Supply and Demand

How can other tablets compete with iPad if they don’t have displays?

After the announcement of the original iPad most other major computer and mobile phone manufacturers announced plans to enter the touch-based tablet market. One year later and most of these rumoured devices are still nothing more than vapour-ware.

Apple competitors caught with their pants down…again?

Apple’s interim lead, COO Tim Cook, is responsible for Apple’s supply chain. His strategic, forward-looking management has enabled Apple to crank out millions of their revolutionary devices while the competition watches from the sidelines.

For example, in 2005, prior to the launch of the original iPhone and iPod Touch, Apple secured long-term flash memory supply agreements with component manufacturers, effectively cornering the global market on this essential portable-electronics part. At the time, everyone thought this move was in response to a shift towards using flash-based memory in all of Apple’s iPod lines. However, in hindsight, it is doubtful that Apple could have delivered the millions of iPhone and iPad devices without these long-term supply agreements.

Fast forward to 2011. At their January 18, quarterly earnings call, Apple announced that they have signed long-term supply agreements with three component manufactures for a total cost of $3.9 billion dollars. Analysts speculate that the investment is in small- to mid-sized LCD manufacturing and inventory.

Apple has cash to burn, and it looks like they are using that cash to corner the mobile LCD supply market.

This is how the world ends. Not with a bang but a whimper.

And so, where are the competitors to the iPad? Even if they get released to the public and there is any sort of demand for these devices, how will the competitors supply that demand? How will Blackberry or HP be able to enter or make a dent in the market with Apple tying up the supply-chain by pouring money into the pockets of component vendors? I don’t think there will be competition for the iPad. Not today. Not for the foreseeable future.

One thought on “Supply and Demand

  1. This just in from the “I Told You So” department. MacRumors has reported on Apple having cornered over 60% of the global 2011 touchscreen supply market:

    “…tablet PC makers also pointed out that the component shortage is causing their shipment volumes to be unable to catch up with their orders, especially for second-tier players. Touch panels are currently suffering the most serious shortage due to Apple holding control over the capacity of major touch panel makers…”


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