iPhone Shortage Stupid Business Move Of The Week

This was the week iPhone users have waited a year for with the release of the newest iPhone.

Now Apple has known for sometime that production of the IPS-based Retina display used in the new device won't ramp to the four million units per month Apple needs to hit its targets until the supplier South Korea's LG Display increases production capacity in late summer perhaps even as late as December.

Hence knowing that this South Korea manufacturer is not up to necessary capacity so far, why would Apple decide to release the iPhone simultaneously in the US, UK, France, Germany and Japan? Why not slowly bring it to market country by country over some months?

The wisdom is that Apple sought to generate a fake shortage to leverage the marketing hype over the new iPhone 4. Jay Leno said it best, "Give a man a fish and he'll eat for a day, teach a man to fish and he'll eat for a lifetime, teach a man to create an artificial shortage and he'll eat steak."

However here's where matters get truly foolish.

Apple has abused this same scheme over and over again and most recently even for the iPhone 3 last year. Hence customers are wise to the whole fake shortage thing. But more than that, Apple does not have market domination like they had a year ago.

Android based smartphones continue to sever deep into the iPhone's market share.

Google is currently activating 160,000 mobile phones using Android software every day or 4.8 million per month. The amount is accelerating fast, having been set at 100,000 a day in the third week of May during Google's yearly conference. Part of the reason is that the Apple iPhone is now playing catch up to Android based phones. The Apple's most recent phone at the present has a 1 GHz CPU like the Google Nexus One had months ago and worse, the new iPhone only has a 5 megapixel camera. In the next 2 months, 8 and 12 megapixel smartphones will be coming out on the market.

So by Apple using the fake shortage from their advertising playbook, they are really pushing more consumers over to Android based mobile phones and we are witnessing that by the fact that just in the last 4 weeks, the amount of Android mobile phone sign ups went from 100,000 a day to 160,000 a day. Way to help the competition Apple.

But it gets even more stupid.

Bernstein Research said that because Apple released the iPhone in 5 countries at one time to create a fake scarcity with the log jam in displays at the South Korean manufacturing plant, Apple may well lose up to 40,000 units a week in sales due to the long-drawn-out artificial shortage they themselves created.

Therefore that's why Apple receives this week's stupid business move of the week.