Slashdot Mirror
Apple & The G4 Order Truth
ferret wrote to us with the final
word from high at Apple about what's up with the G4 Orders. No, they are not cancelled. Yes, there's been a confusion. 400 and 450 Mhz machines will ship as originally promised, but the 500 Mhz machine will not ship until next year. This means that customer who ordered a 500 Mhz will be offered a 450 Mhz machine for now.
Christmas won't be as merry as expected in Cupertino, CA.
Not bloody likely. Apple has had big delivery problems this quarter with introducing three new product lines, the iBook, iMac TNG, and the G4's. There is TREMENDOUS pent up demand for these machines. Well over 500,000 back orders. As a result analysts are predicting that the Christmas season will be a huge blow out quarter for Apple despite some of the advertising and other expenses.
If you don't believe me take a look at:
http://biz.yahoo.com/z/a/a/aapl.html
Analysts are estimating 0.86 per share earnings, vs. net of 0.51 this quarter. This is a 60% INCREASE.
Motorola knew that they weren't quite ready for full production, and warned Apple of that
Ummmm No, A lot of what Apple is doing is because of increased DRAM prices and the fact that Motorola sprung the 500 MHz bug on them. Niether of these are under Apple's control.
Go figure. Like in everything else related to Apple, their stock trends are REALLY weird.
It only looks weird because people here are focusing on what is really only a small part of what is going on at Apple:
1. Apple introduces several new lines of kick-butt products; iBook, iMac DTV, G4 Professional Boxes.
2. Apple announces higher than expected earnings and projections and that because of massive backorders they are going to have a blowout fourth quarter.
3. Apple announces unit shipments are targetted to be 40% higher next year, thus increasing market share.
4. Apple announces G4 supply problems - cannot deliver as many machines as users want to buy.
5. Apple announces Mac OS X preview due in spring.
6. Apple annonces inventory pipeline averaged TWO DAYS in 1999. Best in industry, better than even Dell.
The only one of these that is remotely negative is No. 4, and even that is a problem most businesses would really like to have.
I know Apple isn't our favorite hardware or software vendor here on Slashdot. Truthfully, I wish someone would take the PowerPC Open Platform and implement it, but you are not my fairy godmother(s) and so I will just stick to my feelings on this issue.
Apple lowered the performance on its G4 line due to a constraint in chip demands. This is called Supply and Demand (Hey! US Patent Office! Trademark that, why don't you?) It is not so much a price increase as a performance decrease to help meet demand. Their decision, however, to cancel previous individual orders was wrong, and they realize this. Now, onto the big question:
If VA Linux Systems designed a series of servers with the IA-64 chip (Itanium *blech*), and chip yields on the higher end were less than expected, would their be so much gossip about it if they followed Apple's idea to lower performance on the models offered, yet honored their old orders? No, I am sure there wouldn't be... but Apple made two mistakes.
1. Announced the configurations in a grand blaze of PR before all the details were assured.
2. Cancelled orders from individuals.
As someone who ordered a 7500/100 back right before the 7600 came out, I fell victim to #2. I recieved a letter saying it was delayed indefinitely, and I could either go with a different model, and wait on that to arrive, or wait on my 7500. However, my 7500 had already shipped, so when I called Apple to check on the status of my order, I was told it was already on its way to me.
Now remember, this is before the iCeo came back. This is possibly even pre-Amelio, though I doubt that. Apple needs to make up its mind, recheck its facts, and then announce any changes. That should avoid fiascos such as this.
'There is no spoon.' - Neo, the Matrix
'SPOOOOOOOOOOOOOON!' - Tick, the Tick
-----------
"You can't shake the Devil's hand and say you're only kidding."
After all the fuss (with virtually no official word from Apple, just rumors), Apple ends up doing even more than anybody hoped, and is honoring wholesale orders too - not just Apple Store orders. I guess we need to stop picking on them for a while.
When you look at it, Apple did what they cood with a bad processor availability situation, and used this as leverage with their chip vendors to resolve a fork in the architecture. Remember, Apple was getting G4 processors directly from Motorola only - IBM hadn't been planning to build AltiVec enabled chips. IBM was doing fine with copper-based G3 processors and the embedded stuff. Now IBM is on the AltiVec bandwagon, Apple will get a more stable supply, and six months from now nobody will remember the fab problems that triggered this in the first place.
- -Josh Turiel
-- Josh Turiel
"2. Do not eat iPod Shuffle."
Never in my days have I seen such a total debacle of corporate comminication. I think this really shows the importance of any company (small or large) keeping a good grasp on who's talking to who from inside the company.
My guess is that "Apple" itself isn't really flip-flopping as much as we think they are - rather there are probably several individuals inside the company that haven't heard of this thing called a "phone" and can't quite coordinate what they're going to tell the press. None of the news stories or earlier press releases have indicated a uniform source of the information, and it's wise of them to have Steve Jobs give the final (or maybe not) word.
So what started this whole problem in the first place? If I had to guess it's the fault of good 'ol Operations Research. I imagine Apple was faced with the straightforward financial problem of a drastic overdemand for their machies and an equally drastic undersupply of the key (i.e. 500Mhz) component of those machines.
So they sat down, thought about what was going on, and attached a number to every "variable" they could come up with: What's the $-cost of downgrading everyone's chips versus the cost of delaying shipment versus the cost of making everyone re-order. These are not straightforward things to value, and, as we've seen fairly clearly, they underestimated the public's reaction. Now if they could just get the PR people to communicate.....
Ferrari and other exotic car rentals in New York
It's true that a lot of unfounded information gets circulated on the net. Even though we've mostly learned to disregard email concerning Little-Emily-With-Cancer's dying wishes, lots of us are still learning that we need to apply an extra level of scrutiny to even the mail services online. I think matters will sort out quite a bit as time goes by. Serious news media tend to filter out and become known for their reliability, even as the most atrocious gossip-mongers ooze their way to the lower end of the spectrum. While the net is still young, we readers will have to be alert. If we can't do that, we'll find ourselves in more situations like this business with Apple. There, the herd stampeded because very few stopped to consider the truth of the message. If Slashdot is going take responsibility for trying to avert such events, it will require a collective effort on the part of the readers to examine the sources of information we consume.
evano
Though I doubt it will happen I'd like to see a rational discussion of what this whole affair means in terms of online journalism. What will actually happen will probably be another mudslide of pro- and anti-Apple vitriol, but what I saw here was a fine example of the Internet's effect on the distribution of information. I think that the morass of conflicting information which made this whole event such a circus was only possible with the Net. Otherwise we wouldn't have had all the "Anonymous Sources" emailing misunderstood or unapproved plans to ZDnet/MacCentral/etc., and Apple would have been able to get their ducks in a row before someone posted an underresearched piece on the situation on a few dozen websites.
r evenue is even more intense online than it is in print), and it is the readers' collective responsibility to gather as many reports as possible and try to distill a coherent idea of the situation. Unfortunately few of us have the time to do this, so we see one semi-speculative report and take it as the truth.
In the past it was the job of the media to sort through the conflicting reports and produce a coherent and accurate (as possible) account of events; on the Net it seems that the role of news outlets is to publish every single little snippet of potential news (keeping in mind that the relationship of sensationalism-increases-readership-increases-ad-
Now what does this mean for Slashdot? This particular story is not the only example of several conflicting reports coming in over several days, each one conflicting with the one before. To moderate the news content be requiring confirmation is contrary to the spirit of openness and personal responsibility the Net and Slashdot are built upon, but might it be Slashdot's responsiblity as a major media outlet (which it is) to alert readers if reports are unconfirmed? Lots of questions, not really directly related to Apple or anything, but hopefully relevant to someone somewhere.
um... This article is somewhat inaccurate.
... will honor all orders for its Power Macintosh G4 computers placed before... October 13, at the originally quoted prices, including those placed with the Company's resellers which were accompanied by a purchase order, or a cash or credit card deposit."
"Apple
Apple is ONLY honoring orders that were made via the AppleStore. If you ordered your G4 through a catalog reseller, or CompUSA, or anyone else in the channel (prepaid or not!), well, you're pretty much out of luck. Considering how Apple has flip-flopped over this a few times in the last 48 buisness hours, I can see where the Media was also confused (not that they usually have it right; a post a couple blocks up reviews that well.)
I guess working here at Apple gives me a different perspective on alot of these issues; I'm far from an Apple-Mac bigot (prior to working here I unfortunately was) and if you ever read profiles, you can see that Apple isn't the only OS that I use (each tool has a different job.) But considering the chip supply problems that Motorola was having (less then 24% yield on their fabs) and the demand for the AGP based G4, I don't really see what else Apple could have done. At least we're learning for our mistakes and going back to the dual-vendor approach (IBM and Motorola) and _trying_ to fix what's gone wrong. Some people look at it like "the top end DVD-RAM model is finally available, yeah!" and I guess that's the glass-is-half-full way to look at it. I just shrug my shoulders and realize that there wasn't much of a choice either way.
In
Now that the dust has settled, what are the lessons to be learned?
1) Apple did the right thing in the end, neatly avoiding the fiasco of upsetting its customers and inviting a horde of lawsuits.
2) Apple has re-learned a basic economic lesson. You can't renegotiate orders you already accepted.
3) Higher prices = upset customers. I hope other computer OEMs learn this lesson as well, since news snippets indicate Gateway may be considering raising prices in the aftermath of the DRAM price crisis.
4) Don't depend on a single supplier. In 3-9 months, IBM will be ready to sell G4 chips, which would be a great improvement for Apple.
5) Christmas won't be as merry as expected in Cupertino, CA.
One, there won't be any revenues from those $3,500 G4-500's. Sales of $3,500 G4-450s will probably be lower. Add in CFO Andersen's warning about increasing advertising spendings, and you can smell the gross margins falling.
Two, rising DRAM prices will put even more pressure on those profit margins.
Three, Apple is still stuck with supplying the entire backorder of G4s from Motorola alone. For Apple, Q1 of 2000 will depend on how well Motorola delivers.
And the most important lesson to take away from this debacle? The rumor mill isn't always right, but they do have an impact. Apple could have crushed all these rumors with a press release on Thursday or Friday. They didn't. I'm willing to bet Apple was gauging public reaction over the last 4 days to decide on a course of action.
is this:
/// for five years" (it made 3)
Apple, like allmost all big companies have a habit of breaking promises.
But the people doing the biggest whining were, for the most part, applauding Apple when they broke past promises.
Like:
"The Newton is an important part of our product line" (This one was even said 3 days AFTER the product was cancelled)
"Any machine made in 1997 will run Rhapsody"
and older statements like
"Apple ][ forever"
"We intend to make and support the Apple
(If you want to figure out how long this list is, just read some books on Apple's history.)
Now, when the Newton was dumped, Rhapsody was made a g3 only product, etc...the biggest whiners on this G4 issue were saying that 'Apple was making tough business choices, needed for profitability' WRT the past broken promises.
So, why don't they say the same when the G4 orderes were cancelled? The cancellation was a simple business decision, made to help Apple's profitability.
If it was said on slashdot, it MUST be true!
I'm no Applehead, but I'd cut them a little slack here.
This is a problem with Motorola that Apple had to deal with. They trusted Motorola in good faith, and Motorola let them down.
It's a business problem with no good solutions on Apple's part.
D
----
I'd point out the saga of G4 tends to show that a good PR show doesn't always lead to a successful product launch.
The G4 is a successful product launch, according to pre-order volume. How the 'reconfiguration' will affect this is anyone's guess. The iBook and new iMacs are also doing very well.
Apple Financial Results show a steady decline in international sales for the last 3 quarters.
Unfortunately your basis of comparison does not take into account the seasonal nature of the computer business.
If you do a year to year comparison Apple's international revenues have been up three out of the last four quarters.
Don't get me wrong, it's an important development. But the market which would benefit from OS X is the one Apple retreated from a long
time ago.
Clearly the G4 boxes are not aimed at the consumer market, so it appears that Apple has in fact not retreated from all non-consumer markets. The actual fact of the matter is that Apple does have market niches that are still very performance demanding. For these users Mac OS X is very important.
The point of the build-to-order model is two-fold.
1) Minimize inventory to free up working capital.
2) Minimize delivery time
Apple has achieved objective 1 at the cost of failing objective #2. Not a successful story, I think.
Hmmm. I am not sure you can do both if you are revamping the product line as extensively as Apple is. To meet large initial demand you would need to build up large inventories, or have a large manufacturing capacity that would otherwise be idle. It seems to me that you may be asking for something that is impossible.
Are you kidding? The USB2 story stated "Faster than firewire" Something that was obviously wrong to anyone who knew anything about Firewire. This was NEVER corrected in the story. At least Drudge corrects his stories, slashdot rarely does unless it is a Linux story.
Actually, no Apple story in any news media would be complete without putting a negative spin on it. Even when the news is good, there always seems to be a little barb like "...the once-beleaguered computer maker..." thrown in for good measure...
Where the value of X-Mailer: is the true measure of a man...