I don't think it was an unfortunate set of circumstances that led to the iPad Pros staggered release schedule. The 13” iPad Pro was released in the fall of 2015 and then this spring the 10” iPad Pro came out. Due to its later release, the newer iPad Pro was able to leapfrog its larger sibling in a few areas. This is by design and it will be the new normal.
Earlier this week I wrote about how it makes a lot of sense to update the iPhone SE on an annual basis to try and smooth out seasonal sales fluctuations. It hit me later that this is exactly what Apple is also doing with their iPad Pros. Launch the larger flagship model in the fall and release the smaller version later in the spring.
I have found that you can typically predict what Apple is going to do when you look at their decision tree like a financial analyst. Whether you’re discussing adding features, new product lines, how long before revisions, etc. I always find that the decisions that they make are what I would have advised Tim Cook to do if I was advising him from a financial perspective. In fact, I’m trying to think of an example in the last three or four years where they didn’t do what I would have expected and I can’t think of a single one. This is especially true with Tim Cook at the helm. I’m a manufacturing ops guy and so is Tim.
It looks like Apple is staging a full-court-press against the perpetual problem of seasonality. It’s probably an overstatement to say that in the manufacturing world, seasonality is the root of all evil, but it wouldn’t be too far from the truth.
Seasonal volume swings by necessity introduce waste into the system. There are only two ways to deal with the peaks.
1. Invest in the capital structure required to meet the unit volumes required during your peak. This will mean that after the peak is over, you carry all that needless overhead the rest of the year.
2. Invest only enough capital to meet your average unit sales volume. This will mean some sales will be lost in the beginning as impatient customers defect to the competition.
Most companies try to err somewhere in the middle but it’s always a compromise between the two extremes.
Outside of investing in the capital structure the biggest headache facing modern manufacturers is the problem of finding, training, and retaining enough workers.
It’s easy for wall street analysts to throw stones at companies that don’t do a good job of modulating their manufacturing costs to match their top line sales. But labor is not like electricity. It’s not an easy thing to lay off workers after the peak is over and have to start hiring and training new workers six months later.
The cost of training new workers in both dollars and quality issues is huge. And that is assuming you are lucky enough to find good new people. Some companies have even decided that it’s simply worth the premium to keep good workers on the payroll during a downturn rather than let them go and repeat the cycle. I’ve seen many a company let workers go during a volume downturn only to get caught flat footed when sales went back up because they didn’t have the capacity to fill orders.
Just like with the iPhone, having a staggered release schedule for the iPad allows manufacturers to better manage their capital and workforce costs. This would allow for lower costs and higher quality. I would think that this is an obvious thing that doesn’t even need to be explained. So I’m surprised at reactions from the pundits that seem to range from A) confused by the iPad’s staggered release to B) downright angry. Well, be prepared to be perpetually angry.
I have found that you can typically predict what Apple is going to do when you look at their decision tree like a financial analyst. Whether you’re discussing adding features, new product lines, how long before revisions, etc. I always find that the decisions that they make are what I would have advised Tim Cook to do if I was advising him from a financial perspective. In fact, I’m trying to think of an example in the last three or four years where they didn’t do what I would have expected and I can’t think of a single one. This is especially true with Tim Cook at the helm. I’m a manufacturing ops guy and so is Tim.
It looks like Apple is staging a full-court-press against the perpetual problem of seasonality. It’s probably an overstatement to say that in the manufacturing world, seasonality is the root of all evil, but it wouldn’t be too far from the truth.
Seasonal volume swings by necessity introduce waste into the system. There are only two ways to deal with the peaks.
1. Invest in the capital structure required to meet the unit volumes required during your peak. This will mean that after the peak is over, you carry all that needless overhead the rest of the year.
2. Invest only enough capital to meet your average unit sales volume. This will mean some sales will be lost in the beginning as impatient customers defect to the competition.
Most companies try to err somewhere in the middle but it’s always a compromise between the two extremes.
Outside of investing in the capital structure the biggest headache facing modern manufacturers is the problem of finding, training, and retaining enough workers.
It’s easy for wall street analysts to throw stones at companies that don’t do a good job of modulating their manufacturing costs to match their top line sales. But labor is not like electricity. It’s not an easy thing to lay off workers after the peak is over and have to start hiring and training new workers six months later.
The cost of training new workers in both dollars and quality issues is huge. And that is assuming you are lucky enough to find good new people. Some companies have even decided that it’s simply worth the premium to keep good workers on the payroll during a downturn rather than let them go and repeat the cycle. I’ve seen many a company let workers go during a volume downturn only to get caught flat footed when sales went back up because they didn’t have the capacity to fill orders.
Just like with the iPhone, having a staggered release schedule for the iPad allows manufacturers to better manage their capital and workforce costs. This would allow for lower costs and higher quality. I would think that this is an obvious thing that doesn’t even need to be explained. So I’m surprised at reactions from the pundits that seem to range from A) confused by the iPad’s staggered release to B) downright angry. Well, be prepared to be perpetually angry.
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