark23x on January 18, 2005 at 11:09 PM (PDT)

19

Apple’s ‘backlogged orders” is just clever marketing to create product awareness and hype in the marketplace.

There’s nothing special about the Ipod Shuffle in and of itself.  It’s just another contender in the ocean of flash players.

By making a product seem less available by claiming that orders will take awhile to be filled, it makes people desire the product that much more.

Apple could fill all orders immediately if they wanted to, but they either hold out from filling orders on purpose, or they purposely have far fewer made than they know they’ll get orders for to create a backordered status, in order to create a real buzz in the minds of consumers.  People reason, “Wow!  This product is backordered already?  It must really be popular!  Therfore, I must have made a great decision in buying it!”.  And this reasoning makes them want the product even more and reinforces the idea that buying in the first place was a great idea.

It’s no different than anything else in life:  We always want what we can’t have.

It’s just marketing hype.  Very clever.  But hype nonetheless.

Posted by Neo7 on January 19, 2005 at 2:17 AM (PDT)

20

I like how Demosthenes sources are a site called [url=http://www.fool.com]http://www.fool.com[/url] - therefore his labelling as a troll is accurate and his sources for his argument are not reliable.

Posted by Kingius on January 19, 2005 at 5:17 AM (PDT)

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