With the release of the 4th generation iPhone dominating the news, the smart phone industry has been buzzing lately. Apple successfully shipped 1.7 million devices in the first couple weeks of release. However, it wasn't completely smooth sailing for Apple. During the first days of preordering, Apple had their share of problems. It was widely reported that the ordering systems were faulty, either outright not allowing people to place orders, or worse, having corrupt systems which displayed other customers' confidential data to the wrong people, including credit card and address information. That being said, it wasn't entirely Apple's fault. In reality, it was AT&T's ordering systems that could not handle the load, and crashed, which put some more egg on the face of Apple (as it is already criticized for being on a failing AT&T network).
I will not get into the rest of the problems with the iPhone (you are holding it wrong) in this post.

Those problems shadow in comparison to the problems that HTC has been facing. HTC has set a lofty, yet realistic (based on past performance), goal of achieving 40% of the smart phone market by 2011. However, their supply chain problems are interfering with their goals.

HTC dropped the 'HTC Incredible' Android phone on Verizon all the way back in April. The Incredible was a highly anticipated device being one of the first Android phones on Verizon's network sporting a 1ghz processor and a 8 megapixel camera, capable of recording in 720p HD. This phone is one of the few contenders in Verizon's arsenal that could compete with the overwhelming success of the iPhone on AT&T. However, the phone has yet to gain a dominating presence in the marketplace because Verizon does not have the ability to ship them, due to having no inventory. Verizon has no inventory because HTC has no inventory of the OLED display that is used in the phone. The OLED display is in shortage because Samsung (the sole manufacturer) has not been producing the quantities necessary, and has been redirecting some of their own manufacturing capacity into developing OLED displays for their own Andoid Phones (Galaxy S), which should be hitting the market soon.

It doesn’t stop there. HTC then dropped the Evo on Sprint back in the beginning of June. The Evo was one of the industry’s most anticipated devices, as it was the first U.S. domestic phone to operate on Sprint’s 4G WiMax network. However, the Evo suffers from the same OLED shortages, and HTC cannot meet Sprint’s demand either.

So in each of the cases above, each provider suffered failures with their supply chain. In Apple’s case, they had mud on their face for a couple days, but fortunately for them, the loyal consumers of Apple products have an uncanny ability to forgive and forget any negative news on their beloved company. In HTC’s case, they not only lose confidence in their customers (who are Sprint and Verizon), but they let their direct competitors come to market with devices that directly compete with their own. Motorola is set to release the Droid X and Droid 2 on Verizon in the next month, and presumably will not experience the same problems HTC faced in shipping products out the door. Verizon and Sprint suffered directly in many cases as educated buyers, who had expired contracts, were not able to purchase the phone they needed from the carrier they wanted and switched to the iPhone and AT&T due to its immediate availability.

The moral of the story: when you are analyzing your sources of supply, remember to take that extra step and analyze your supplier’s supply chain as well.