What if SoftLayer Managed Inventory and Demand Like Apple?

July 27, 2008

Quick Answer: It would be disastrous!

Consider Apple's rollout of the iPhone 3G. Full disclosure: I'm trying to get my hands on one of those new iPhones, but as yet I have been unsuccessful.

When the first iPhones rolled out in June 2007, it was understandable that Apple had no idea how many to produce in advance of the launch. It was a product that moved the smart phone concept forward in several ways, but it wasn't perfect. Also, buyers set it up at home on their own using iTunes, so the buying process was simple. Get in, pay up, and get out. The long lines moved quickly. There were rumors of overproduction based on realized demand. I bought one for my wife's birthday at the 2007 release. Buying it and setting it up was easy.

This year is very different. Because of aftermarket hacking, you are required to activate and set up the phone with AT&T service in person this time around. So if you want to jailbreak the iPhone 3G, you'll have to pay a cancellation fee to AT&T. There is no get in, pay up, and get out. The buying process is running 20 to 30 minutes at this point, and Apple and AT&T are selling TONS more phones than at last year's rollout. Stock outs are occurring everywhere. But yet, Apple is still selling them on a first come/first served basis. Yes, you can prepay at an AT&T store, but they're quoting a minimum 10 business day wait for your phone.

It would make complete sense if a few months before the launch date, folks could have logged in, paid a deposit, reserved a phone, and set up a time for activation. Apple could have better anticipated demand and tailored phone production and store staffing accordingly.

Suffice it to say that SoftLayer does not manage inventory and customer demand like Apple. We strive to anticipate demand and arrange our inventory and staffing accordingly. We do our best to find that balance to keep our inventory lean so as to not waste money on maintaining unused product, yet have enough on hand so that our customers' businesses can be scalable. In other words, when you need another server or two or two hundred, we've got ‘em for you – and ready for you to use in a few hours, tops.

Yes, you can order enough servers for us to require a few days to call in a shipment. But that would be quite a large order, and you can rest assured that you wouldn't be a nameless "first come, first served" patron.

Bottom line, if we treated the customers who want our services as Apple does their iPhone customers, we'd have a lot less of them. That's customers, not iPhones.

-Gary

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