iPad. The mother of all backlogs. And Brazil.
I've written several times here that I think America, if not the world, should look to Brazil, today, to better understand its future. (Do a search on this if interested). I've also written that Apple has *earned* my acceptance when they state the lower-then-expected iPad sales are due to supply constraints.
I accept. But, as I've written, I'm skeptical. I want to see the numbers going forward.
These two issues have somewhat merged in this letter I received today from a reader in Brazil. I hope you enjoy it:
Dear Brian,
Let me start by saying that I'm brazillian and a regular reader.
I've read here multiple times that you have doubts that Apple is having
trouble producing enough iPads to keep up with demand.
While your arguments (as usual) are logical, there is some evidence in
brazillian media that suggests they really might be having constraints.
Please Google Translate this page - it is from Brazil's largest newspaper
(and our only relevant online newspaper), Folha de São Paulo:
http://www1.folha.uol.com.br/mercado/929209-ministro-diz-que-ipad-nacion...
Basically, Foxconn's factories here in Jundiaí (São Paulo State) are being
reassigned to produce iPads *and* iPhones - and our government (through our
Telecommunications minister) is leaking all the information for us.
Now, there are a lot of reasons to produce here, including a huge tax
incentive the government just announced - it will allow Apple to sell us
iPads for 33% less than today (we currently pay R$1749 for the basic model =
US$1100).
Nevertheless, manufacturing stuff here is **expensive**. We have
european-like labor-laws, unions have a HUGE ammount of power (Lula - our
most popular president ever - was a Union member back in 1970/80s) and
importing components which we don't make
(**cough-everythingwithsemiconductors-cough**) is REALLY hard, thanks to
crazy importation taxes and customs bureaucracy - some stuff may take up to
TWO MONTHS waiting on our dumb customs system.
While we are a considerable market (we have ~30 million people which *can*
buy iPhones, iPads and iGadgets [not Macs, though] + 100 million which can
afford their own cheap, Symbian/Android-based smartphone), **we are just not
worth it**. It doesn't make sense for a company like Apple to invest US$12
billion here (our government leaked that as well) and produce stuff to sell
just for brazillian people - they must be investing that huge ammount of cash
to export for everyone else, as well.
While the Brazillian-iPad might cost US$770 here (and, I guess, about 400-450
to produce) and be *very* popular here, there is no way in hell people in
other countries would be willing to pay that extra 150-200 bucks to cover the
Brazil-cost (assuming Apple wouldn't want to just leave a huge chunk of their
nice margins here in Brazil).
The only scenario where that makes sense (at least in my head) is if Apple is
having **serious** production line issues and is, in reality, desperate for
new production lines. The iPhone might have covered the "bad" (as in: not
spetacular) iPad sales last quarter, but I just can't imagine Apple counting
on that for every quarter and reject the money from people who are **still**
waiting early on lines on Apple stores throughout the US.
Cheers from Brasília! :)
Interesting, no? What do you think?
Apple appears to be relying even more heavily on Foxconn. Supply issues are, apparently, a very real concern -- as are costs, no doubt. Still, remember that we now have iPad 2 for $500. A year ago we would have assumed the equivalent of iPad 2 would be at least $1,000. And thought it was awesome.
Lastly, I must say, I am pleased that Apple is helping to move production of our most advanced personal computing devices away from just China. For whatever reasons.