New Mac cravings may leave some buyers hungry

Whether the cause is overwhelming demand or an inability to stock its sales channel, Apple Computer is having trouble delivering some of its new computers to customers.

5 min read
Whether the cause is overwhelming demand or an inability to stock its sales channel, Apple Computer is having trouble delivering to customers some of the new computers it unveiled at Macworld.

Apple's PowerMac G4 Cube and several of the new iMacs are in short supply at distributors Ingram Micro and Tech Data, sources said. While high demand is a factor, so is Apple's practice of not shipping systems to distributors before the official product launch. This helps Apple maintain secrecy about new products, but it prevents stores from getting computers right away.

The shortage comes at the dawn of the back-to-school season, which is typically the second-biggest period for PC sales and often Apple's busiest season.

At the Macworld Trade Expo last month, Apple refreshed virtually its entire line of desktops and introduced a new one, the 8-inch PowerMac G4 Cube. The refresh included four new iMac colors--Indigo, Ruby, Sage and Snow--in configurations ranging from $799 to $1,499. Apple also added a second processor to high-end 450-MHz and 500-MHz PowerMacs.

The Cube computers are nearly impossible to find, sources said. Ingram is slated to get 890 Cubes with a 450-MHz processor within two weeks, or about 1,650 units short of pending orders, according to sources who have examined the distributor's database.

Neither Ingram nor Tech Data have any Indigo-colored 400-MHz models in stock, said sources close to the companies. Ingram's product database indicates that Apple has committed to send the distributor 463 of these computers. However, Ingram already has orders for 1,480 units and is not committing to any more orders.

Not all of the new computers are tough to find. Snow-colored iMacs seem to be in decent supply, while Indigo computers containing a faster 450-MHz can be found, but the full panoply of computers just isn't there, several sources said.

"Apple continues to struggle meeting demand," said Technology Business Research analyst Brooks Gray. "They need to improve their supply chain strategy in order to boost sales and meet demand for the upcoming consumer-buying season."

The timing of the shortage could hurt Apple's third-quarter revenue at a time when it faces slowing sales of its consumer iMacs and when another major Apple market, education, moves into its biggest buying period of the year.

"The timing is not good. One of the things that Apple suffers from is they tend to announce product and not have product available," Gartner analyst Kevin Knox said. "Back-to-school selling season is certainly a major factor, and it's surprising Apple would kind of miss that."

The effect on Apple's third quarter is hard to ascertain. The company saw sales slow in June. Discounts were also imposed to clear out existing inventories of the fruit-colored iMacs.

Market researcher PC Data earlier this week reported that Apple's retail sales in June dropped 15 percent from a year earlier. For June, the company had 9.4 percent market share in retail, behind top-ranked Hewlett-Packard, Compaq Computer and Emachines. For comparison, HP had 39.9 percent retail share in June vs. Compaq's 30.6 percent.

"They have a lot of pent up demand for this stuff, and you'll see them shifting this revenue into the latter half of the third quarter and into the fourth quarter," Knox said.

Shortage trends
Although PC companies like to position themselves as technological innovators, success in the PC business often depends upon simply having the right computers for sale at the right time. An unexpected bloat of PCs in early 1999 at Compaq kicked off a chain of events that eventually led to the firing of then-CEO Eckhard Pfeiffer. Meanwhile, Dell Computer's success can be partly attributed to the company's ability to capitalize on trends in component supplies.

Supply swings have bedeviled Apple at various times in its history. Michael Spindler, the Apple CEO before Gil Amelio, saw his reign terrorized by extreme swings of computer shortages and surpluses.

Several shortages last year prevented the Cupertino, Calif.-based company from delivering new models to customers. Shortages of 500-MHz G4 processors forced the company to reprice systems, initially canceling some back orders.

A display shortage kept dealers from getting iBook notebooks to customers soon after the first units starting shipping in volume.

Apple differs from PC makers in that it doesn't ship systems to distributors and retailers in anticipation of announcing a new product. That strategy would ensure plenty of supply.

"Part of it is the secrecy thing," Knox said. Apple is notorious for zealously guarding new product details until their scheduled unveiling, which typically happens at trade shows, earnings announcements and other scripted events. Earlier this week Apple filed a lawsuit against an "unknown individual," accusing the person of disclosing product details; yesterday, the company subpoenaed Yahoo in relation to the case.

What you can find
Still, some new models are out there. Several online retailers this morning reported that Snow iMacs and dual-processor 450-MHz G4 PowerMacs are in stock. Ingram had 1,200 Indigo 450 Plus iMacs.

"We have quite good supply on the older models and reasonable supply on some of the new iMac colors: Indigo, Ruby and Snow," said a source at a major online computer retailer. The retailer had sold about 100 PowerMacs with dual 450-MHz G4 processors, with more than 100 more in stock. But the company can't get the 500-MHz models, even though about 100 orders have been placed.

Online retailer MacZone's Web site shows the Indigo 400 iMac out of stock until Aug. 28.

Tech Data this morning had 12 Indigo 450 models, seven Graphite DV SE 500 models, four Ruby 450 iMacs and two Sage 450 models; it had no Ruby 400 iMacs and no G4 Cubes, said sources close to the company.

Except for the 450-MHz Indigo model and the Snow-colored iMacs, Ingram is out of stock on virtually every new model, with more orders in place than new products coming in, sources close to the company said. The wholesaler expects to receive 369 Graphite DV SE 500 iMacs, about 1,000 short of orders. About 464 Ruby 400 iMacs are due in, with 1,480 orders pending.

New dual 500-MHz G4 PowerMacs are over-ordered, with Apple committed to delivering 768 units but Ingram holding orders for 1,575.

Knox said the shortage is more an issue of attitude than a breakdown on Apple's part.

"Apple understands what their capabilities for manufacturing are," he said. "They have pretty good estimates...as far as demand. I think their view is, 'We'll get it out there when we can get it out there.'"