Handtops, UMPC - Shipping delays

Shipping delays – the bane of the computer industry.

As a software developer, I know all about shipping delays, and the almost super human effort that goes into trying to avoid them, to no avail. Murphy is alive and well and visits almost daily.

Although not alone in suffering from this problem, the computer industry tends to be beset by it more often than most, and more often than not, for that matter.

Shipping delays can be caused by any number of factors, ranging from natural disasters to human error, but what ever the cause, the computer industry just does not seem to get it right most of the time.

The hot topic with regard to this at the moment is of course the delayed shipping of the much anticipated OQO Model 02. Comments about the delays have been made attributing the cause to all manner of reasons, ranging from an evil conspiracy on the part of OQO to plain bad planning.

While I doubt that either extreme is accurate or true, the negative sentiment generated by these delays is a PR nightmare. It is also a no win situation. Tell everyone what is going wrong, and why the delays are happening, and you risk diminishing confidence in the product, or even being dubbed a liar. Tell no-one anything, and you have people angry about being kept in the dark, and diminish confidence in your organisation. Tell people a little, and you risk wild speculation, and diminish confidence in your product and organisation.

What is the alternative? Don't pre-announce the product or take pre-orders. In many ways, that is worse than suffering the fallout from the delays, especially for a small company like OQO.

With no advanced announcement of a new product, or no time frame for the product (i.e. Flipstart), the market is likely as not going to buy something else. While there are those who are financially fortunate enough to be in a position to purchase every new device that comes onto the market, (and has access to them) most of us are limited in what we can afford, and have to be selective about our expenditure. Once we have bought a unit, there is little chance that we are going to buy another one shortly there after. Companies know this, and unless they are trying to create a new market, they try to avoid such situations.

The second reason to have advanced notice is to create excitement and, to coin a term, anticipation of purchase in the market. This attracts new client, and convinces old clients to upgrade. It takes time to create awareness of a new product, and to achieve any depth of market penetration. Particularly where advertising budgets are small, and one is serving a niche market, this is needed.

Another reason for advanced notices and pre-orders is simple, to sell as many products from the first production run as possible. While even large companies need to look at cash flow, this is particularly relevant to smaller companies with more limited resources. It costs way too much to build a whole lot of units, and have them ready to ship, before announcing that you have them. By the time the market has reacted to advertisements and press notices, the cost of not selling the units in stock can easily wipe out the profit made on the sales of the units. One has just to look at the Dell business model to see how effective it is to carry a low level of inventory. The converse is also true.

And finally, it is difficult to keep a new product secret past a certain point, especially if one is a small company that needs to outsource for components, arrange for shipping to distributors, create advertising campaigns etc. Most companies want to be able to control the initial announcement of their products, and “spin” them in the desired direction. So at some point before full scale production begins, they have to make an advanced announcement about the product.

So it is pretty obvious that advanced announcements are necessary and desirable. That leaves the question, how far in advance, and what form?

It is impossible to say how far in advance is too far in advance. The smaller the company, the more niche the market, and a number of other considerations all point to an advanced announcement that is fairly far ahead of the intended product ship date. That is countered by the possibility of the public loosing interest in the product, and the buzz dying down if the product is announced too far in advance. The other question, how much information, is more difficult to answer than when. Too much information, and interest is lost when no new details become available. Too little information, and you risk an adverse reaction. And one piece of information that seems to be essential is the product launch and/or product shipping date.

If one has to make an advanced announcement, and one has to at some time prior to the shipping date, tell everyone when that is going to be, why not simply give oneself enough slack to make sure that one can meet that timetable?

The answer to that one is simple: with very few exceptions, everyone thinks that that is what they are doing. When shipping dates are announced, they seem to be generously timed to allow them to easily be met. So what goes wrong?

While it differs from case to case, there are a few fundamental factors that affect the computer industry as a whole. The first is the headlong pace of development in the industry. If you take too long to develop and ship your product, it will be out of date before it ship's. This means that development often continues on the product long after the product is announced, and even the shipping date is set. How long it takes to develop something is similar to how long is a ball of string. So development problems can result in delayed shipping.

The second fundamental issue is the cost of the units. The units are high value items, developed at high cost, and sold at a slim margin. In order to make a profit, it is necessary to ship the units as soon after they are built as is possible. So shipping dates are based to a great extent, all other factors considered, on this principle. Consequently, any type of delay in the production process will result in a shipping delay.

And finally there is the little matter of out-sourcing. Almost without exception, companies have to out source most of the components for their units. Due to the previously mentioned cost factors, it is not possible to stockpile all the necessary components and start production once one has everything in place. So any delay of delivery from any of a large number of suppliers will result in production delays, that in turn will result in shipping delays, and all of these are out of the control of the manufacturer.

If one looks at it objectively, and earthquake in Indonesia can result in shipping delays on the OQO Model 02. This might be because the rubber needed to produce the shock mounting for the hard drive is obtained from Indonesia, shipped in turn to China to be manufactured etc. Units like the OQO Model 02 can not be shipped incomplete. They have to be finished, properly working, fully functional and error free. Until the manufacturers can achieve this, within budget, they can not ship.

So although shipping delays are without any doubt some of the most irritating and frustrating occurrences (or non occurrences) that can happen, in the computer industry at least, it would seem that they are also all but unavoidable.