

Forget Acquisitions: Apple control the Supply Lines - AlexBlom
http://alexblom.com/blog/2011/07/forget-acquisitions-apple-control-the-supply-lines/

======
pyre
Say what you will about Apple, but if this is true, they are definitely
putting their money where their mouth is with respect pushing progress in
tech.

~~~
pedalpete
I'm not sure I agree,

Apple has done a very good job of taking the technology others have created
and building them into a product and marketing that product so people want it,
but are they pushing for new tech?

They used touchscreens that others had developed. If the touchscreen wasn't
available, would Apple have created it?

What is the 'cutting edge' technology in Apple products? I think it is mostly
commodity components engineered into their products.

The difference with respect to choking the production lines is that when a
manufacturer comes to Apple or Apple sources a product from them, they take
almost all the stock meaning others can't get that product.

For example, the 10" screen on the ipad, from what I've heard, other
manufacturers had a difficult time getting that size screen for a year. but is
that really Apple pushing the progress in tech?

Someone more knowledgeable than I could shed some light on this possibly
choking technology progress.

For instance, CES 2010 showed lots of tablets before Apple announced the iPad.
It took a year for many of those products to get to market, and I believe part
of that was due to the limited availability of the screens.

Is that Apple pushing innovation or slowing innovation as others are unable to
develop products?

~~~
jonhohle
> For instance, CES 2010 showed lots of tablets before Apple announced the
> iPad. It took a year for many of those products to get to market, and I
> believe part of that was due to the limited availability of the screens.

There were a lot of products speculating what the iPad was going to be, but
were no where near ready for mass production. Just because Apple (or any other
company with tight lips) doesn't show you what they're working on until they
ship doesn't mean they aren't ahead of the competition.

~~~
yardie
Apple doesn't announce products at CES. If you haven't noticed they don't even
participate in these events anymore. A lot of product gets announced at CES,
but most of it doesn't make it to market (especially amongst the smaller tech
companies who use CES as a way to raise funding). The iPad was announced and
shipped one month later. A lot of CES tablets were announced and shipped 6-9
months later.

The $499 price point was absolutely devastating to every other tablet maker
because up to then they were assuming Apple would price it at $800-1000. Which
meant they could price it at 600-800 and have comfortable margins. Their
announcement one month after CES sent everyone scrambling back to the drawing
board.

Except for the Archos, I can't remember a single tablet from CES 2010.

~~~
masklinn
> Apple doesn't announce products at CES.

More than that, Apple does not announce products unless they have to (because
they need developers to start working on it right now so everything's ready
for release for instance).

------
shaggyfrog
Philip Elmer-Dewitt had a better write-up (based on the same Quora post) a
couple of weeks ago:

[http://tech.fortune.cnn.com/2011/07/05/how-apple-became-a-
mo...](http://tech.fortune.cnn.com/2011/07/05/how-apple-became-a-monopsonist/)

~~~
sjs
May as well just go to the source and listen to Horace Dediu's podcast.

(slightly ranting tangent)

The "pros" can't make a working link nor can they link to the appropriate
page. First link to 5by5 is broken and why link "5by5 networks" to
5by5.com/live? No good reason if you're at all familiar with the web. These
people must be incompetent and I'm not using the word lightly. The writers who
publish these articles should be able to link things properly. It's CNN, they
just hire a dedicated link checker if nobody else is able to do it. Millions
of ordinary people links things properly on their blogs every day but the
people who do it for a living can't get it right.

Supposed professionals who blunder trivial and ordinary tasks ... sounds like
material for TheDailyWTF.

------
hop
They will have retina display iPads and computer monitors 2-3 years before any
competitors can do it at similar scale or cost by paying the upfront capital
for an ODM to build the factory.

And it's basically a proxy for having their own factory, which they directly
control (classic Apple), but without their name tied to the negative aspects
of it.

~~~
mahyarm
Sony and many other LCD projector makers have been making high pixel density
LCDs since the 90s (think 1024x768 on an square inch). And there has been a
smartphone out shortly before the iPhone 4's release date that had a 300+ dpi
by some major manufacturer. LCD's major cost isn't pixel density, it's the
size of the glass. The reason why they weren't released is because nobody was
willing to buck the PC status quo of not having resolution independence (or
doubling, like apple did it) since it would miniaturize everything to be
irrelevant, making it not sell well. People who needed to see a lot of detail
got specialized displays.

Plasma displays it's more the pixels, which is why large 720p plasmas are
cheaper.

Samsung is also a huge company with south korean government backing, they can
raise the capital to make whatever improvements apple contracts them out to do
and make a shadow factory at the same time.

~~~
misterbee
"they were _n't_ released is because _nobody_ was willing to _buck_ the PC
status quo of _not_ having resolution _in_ dependence"

Quintuple Negative!

~~~
mahyarm
Yes sir, I am a native speaker of english. That is a rule up with which I will
not put.

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kalleboo
Doesn't this article forget Samsung, who themselves manufacture a lot of the
major components that make up a modern phone (display, flash memory, camera,
etc).

~~~
sjs
If Samsung doesn't catch wind of the new component or can't study it until
it's released to the public then Apple is still ahead until Samsung can
duplicate the manufacturing process. They are good at copying but some things
just take time, how long I'm not sure (but am curious if anyone here does
know).

~~~
cubicle67
_They are good at copying..._

seen this? [http://9to5mac.com/2011/07/18/family-ties-earn-this-smart-
co...](http://9to5mac.com/2011/07/18/family-ties-earn-this-smart-cover-knock-
off-a-samsung-certification-and-a-place-on-their-store-shelves/)

~~~
sjs
Yes, to be fair that's not made by Samsung. Since everyone else is speculating
though... I agree their hand in its creation was probably non-trivial.

------
snupples
Interesting stuff.

However, I disagree completely with the statement that Apple's software is
superior. Superior to what? Everything? No.

The user experience is excellent in the same manner that McDonald's is.
McDonald's at one time provided an "innovative" customer experience, and so
did Apple in 2007 with iOS. The McDonald's "UI" is not truly innovative or
necessarily superior anymore, but it's always consistent. Same with iOS.
Consistent, but not necessarily superior given all the choices.

~~~
fabjan
Or the user experience is superior as in you bought a car that just works and
you don't have to service. As opposed to, say, a kit-car that you can build
yourself if you like cars that much, and you have much better control over.

------
softbuilder
Reminds me of what I heard about Nolan Bushnell buying up entire production
runs of chips from manufacturers to keep Atari's competitors hobbled.

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aresant
Jobs has had full supply line / vertical integration in mind for decades.

NeXT reflects his vision, down to raising a stunning amount of cash to build a
factory for the hardware with NeXTs building NeXTs (circa 1986) - beautiful
vid of that process <http://www.youtube.com/watch?v=jhfUKEu7sJ0>

There's a remarkable MacWorld keynote that I just wasted 15 mins trying to
find where he lays out, blow-by-blow, his vision for returning to total
vertical integration (posted years back) - anybody have that handy?

------
guelo
More propaganda. If they are so much smarter and so far ahead why are they
running scared suing their competition?

~~~
esrauch
Pretty much every company is perpetually suing every other company. If a
company didn't exert all the legal advantages they can get, the other
companies still will and you will end up at a disadvantage when you otherwise
wouldn't be.

Apple is considered to be the most valuable company in the entire world right
now. Not exactly a company that is an underdog.

Source:
[http://www.cnbc.com/id/41473211/Apple_Is_Most_Valuable_Compa...](http://www.cnbc.com/id/41473211/Apple_Is_Most_Valuable_Company_on_Earth_Analysts)

~~~
guelo
Google isn't suing any competitors. Apple can see the writing on the wall,
Android is beating them fair and square, no matter how much they supposedly
overinvest in their supply chains (the touchscreen supply thing happened a
couple years ago but for some reason people keep bringing it up) they are
losing in the marketplace so they're bringing the courts into it. And of
course their hype machine is in full drive.

~~~
robryan
By what metric? Phones activated? Apple doesn't care about having a large
percentage of the market, as we have seen with OSX/ Macs over a long period of
time. Each phone purchase/activation has far greater lifetime average profit
than what Google get for each android activation.

~~~
pedalpete
Can you provide some metrics to back-up that comment?

Google revenue on Android is through advertising revenues built into google
search being the default.

What is Apple total lifetime device revenue vs. Android?

~~~
halostatue
Horace Dediu's latest article ("A new way to value Apple",
<http://www.asymco.com/2011/07/18/a-new-way-to-value-apple/>) gives some
suggestions that Macs, iPhones, and iPads represent upwards of $225 recurring
revenue per user to Apple. All iOS users are worth about $150/year/user
([http://www.asymco.com/2011/06/30/how-much-is-an-ios-user-
wor...](http://www.asymco.com/2011/06/30/how-much-is-an-ios-user-worth-to-
apple-about-150-every-year/)).

Finally, his Rawr Chart (<http://www.asymco.com/2011/05/18/the-rawr-chart/>)
shows profit per phone sold. The picture isn't pretty for non-iOS devices.
It's not quite answering your question, as it doesn't break out Samsung's
"feature" vs Android vs Bada (as an example), but the best example is HTC --
which appears to be just under $60 profit per phone (and IIRC HTC is mostly
Android, isn't it) with less volume than Apple (which makes ~$275 per iPhone
sold).

EDIT: small clarification. The Rawr chart doesn't break out handset maker
profits by phone classification, so only Apple and RIM are the only ones who
have profit for smartphones only, and _maybe_ HTC. The others have diluted
information because they sell more than just smartphones.

~~~
pedalpete
That is a great resource halostatue, and they do a great job of explaining the
revenue per device figures for iOS.

Compared to this article [http://aseidman.com/2010/05/65000-new-android-
devices-ship-e...](http://aseidman.com/2010/05/65000-new-android-devices-ship-
each-day-how-much-are-they-worth-to-google/) which estimates that each
iOS/Android user is worth only $2.64/year/user. Though I'm not sure I trust
the authors methodology, and that number seems extremely low.

------
redthrowaway
With all due respect to the author, some editing is in order. The many grammar
mistakes in the article make it hard to read. Most of it comes down to the
fact that "Apple" is singular, not plural, but there are some general writing
level issues there, as well.

~~~
jbrennan
It depends which country you're from. In North America we tend to refer to
companies as singular, but this is not so common in the UK for example, where
they're usually referred to as plural.

~~~
esrauch
Despite the title feeling weird when I read it, it is actually pretty common
to refer to companies as "they" in the US (see other comments in this very
thread!) Which is really crazy; you end up with sentences like "Apple is
smart; they are getting a huge competitive edge by doing this" where you refer
to the company as singular and plural in the same sentence.

~~~
redthrowaway
"They" can be singular or plural. It can easily refer to a single entity that
is gender ambiguous (like a company, team, etc)

~~~
chimeracoder
People say that, but it is grammatically incorrect.

~~~
neild
A few examples of the singular "they", courtesy of Wikipedia:

 _Eche of theym sholde ... make theymselfe redy. — Caxton, Sonnes of Aymon (c.
1489)

Arise; one knocks. / ... / Hark, how they knock! — Shakespeare, Romeo and
Juliet (c. 1595)

'Tis meet that some more audience than a mother, since nature makes them
partial, should o'erhear the speech. — Shakespeare, Hamlet

I would have everybody marry if they can do it properly. — Austen, Mansfield
Park (1814)

That's always your way, Maim—always sailing in to help somebody before they're
hurt. — Mark Twain, Adventures of Huckleberry Finn (1884)

Caesar: "No, Cleopatra. No man goes to battle to be killed." / Cleopatra: "But
they do get killed". — Shaw, Caesar and Cleopatra (1901)_

The singular "they" has extensive precedent. Some proscriptive grammarians
feel that it should be disallowed, but given the usefulness of a neutral
pronoun and the venerable history of the usage, I think they may be safely
ignored.

~~~
esrauch
I think that is a little bit misleading; I am fairly certain that there are
plenty of examples of nonstandard usage in works by any of those authors that
you would absolutely not accept as correct. Particularly Shakespeare, who is
well known for using common parlance in his works rather than proper English.

------
hnsmurf
Not to be grammar police, but either this guy is allergic to his "s" key or he
thinks Apple is plural. The tile of the post, "But Apple make fewer
acquisitions", "Apple over-invest in their supply chain", Apple pay a
significant portion" makes me think that he thinks the plural for Apple is
Apple.

~~~
spicyj
In countries other than the US, it is standard to treat corporation names as
plural.

~~~
stellar678
Which is really intriguing in light of the Citizen's United court case and our
general promotion of the concept of corporate personhood. That a corporation
is its own entity rather than a representation of the interests and rights of
the people who run it.

~~~
DavidSJ
People keep saying that the Supreme Court ruled, in the Citizens United case,
that corporations are people. No one has ever actually produced a quote from
the court's opinion suggesting so.

In fact, the ruling was precisely _that_ corporations are representations of
the rights of their owners, and therefore conduits for their owners' exercise
of free speech.

~~~
stellar678
How cool, let's dump a bunch of downvotes on something because we disagree
with one part of it.

The point was that it's interesting that American English treats a corporation
as a single entity but British English treats it plurally (i.e. as a proxy for
the people controlling it).

