Women and children wait in line for hours to purchase a small appliance. Customers go hungry and sleep over night in the dirty streets until a darkened store turns on its lights. Even wealthy celebrities are forced to submit to the lack of supply of a desired good. Is this a portrait of a 1980s USSR?

No, it's the Apple store in SoHo.

Apple deliberately broke the rules of supply and demand by not sending enough iphones to Cingular/AT&T stores this week in time for the launch of the revolutionary device. When the word got out that not everyone would be able to be in that first batch of ultra-cool gadget trendsetters, a frenzy of hype immediately rippled through tech blogs. Cultish Apple fans could not bear the thought of not having the shiny cell phone/ipod/internet browser package the second it was made available on store shelves.

One thousand people were at the 59th street store in Manhattan. Spike Lee was among the crowd outside Prince Street. The Philadelphia mayor even tried his best in his town, before he was heckled out of line by spectators and news media.

Many people waited for hours only to end up walking out with a simple piece of paper apologizing that there were no more iphones available that day, but that the customer would definitely get one on Monday. Or maybe Tuesday or Wednesday, depending on shipping times.

Traditional economists would say that Apple failed to maximize profits by missing the supply and demand equilibrium. It seems as though the internet has facilitated a new rule... As long as you can hype up the supply shortage before it occurs, the marketing blitz will ensure an even greater return.

Posted by Michelle Smith on June 30, 2007 10:03 AM