A Thought Experiment
Assume a component cost in the iPhone 4 of around $200 (+/-). We’ll know more when the inevitable teardown and analysis happens but previous models have all come in somewhere around $200 in parts at introduction, so I think this is a safe guess.
Figure in addition to the 600K in announced pre-sales that Apple will have enough supply on hand to sell through two million iPhones in the first week (not unrealistic, again, based on sales of previous models and apparent demand).
Then consider that those numbers only include sales in the United States, and that Apple will be launching the iPhone 4 worldwide. Even if Apple currently only has enough product in the channel to sell a mere half as many outside the U.S. as it will sell here, that’s still over half a billion dollars in capital going to the hardware manufacturing for this product launch.
Apple, a company that makes its money selling things, not just licenses, has no debt. It can self-finance a worldwide product launch that costs at least half a billion dollars and still have people complaining that it should have seen this coming.
I would argue that Apple did, in fact, see this coming, and chose to limit its capital outlay to something manageable. While they could have thrown more money at the problem, bringing additional factories online to produce iPhones is itself expensive and is money they wouldn’t get back. As long as they have enough capacity to make INSERT RECORD NUMBER HERE iPhones for the launch, the only people they have to satisfy, really, are themselves. As I’ve said here before, we should all get it wrong like Apple.
