So where is the link to the article:
http://appleinsider.com/articles/13/10/11/iphone-5s-supply-declining-in-us-while-apples-iphone-5c-remains-fully-stocked
To sum it up what the article is saying, that the supply of iphone 5s went from 27 percent availability two weeks ago to 6 percent over the past week. The statistics are based on 60 apple stores in the states.
So the following can be illustrated in this diagram:
http://appleinsider.com/articles/13/10/11/iphone-5s-supply-declining-in-us-while-apples-iphone-5c-remains-fully-stocked
To sum it up what the article is saying, that the supply of iphone 5s went from 27 percent availability two weeks ago to 6 percent over the past week. The statistics are based on 60 apple stores in the states.
So the following can be illustrated in this diagram:
Apologises for forgetting to label the x, and y axis. X-axis should be labelled as quantity and price for the y-axis.
Firstly, S1 and D1 are the demand and supply curves that apple pressumed the market to be for this year, and the market price that is set is P1 one to start with.
After apple launched iphone 5s, iphones were sold out all the time in the states therefore supply kept on running out. With the iphones selling out really quick, and the decreasing in time period. the supply became more inelastic as time between today and the end of the year decreases, so it is harder to respond to the market as the supply cannot just increase production easily. This is shown by the shift in the supply curve from S1 to S2, but remaining at the same price.
For some deliberate reasons, the supply did not just become inelastic, the supply of iphone 5s actually decreased, this is shown by the shift in the supply curve, from s2 to s3.
With the success of IOS7 installed in iphone 5s, and the new technology of finger print unlock system of the iphone 5s, this attracted more people to buy iphone 5s than Apple predicted initially. The increase in demand of iphone 5s is shown by the shift in the demand curve from D1 to D2.
With all these shifts in supply and demand curves. In the market of iphone 5s, the price did not change in a short term. Therefore, with the same price (p1), there is a shortage of supply, and at the same time representing the excess demand, Which are the sections from Q2 to Q3.
So what is happening?
So, as mentioned before, there is an excess demand of iphone 5s. Demand the desire for a good or service supported by ability and willingness to pay. People who have waited for a few hours on the apply online store just to be first to click the button to pre-order the iphone 5s, would not recieve their iphone 5s. Instead, their orders get cancelled due to insufficient supply or not being able to order the iphone 5s at all.
Munster
Why is Apple doing this?
You might think that it is stupid to restrict your own supply when you know that you are the boss of a company that has consumer loyalty, so we should just sell as much as we want and maximize profit.
Mr. Munster mentioned in the article that Apple is actually preparing for an international launch of iphones, with 51 new markets to recieve both iphone 5s and 5c by Nov 1.
So the first reason, they have to save their supply so that the new market can have sufficient supply to meet demand. Also, they would be much better off to expand their market in other countries than just selling as many iphones as they can in the states. What happens is that, in the states, they are many people who simply buy iphones and sell it to other people at a higher price. Apple is expanding it's market because they want to make more profit and to prevent people from selling their product at a higher price in a second trade, by making it available internationally.
Second reason, it might not be the main one, is to fluctuate the iphone 5c market. Right now, as suggested by the article, it is sold at a discount rate of 11 percent below market price. By restricting supply of iphone 5s, many people may not be able to buy the iphone 5s, so they may buy the iphone 5c instead.
What happens next? Will Apple be successful?
Firstly, S1 and D1 are the demand and supply curves that apple pressumed the market to be for this year, and the market price that is set is P1 one to start with.
After apple launched iphone 5s, iphones were sold out all the time in the states therefore supply kept on running out. With the iphones selling out really quick, and the decreasing in time period. the supply became more inelastic as time between today and the end of the year decreases, so it is harder to respond to the market as the supply cannot just increase production easily. This is shown by the shift in the supply curve from S1 to S2, but remaining at the same price.
For some deliberate reasons, the supply did not just become inelastic, the supply of iphone 5s actually decreased, this is shown by the shift in the supply curve, from s2 to s3.
With the success of IOS7 installed in iphone 5s, and the new technology of finger print unlock system of the iphone 5s, this attracted more people to buy iphone 5s than Apple predicted initially. The increase in demand of iphone 5s is shown by the shift in the demand curve from D1 to D2.
With all these shifts in supply and demand curves. In the market of iphone 5s, the price did not change in a short term. Therefore, with the same price (p1), there is a shortage of supply, and at the same time representing the excess demand, Which are the sections from Q2 to Q3.
So what is happening?
So, as mentioned before, there is an excess demand of iphone 5s. Demand the desire for a good or service supported by ability and willingness to pay. People who have waited for a few hours on the apply online store just to be first to click the button to pre-order the iphone 5s, would not recieve their iphone 5s. Instead, their orders get cancelled due to insufficient supply or not being able to order the iphone 5s at all.
Munster
Why is Apple doing this?
You might think that it is stupid to restrict your own supply when you know that you are the boss of a company that has consumer loyalty, so we should just sell as much as we want and maximize profit.
Mr. Munster mentioned in the article that Apple is actually preparing for an international launch of iphones, with 51 new markets to recieve both iphone 5s and 5c by Nov 1.
So the first reason, they have to save their supply so that the new market can have sufficient supply to meet demand. Also, they would be much better off to expand their market in other countries than just selling as many iphones as they can in the states. What happens is that, in the states, they are many people who simply buy iphones and sell it to other people at a higher price. Apple is expanding it's market because they want to make more profit and to prevent people from selling their product at a higher price in a second trade, by making it available internationally.
Second reason, it might not be the main one, is to fluctuate the iphone 5c market. Right now, as suggested by the article, it is sold at a discount rate of 11 percent below market price. By restricting supply of iphone 5s, many people may not be able to buy the iphone 5s, so they may buy the iphone 5c instead.
What happens next? Will Apple be successful?
It depends what is their main intention is.
If Mr. Munster is right about them cutting down supply to prepare for international launch of iphones, this move is totally worth it. This is because most money are made during the first week of launching. If they didn't restrict the supply, they wouldn't be able to launch iphones in as many places and markets as they are planning now. With that, there is a loss of market potential in some places, in a long term, is bad. As i have said, if some places launch earlier than the other, what most people do is to sell their iphones that they got from the Apple store, and sell it to other places with a higher price where their apple store hasn't released iphone 5s yet. But by launching internationally at the same day, they can prevent the loss of market potential as I have said.
If their intention is the fluctuate the iphone 5c market, I personally don't think that decreasing the supply of iphone 5s would be effective. Firstly, Iphone 5s and 5c's price are very similar but 5s's functions are so much better in my opinion than 5c. So it isn't exactly very competitive. If I was going to buy a iphone 5s, but I can't, I would buy a Samsung, instead of