The secret to Apple’s success isn’t demand, it’s supply

I tried to buy a HomeKit lock this week. I couldn’t.

The Schlage Encode Plus got good reviews when it was released back in March. It supports Apple’s Home Key feature, which uses the same NFC technology used by Apple Pay to let you tap your Apple Watch or iPhone on its keypad to unlock it.

It’s out of stock. Just like they were back in March, and every time I’ve looked in the intervening time. It turns out that owing to supply-chain issues and chip shortages, Schlage was only able to make a small number available at launch, and they all sold out immediately. Schlage says more will be available shortly, and in fact, I’ve gotten reports that some of them turned up briefly on various home-improvement sites before being sold out again, presumably purchased by people who will mark them up and re-sell them elsewhere.

And I had the thought that I always have when I have money in my pocket and am ready to buy a tech product: How is it that Apple, the makers of perhaps the most popular consumer technology product in the world, can announce a new iPhone, take orders, and then provide customers with a pretty good idea of when that iPhone will arrive? And how is it that so many other companies just can’t?

The thrill of the hunt

I don’t mean to beat up on Schlage. It was clearly bitten by the same crisis that has slowed the supply of just about every tech product out there, and it doesn’t have the facility to sell products directly. It has to rely on sending its locks into the sales channel–places like Home Depot and Lowes–and then watching as those companies ship them out to stores or put them in their online-store warehouse and watch as they sell out immediately.

It’s frustrating. It’s bad for people who want to buy the products. And what’s worse, it encourages bad behavior–namely, those people who are buying the locks in order to turn around and resell them for a profit.

But we’re talking about a lock here. How much gray-market demand could there be, and how long could it really last? Schlage will probably be able to bring their lock into supply-demand balance in a few months. Imagine, instead, a product that had wider appeal–something like a game console.

I do mean to beat up on Microsoft and Sony and Nintendo. They are grown-up companies who wear big-boy pants, and yet they continue to sell their game consoles like they’ve never been out of diapers.

If you’ve ever tried to buy a PlayStation or Xbox or Switch, you have probably experienced the nightmare: The consoles go in and out of stock ridiculously quickly. There are Twitter accounts to alert potential buyers of new stock, and bot farms that constantly reload pages to see if stock exists. All of that stuff exists for the collectibles and fashion market, of course, but these are computers. They aren’t collectible or fashionable. They are mass-produced units. And yet the quest to get one drives otherwise normal adults to behave like they’re buying the last can of beans that was made before the zombie apocalypse.

Oh well! What can they do? Global demand, global shipments, it’s all very complicated and they try their best. This is the way it has to be. Maybe treat it like a meta-game! It’s the game you have to play in order to be able to play other games! Anyway, it’s not as if there’s a better way to do a global tech product roll-out.

Tim Cook laughs

Except we know there is a better way. It’s Apple’s way. In Apple’s world, people are told that the iPhone will go on sale on a certain day. It goes on sale. The earlier you get your order in, the earlier you’ll be able to get one, but the company will take your credit card regardless and give you a ship date that’s somewhere between accurate and a little conservative.

Yes, there are quirks to the way Apple does it. The company tends to reserve a certain number of devices and ship them directly to stores. If you order a product on Apple’s site and are unsatisfied with your product’s ship date, a trip to an Apple Store on release day or shortly thereafter can sometimes turn up that product.

But more broadly, Apple does all the little things right. Before it even announces its products, it’s been assembling those devices in factories, building up enough supply to at least somewhat satisfy initial orders. It makes an announcement and tells people when orders will be accepted. It opens the gates and begins accepting orders. And ultimately, it ships the orders out when it promised to.

It does this with all its products, but even if we crank the difficulty all the way up to the iPhone… the principle still holds. Quite frankly, it makes the game console makers look like amateurs. Compared to Apple, they are.

Send in Tim Cook

Apple wasn’t always this good. Early iPhone sales days featured long lines at various retail stores. Apple has learned its lessons from that, including strongly preferring direct shipments over store purchases.

Before Steve Jobs returned to Apple, the company also failed to have its pulse on supply and demand–and would make too many Macs, which would sit unsold and eventually written off and sunk into a landfill. When Jobs returned, he realized his company needed to be more efficient if it was going to survive. He found an executive who had the skills to get the supply chain humming and build a system that’s so efficient, from factory to online store to delivery, that we all freak out when the Mac model we want won’t ship to us for a month or two, as happened this summer.

That executive was Tim Cook, and now he runs the whole show. Is it any wonder that Apple’s good at this? I don’t think it is. But then I look around at just about every other company and realize that it’s not just that Apple is good at this–it’s that almost everyone else seems to be terrible at it.