The fact that it is 2012 and stores still refuse to just let you give them money and then have them ship you a product is ridiculous. I don't want to sit here and wait for a store to open or for things to come 'back in stock' to buy a phone. That's why we invented computers, to automate boring tasks.
I give you money, you put my name on a list, as phones come in, you ship them in the order of the names on the list. Problem solved.
Of course, that won't happen any time soon, because being sold out inexplicably generates buzz like the present article.
There are laws in the US which require you to ship a product within a certain time or offer a refund. I agree that the 'sold out' buzz is a popular marketing technique, its one of the persuasion tools that works well, scarcity, but I think that is a side effect here.
So take a moment and imagine you are in the product manager's shoes at Google and you're tasked with forecasting how many Nexus 4's will be needed. If you guess 'high' you end up with HP's Touchpad fiasco, or Motorola's Xoom, too much product. Since you've probably borrowed the money to buy the parts to build the stuff and you have to pay it in 90 days, you need to get stuff, sell it, and then get the money to pay off the money you borrowed.
Building a million phones like this probably costs in the neighborhood of $200M - $250M. That is a pretty sizable chunk of cash to be hanging out there 'in the float' as it were. Sloshing around that much capital is like driving a fully loaded big rig truck on a wet highway, you don't want to enter any turn with too much speed, the 'bad' outcome is really bad.
So of the two options, "leaving money on the table" because someone who wanted to buy your gear couldn't, and "missing your wall street guidance" because you're carrying inventory for longer than you wanted, the former is the much better choice. At the limit its horrible but if you're going to err, and your error bars are large, you want to err on the negative side not the positive side. On the negative side you just don't make as much money as you might have wanted to, on the positive side you don't make the margins you need to make on the product.
Xoom and Touchpad were 'new' products (new to that brand) - Nexus isn't 'new' by any stretch. It's got a track record. They have customers they can survey. Hell, it's google - if they can't predict public and customer sentiment and willingness to buy, who can?
But now they have a lot of people bitching about how the phone doesn't have LTE so it's not like it was known it'd be a total slam dunk. I'm a T-Mobile customer in the US though so i don't worry about stuff like that. ;)
What do you use all that space for on a phone? My Android phone (HTC Evo 4G) has 512MB internal storage and the Android version it runs doesn't support moving most apps and their data to an SD card. I still have all the apps I want. I still listen to my entire multi-gigabyte music collection... by streaming it through Amazon MP3 for free. Everything's streaming or in the cloud these days. You don't need to carry duplicate copies in your pocket.
I am somewhat obsessed with music, and these days, 16 gigabytes isn't really that much. Yes, you can stream it with spotify and google play, but that always fails when you least want it to. I wouldn't buy a phone these days with less than 64 gigabytes.
I realize I'm also somewhat unusual in this respect.
You'd be surprised. Many games, these days, can take up to 1GB for program and data files. My iPhone 4 with 16GB was so maxed out, it'd often refuse to upgrade more than one app at a time because of insufficient space.
The 16GB is the cheapest option for a very fashionable phone. So no doubt it's popular. My wife has the 16 and I have the 32, figuring we'd never max out the memory in either case. Boy, were we wrong. She can't update more than a few apps at a time. I'm down to the last few GBs and even after purging videos and photos. Music isn't even a problem because we have iTunes Match so it purges things regularly.
The size of the retina apps is just insane. I compiled my first app (a small music app) around the time the 3GS came out and it was only 1MB. Now, even a simple game clocks in at 30MB.
Sadly I can't sell you a binding pre-order contract. (That would be where you couldn't cancel your order) And for things like the Nexus 4 (where you might engage in a bit of reselling) you will have people 'pre-order' to get a place in line, only to find when they start shipping that you can't sell them for much of a markup on ebay so they cancel their pre-order. Or like the great disk drive crisis of 2011 where people put multiple orders into multiple distributors only to cancel when one of them filled.
Another thing to consider (and this was true of the Nexus 4 and later updated in the article) the article said they 'sold out' but Google didn't. The authors interpreted not being able to get to a sales page as being 'sold out' but later discovered that there was some order rate management going on where the 'overflow' went to the 'coming soon' page and repeated attempts would eventually get you a page you could order from.
Logistics management is a tricky thing, if you are good at it you can pretty much name your own salary because its trivially easy to 'show' how much you are worth with basic accounting techniques. If the company has the volume you can literally say "If you hire me I'll save you $700,000 a year, I'll actually save you $1,000,000 a year but I'm going to keep $300,000 of it as salary."
This is nice in theory. I think this doesn't happen because when you take people's money they're suddenly your "customers" and think they're entitled to a phone ASAP and if there are any unexpected delays you have upset the hoard. As soon as you take someone's money, they're a customer support liability.
It does not seem to cause any problem to Amazon, Apple, or the vast majority of other shops out there. The biggest shop debit your card when they ship and let you cancel at any time.
Google is crafting buzz like Apple is doing with the queues at the Apple store or their irritating "reserve your iPhone" that in reality does not reserve anything. A difference though, if you don't want to bother, you can simply order online and it get it delivered the old boring way once it is back in stock. The Nexus can only be bought online.
(disclaimer: a bit bitter after having tried to buy a Nexus 4 today)
This! Google just recently saw this happen with the Nexus 7 this summer. People were charged when they preordered and then the lack of a hard ship date caused Google to have to spend countless hours in customer support. Once somebody has paid you, the can of worms is open.
They could also want to control the amount of unearned revenue on their books.
A backlog of orders pushes back your shipping date by two months. One random day you get an email saying "Your item has shipped and your card has been charged". Is it not plausible that you've found an alternate in the meantime? Or that your financial situation has changed?
> I can log in to any bank and it'll tell me within a few moments of when a charge was made.
No you can't; that's exactly the issue. Most people don't know the difference between an authorization and a charge. What you see on online banking as "pending charges" or "holds" are authorizations. No money has moved hands -- your bank balance has not gone down, the merchant's bank balance has not gone up, there's not even an in-flight ACH somewhere yet to be processed.
Literally all these entries on your online banking represent is a message of intent from the merchant to charge that much to your card in the near future. Even your bank does not yet know if the merchant actually captured the funds and they'll be settled (the money will move) soon or if they only performed the authorization. They could void the authorization or let it expire itself without ever charging the card.
Hence the comment -- even if Google only performs an authorization, it looks to the customer like they paid, and the bank won't tell the customer otherwise. That makes using authorizations to hold preorders untenable from a customer service standpoint even if it were technically possible, which it really isn't due to the short period authorizations are valid outside the hotel, travel and rental industries.
Our banks all work the same. The settled transactions list you're talking about does not update "within a few moments" as the comment I was replying to said, if a charge was even made.
The fastest your bank could possibly show a charge I make to it right now is tomorrow. Most will take longer than that. If it's near a weekend, it could take 3 or more calendar days. The authorization can show up immediately, the charge cannot.
Authorizations happen in real-time over the card networks. Settlements, where the charges get recorded and the funds actually move, happen in daily batches (or even less often).
In the meantime, customers assume they have paid for something, because they see it in the pending charges or holds list, whether funds were captured or not. Again, refer to previous comments on why that makes authorizing cards for the full amount of preorders problematic.
If you're running a brick and mortar store, you want to serve the customers who are there now. That means not cannibalizing your inventory by mailing to someone who ordered last week. You also want people to come back to your store.
It is irrational for the store to mail you one when it comes in stock, though they should have a web-based corporate distributor that they can direct you to.
Consumers usually have an expectation of quick turnaround, and when they don't have a quick turnaround, they expect good feedback about when to expect what they paid for to be delivered to them.
In light of that, no, we don't really have the technology to automate all of those business decisions (especially so early in the product lifespan) and give a precise prediction about when a consumer can expect the product with acceptable reliability. There are too many factors that can delay delivery by a day or two, and accuracy within a day is extremely important for good customer service.
For a mass-market phone like this "It'll get there when it gets there!' is not an acceptable response to people who need a phone right now, or in the very near future. This isn't a raspberry pi.
There's no use pretending that high tech supply chain management is a simple process, and any hickups are really just ploys for media hype.
You make it sound like Amazon is put through the ringer for estimates like "2-3 weeks" or even "when more are available.". They aren't.
I think the most people are not upset they sold out, but upset that:
a) Many of them did put in the effort to get up (or stay up) and get there in time, and had to suffer checkout issues.
b) There is no Plan B, nor any other information coming out of Google. They are forced to go round the merry-go-round of refreshing the Play Store and waiting and waiting to see something change.
Most people just want to say "I want this, take my money when you can" and forget about it. It shouldn't take so much effort to give a company your money.
Yeah. I'm not sure they'd ever go that far. After all, it's always better to be understocked than overstocked. Sold out after 24 to 48 hours may represent unprecedented demand. After 50 minutes it's kind of mindless marketing manipulation.
Im sure the PR machines are involved too. "iPhone sells out" always hits the headlines (online and otherwise) in a big way, stoking demand (if it's sold out it must be good - and if I get one faster than everyone else I'll be able to show it off)
Put it this way - I'm sure it won't remain "sold out" (inaccessible to purchase) for long...
I completely agree, but is it possible that Google and/or LG have contracts with their partners that they may not create obligations to more than a certain amount of product at one time? Might these products sell out because, contractually, they cannot sell beyond a certain deficit of materials?
At many stores you can. "Sorry, that's not in stock right now, but we can order it for you".
Especially bookstores, what few record stores still exist, some clothing stores, hardware stores, and more.
This is actually my preferred form of shopping. I don't care for online purchases generally, shipping and returns are a hassle (you have to be there for it, there's always the question of refunds getting properly processed, and there is simply no online presentation which is as comprehensive as having the product in your hands to assess its qualities).
For electronics, which are readily produced, it's a real sham if you aren't able to do this.
On a small scale that could work, but I don't think it would work well at something like consumer smartphones. They could look "bad" twice: 1) if they don't get enough pledges and 2) not being able to fulfill pledges because of too much demand.
Computers may be able to automate the task of charging for a product but they can't automate away the realities of manufacturing, especially if the initial demand was beyond Google's predictions or supply chain.
Even right now I bet Google is scrambling to find enough chip vendors for another production run of the phones as well as trying to scramble up the transportation and labor for putting them together.
I think so too. AFAIK Google's computing infrastructure is such that if performance issues arise on anything critical enough they just can shove more and more servers and bandwidth into the mix and expand capacity elastically
Plus it's amazing marketing to be "selling out" of your product.
I bought my iPhone through AT&T this way. It took a month to show up. There are usually avenues to do this, but people apparently would rather gamble on a phone today than have a sure thing in a month.