Forget Acquisitions: Apple control the Supply Lines

http://alexblom.com/blog/2011/07/forget-acquisitions-apple-control-the-supply-lines/

by AlexBlom • 15 years ago

63 60 15 years ago

pyre2• 15 years ago

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.

MikeCapone• 15 years ago

You can see it as that, or as a very savvy business decision to keep margins high and build a moat by giving them an advantage over their competitors.

Either way, it's a smart move.

pyre2• 15 years ago

It's both. They are pulling a shrewd business move, which is also providing funding to propel the industry forward.

pedalpete4• 15 years ago

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?

rbranson• 15 years ago

I don't think Apple is directly behind these innovations, but they finance it and make things feasible at industrial scale.

Apple is basically doing what Wal-Mart did for the retail supply chain: they aren't sitting around waiting for their vendors to bring them product, they figure out what will sell and demand it from their suppliers, using their fantastic capital resources to make it a sure thing.

jonhohle• 15 years ago

> 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.

micampe• 15 years ago

> 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.

You hear this story a lot, but I don't understand: did Apple buy all 10" screens from all display manufacturers in the world?

shaggyfrog• 15 years ago

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...

sjs3• 15 years ago

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.

softbuilder2• 15 years ago

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

redthrowaway5• 15 years ago

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.

jbrennan2• 15 years ago

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.

esrauch4• 15 years ago

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.

nostromo• 15 years ago

Interesting to note, thanks. Out of curiosity, when I read the BBC I see Apple written as singular -- any thoughts on why? (Ex: http://news.bbc.co.uk/2/hi/8435767.stm http://news.bbc.co.uk/2/hi/business/4625262.stm)

redthrowaway5• 15 years ago

Taking Apple as an example, a quick search of British sites yielded the following:

http://www.independent.co.uk/travel/news-and-advice/inside-t...

http://www.bbc.co.uk/news/business-14196153

http://www.bbc.co.uk/news/business-14181329

http://www.guardian.co.uk/technology/2011/jul/18/apple-htc-a...

...all of which use Apple as singular. In fact, I didn't come across any article that used Apple as plural.

kalleboo2• 15 years ago

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).

sjs3• 15 years ago

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• 15 years ago

They are good at copying...

seen this? http://9to5mac.com/2011/07/18/family-ties-earn-this-smart-co...

kalleboo2• 15 years ago

Samsung don't copy technology from from Apple, despite their designs being somewhat... inspired by them. They're up there with everyone else battling on the forefront of component development, e.g. bright colorful S-AMOLED displays, better camera sensors, etc.

pedalpete4• 15 years ago

I don't think this forgets Samsung, as in certain occasions Apple is buying so much product from Samsung that they are essentially buying up all the product from the factory.

I don't think the key is necessarily that Apple has invested in this factory or that one, but more that they have locked up the market so competitors can't get the same components.

hnsmurf• 15 years ago

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• 15 years ago

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

stellar6782• 15 years ago

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.

AlexBlom• 15 years ago

Note: Mostly differences between American and British English.

guelo3• 15 years ago

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

esrauch4• 15 years ago

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...

guelo3• 15 years ago

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.

snupples• 15 years ago

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• 15 years ago

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.

hop2• 15 years ago

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.

mahyarm3• 15 years ago

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• 15 years ago

"they weren't released is because nobody was willing to buck the PC status quo of not having resolution independence"

Quintuple Negative!

hop2• 15 years ago

Ultra high res displays are extremely expensive - 4K monitors are over $10k. Apple will democratize them by having a better manufacturing process to make them a few hundred or less. Plus, i would bet Apple can bake in resolution independence into OSX far quicker than Redmond will.

aresant• 15 years ago

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?

Forget Acquisitions: Apple control the Supply Lines

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