Allen Liu

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HI Alonso,

Can Apple replicate their past success launching new hardware products? How much do they miss the vision of Steve Jobs?

Only time can tell. HAh. It’s only been about 4 years since Steve Jobs passed away and many people questioned whether Apple could still continue to innovate. In the past 4 years Apple has released a new Mac Pro (completely different from previous models), created Apple Pay, released the Apple Watch, iPad Mini, and Apple Pencil. Apple still continues to create innovative products and I don’t doubt their ability to create great hardware, but the thing I miss the most about Steve Jobs is the way he was able to create excitement and anticipation for Apple products. He was a great public speaker and was able to capture the audiences attention whenever he was launching a new products. When you get a chance, I encourage you to listen to his commencement speech at Stanford here:

HI Chun,

Great questions!

– How do you think they’ve been able to set up manufacturing to better anticipate and fulfill demand?

Apple has a couple has a couple levers they can pull in terms of fulfilling demand and increasing production.
Once production has been fully ramped up, Apple can produce around 150,000 units of iPhones per day:

If they predict that the next generation iPhone will sell 4 million more units then their previous year, then they can decide to ramp their production about a month earlier. The other lever they have is to increase the number of suppliers and manufacturers so their units produced per day increases.

How do you think Apple was able to figure out the right levels of products to produce during initial launches since they had little consumer insights / demand data? How did they balance fulfilling demand with mitigating overproduction risk?

For products that are releasing a new generation, Apple can rely on historical sales to predict future sales. What do they do for new products like the Apple Watch? It’s actually pretty challenging and honestly its not exactly a science. Many companies will undershoot or overshoot production by multiples. With the Apple Watch they made an announcement over half a year in advance to gauge customer interest. Then about 2 weeks before shipment they took pre-orders online to get a baseline number of units they need to produce. Within those two weeks, assuming they’ve already built up a good amount of product already, they have the choice to continue building an additional 2 million units up until shipping day or throttle back depending on how pre-orders go. For the most part it is much riskier for them to be understocked than overstocked because the selling window for consumer electronics is very narrow. Consumers know that about every year or so a new generation of a product comes out. Sales are usually highest within the first 2-3 months after the first shipment begins and if they cant meet demand within that window, the sales decline rapidly.

On December 13, 2015, Allen Liu commented on SolarCity’s Rise to the Top :

Interesting write up! How do the contracts work when homes are sold to new owners? Do they transfer to the new home owners and are there shorter term contracts. Is it possible to purchase the solar panels up front and collect all the solar power for yourself at no charge?

On December 13, 2015, Allen Liu commented on Tesla Lights Fire Under Automobile Industry :

It’s really interesting that because Tesla did not have legacy/historical designs in place already, they weren’t limited to existing car bodies and were able to come up with a new body that was designed to maximize battery capacity. Even their interior controls have reduced buttons and levers, using a touchscreen instead because they weren’t bound to what a traditional car should look like.

Its strategy of releasing its Supercharge technology to everyone is an interesting move. On the one hand the technology may be a competitive advantage for them against other EV vehicles (if they keep the technology in-house), but at the same time they still have to remember that their main competition still is traditional combustion engine cars. By spreading the Supercharge technology they are unifying the EV industry and spreading the ease of use/charging for EV cars. Since the Supercharging station will be free of charge, I wonder how companies will split costs if say a Ford car charges at a Tesla Supercharge station or vice versa.

On December 12, 2015, Allen Liu commented on PeekaBOO Pop-up Stores: Spirit Halloween :

Thanks for the write-up. I always wondered why I only noticed Spirit stores right before Halloween. Makes sense to take stores down during the rest of the year since most people wont be buying Halloween costumes after October. Questions that popped up: For 2 month leases, is rent more expensive or less expensive since they’re occupying vacant property that wouldn’t be otherwise leased out? For unsold inventory, inventory management must be a mess. How is unsold inventory transported back and sorted, where are warehouses located, and how much are warehousing costs?