Seeking Alpha
Profile| Send Message|
( followers)  

Apple's (NASDAQ:AAPL) World Wide Developer's Conference has done more than just introduce the world to the latest offerings from the biggest name in technology, It has created another nightmare for their suppliers. In what should give executives at Intel (NASDAQ:INTC) and their partners in Ultrabooks fits the new MacBook Pro with the Retina Display were put on sale on June 11th but within two days were back-ordered up to 4 weeks.

Demand for a $2199 laptop is so strong that Apple's growth is constrained by the world's ability to produce the components used to make their iStuff, while everyone else is trying to figure out how to sell a computer for more than $999. The likely culprit, aside from the obvious demand, is the availability of the Retina Display itself. It was the problem with the latest iteration of the iPad earlier in the year.

And this highlights a growing problem in the mobile computing market, extremely stressed supply chain channels. In a world economy teetering on collapse, supposedly, the areas which are showing strength are showing explosive growth. When money is tight and value is hard to find, those that produce a truly superior product, one that creates a tremendous edge in your business, will be chosen with extreme prejudice. Quality will be paid for and average junk will be discounted heavily.

This is the challenge facing the mid-end of the current computing solutions. The Retina Display borders on disruptive technology in how we interact with our computers. It represents a move in digital publishing that can approach print quality. For the first time so many publishers now have the ability to display their work on a display that does their work justice.

Everyone I know, including me, who has looked at an iPad with the Retina Display has literally been blown away by it. Is there something visceral in getting that kind of visual feedback from a digital device after a lifetime of looking at sub-standard images and your brain having to work that much harder? It's a good question and may get to the heart of the demand. In the days of CRT's people were willing to pay more for a Sony (NYSE:SNE) Trinitron because the picture was that much better, especially computer monitors.

In the end, this highlights the biggest issues limiting Apple's sales and potential revenue. Their dominance in the supply chain built through hard work and investment in them means that in the advent of shortages for items common across the industry, Apple always gets supplied first. Qualcomm's (NASDAQ:QCOM) well-documented problems with supplying their 28 nm Snapdragon SoCs and baseband chips will not impede the launch of the iPhone 5 later this year. Everyone else, on the other hand, will likely have to get in line.

In their latest earnings call, Apple CFO Peter Oppenheimer made it clear that the number of iPhone sold were not limited by demand. It was a failure at the logistic level, either in Apple's forecasting of demand or supplier FOXCONN's ability to keep up with orders. On the other hand, Apple is not above using its position with suppliers and its enormous pile of cash to build a supply chain moat around their competitors. Just ask the guys who worked on HP's TouchPad.

With Tim Cook in charge and Apple already considered by Gartner to be by far the best supply chain management company on the planet, it is difficult to believe that these shortages will not continue into the future. Apple's ability to disrupt everyone else's business at this point is almost as important to the company's continued success as the products they are developing and selling.

Source: Apple's Dominance Stressing Everyone Except Investors