Every holiday season there are a few must-have gifts that leave shoppers desperately scouring stores to find them. That was true of the iPod last year, and it will be true of the popular MP3 player again this year, according to BusinessWeek‘s Peter Burrows, who contacted several retailers and found that some of them are not receiving enough supply to meet demand.
For example, a Circuit City representative told Mr. Burrows that the electronics chain “expects demand to outstrip supply through the end of the year, though [he] wouldn’t say to what degree.” The reporter noted that in two cases, retailers told him they expected to receive half their normal weekly allotment of iPods during the holiday shopping season.
While high demand is great for Apple, the company’s potential struggles to meet it worry analysts, according to Mr. Burrows, who quoted Piper Jaffray analyst Gene Munster as noting: “As of right now, they’re doing a great job of meeting demand, but we’re not going to really know how they did until Dec. 25.” And NPD Group analyst Stephen Baker pointed out that supplies have been rising in recent weeks, holiday shopping hasn’t kicked into high gear yet.
Mr. Munster told Mr. Burrows that he may drop his forecast of 9.1 million iPods sold this quarter because of fears Apple won’t hit his target of five million units shipped this month, despite the fact that “distribution is almost as wide as you can get,” according to Mr. Baker. Apple, which typically keeps inside information very close to its vest, didn’t provide a comment for the article.
Apple’s reluctance to provide information also extends to its interactions with retail stores, according to Mr. Burrows. He explained that most companies provide 13-week forecasts of product shipments, but Apple only offers a one- or two-week outlook. One anonymous retail source told the reporter that “[Apple] goes by what you’ve sold in the past year, not what you think that number will be going forward.”
Unsurprisingly, some retailers also expressed concern that Apple stocks its own stores before it ships products to third parties. One interviewee told Mr. Burrows: “There’s no doubt that whatever their intention is, the reality is that at the end of the day, if a retailer is out of stock and they’re in stock, it gives the customer the perception that if they want a hot product they’ll have to go to an Apple Store to get it.”