Apple Operations: Supply Chain Management

[badb0y]

To really understand how Apple works I recommend reading Walter Isaacson's biography, "Steve Jobs."

It's actually quite funny how little people remember about touchscreen phones pre-iPhone. Most smartphones had keyboards and a stylus and the most popular smartphones were like the Blackberrys. It wasn't until Apple pushed into the market did other people really focus on touchscreen phones.

More will be posted later on this, now I have to work .

 

[akugami]

I disagree with saying the touch screen phones similar to an iphone experience would have made it to the market irregardless of apple in due time.

The technology was always there. Apple refined it, sure.

But the biggest barrier to innovation was the carriers' lockdown and totaliarism like control of the experience. Remember, everybody before the iphone were the carriers' bitches. Apple is the only company that had enough clout to negotiate a deal in which they got full control over the phone. This was huge.

As the iphone became successful, it became clear that the carriers had to budge and allow things like the app market on android because otherwise the android phones wouldn't be competitive. Apple effectively breached into the carrier's walled garden and opened the floodgates to innovation in the mobile space.

Beyond the hardware/software innovations, it's Steve's negotiation tactics with the carriers we should all appreciate.

Apple leveraged the iPod brand and it helped every cell phone owner.

In many respects, this opened the door for Android to be a more open and free system. Without it, I think Android would have met massive resistance from the carriers. Not in actually supporting Android but in having Android be as open as it is. There would have been all sorts of carrier lock-ins.

Ruthless? Pretty damned brilliant if you ask me. What's better than cutting costs? Cutting those costs and never having to trickle it down to the consumer. If people are willing to pay high prices, then let them pay those prices. It's just throwing money away if you cut prices before the market says you should.

It's ruthless though. I mean, they're even controlling how much the suppliers are making! They're maximizing their profits, and not having to pass the savings on to the customer. At least Wal-Mart has to cut prices down to cut-throat levels to stay in business and keep their sales volume. It's absolutely brilliant from a business perspective. But that's still pretty damn ruthless if you're a supplier. If I was a supplier I'd be torn between making a lot of money guaranteed, even if the percent earned is peanuts, vs freedom and higher margins.

 

[WelshBloke]

To really understand how Apple works I recommend reading Walter Isaacson's biography, "Steve Jobs."

It's actually quite funny how little people remember about touchscreen phones pre-iPhone. Most smartphones had keyboards and a stylus and the most popular smartphones were like the Blackberrys. It wasn't until Apple pushed into the market did other people really focus on touchscreen phones.

More will be posted later on this, now I have to work .

Wasn't that just because resistive touchscreens were more available then?

 

[Pliablemoose]

The thing Wal Mart does that Apple does not is bleed it's supplier/manufacturer dry, then buy them out for pennies on the dollar.

 

[LikeLinus]

Dude, 404 on your logic, Apple killed the early tablet market, Intel had to jump start the Ultrabook market with millions...

Without Apple to push the industry, many products you take for granted wouldn't even exist.

I'll grant you tablets are big today in part because of the iPad, but other that, what product did they create that did not exist prior????

 

[Ns1]

ah f it n/m, this post deleted

 

[Pliablemoose]

Do you honestly believe a lot of the Apple BS you spew?

I'll grant you tablets are big today in part because of the iPad, but other that, what product did they create that did not exist prior????

Meh, semantics, how about "wouldn't exist in their current form"

 

[LikeLinus]

Meh, semantics, how about "wouldn't exist in their current form"

So you think no one would have created the current touchscreen (Multi Touch and Captive)type device if Apple had not created it? Several companis were already going that way with devices. The issue is that the technology hadn't caught up yet. People were using resistive touchscreens and limited by that. It was only a matter of time for it to all come together.

They def helped advance the smartphone, but it's not something that no one else wouldn't have done eventually and were already headed that way. Someone is always going to be first.

 

[alent1234]

The thing Wal Mart does that Apple does not is bleed it's supplier/manufacturer dry, then buy them out for pennies on the dollar.

Wal mart didn't bankrupt vlassic

Wal mart has special cheaper models of products made for their stores. Not like they sell the exact same thing and force the manufacturer into a lower price

 

[Pliablemoose]

So you think no one would have created the current touchscreen (Multi Touch and Captive)type device if Apple had not created it? Several companis were already going that way with devices. The issue is that the technology hadn't caught up yet. People were using resistive touchscreens and limited by that. It was only a matter of time for it to all come together.

They def helped advance the smartphone, but it's not something that no one else wouldn't have done eventually and were already headed that way. Someone is always going to be first.

Yes, let's all play "what if...."

 

[LikeLinus]

Yes, let's all play "what if...."

I thought we were playing no other devices would exist if it wasn't for Apple???

 

[cheezy321]

So you think no one would have created the current touchscreen (Multi Touch and Captive)type device if Apple had not created it? Several companis were already going that way with devices. The issue is that the technology hadn't caught up yet. People were using resistive touchscreens and limited by that. It was only a matter of time for it to all come together.

They def helped advance the smartphone, but it's not something that no one else wouldn't have done eventually and were already headed that way. Someone is always going to be first.

This kind of circular reasoning is why there are so many useless arguments in the GG&P forum.

 

[Larries]

So you think no one would have created the current touchscreen (Multi Touch and Captive)type device if Apple had not created it? Several companis were already going that way with devices. The issue is that the technology hadn't caught up yet. People were using resistive touchscreens and limited by that. It was only a matter of time for it to all come together.

They def helped advance the smartphone, but it's not something that no one else wouldn't have done eventually and were already headed that way. Someone is always going to be first.

It is not about technology. Microsoft has been trying to make tablet PCs a long long time ago. Companies have been trying to make UMPCs for a long time. Nokia has been trying to make a phone that can game.

It is about the design of the device and about the corporate strategy. If Apple didn't push hard on the appstore, the iPhone wouldn't be as successful as it is today.

And that is what makes it hard to execute. Because the success of the iPhone is a combination hardware and software.

Edit: also, since the release of the iPhone, it is pretty much obvious that the technology for the tablet is already in place. But why didn't Samung release the Galaxy Tab BEFORE the iPad?

 

[badb0y]

Late 2010:

Late 2011:

Natural progression of technology my ass they literally copy + pasted the MBA design lol

EDIT: http://www.youtube.com/watch?feature=player_detailpage&v=BWMXyXibCxU#t=470s
Oh my it's worse then I thought lol. Does Apple have a patent on this?

 

[akugami]

Let's keep the copying stuff out of this thread guys. We are talking about Apple's downright ruthlessness in supply chain management. I think this was interesting because it also affects other suppliers like HTC who may be looking for parts. Probably less so on Samsung who manufactures many of their own parts from different arms of the company.

 

[Ns1]

what a great article.

 

[Zaap]

Natural progression of technology my ass they literally copy + pasted the MBA design lol

It's already been pointed out Apple didn't invent the form factor in the first place.

By the way, Intel, not Apple coined the term Ultrabook and pushed for their development. The term is even an Intel trademark. Yup, natural progression of technology.

 

[Phynaz]

It's ruthless though. I mean, they're even controlling how much the suppliers are making!

That's not really anything new. It works this way for most / all manufacturers.

For example in the automotive world, let's say you negotiate to design and manufacture a dashboard. The auto company automatically reduces they price they pay each subsequent year of the contract. It's not uncommon for the supplier to actually take a loss on the last year or two of a contract in order to get the profitable first few years.

Don't like it? You know all that tooling you designed and bought in order to build the product? It's not owned by you, it's owned by the auto company. They will be happy to come pick up their tooling and deliver it a different supplier.

 

[alent1234]

Late 2010:

Late 2011:

Natural progression of technology my ass they literally copy + pasted the MBA design lol

EDIT: http://www.youtube.com/watch?feature=player_detailpage&v=BWMXyXibCxU#t=470s
Oh my it's worse then I thought lol. Does Apple have a patent on this?

patent on what? did apple or their supplier invent the unibody case?

 

[akugami]

That's not really anything new. It works this way for most / all manufacturers.

For example in the automotive world, let's say you negotiate to design and manufacture a dashboard. The auto company automatically reduces they price they pay each subsequent year of the contract. It's not uncommon for the supplier to actually take a loss on the last year or two of a contract in order to get the profitable first few years.

Don't like it? You know all that tooling you designed and bought in order to build the product? It's not owned by you, it's owned by the auto company. They will be happy to come pick up their tooling and deliver it a different supplier.

Actually, I didn't realize that. Interesting.

 

[poofyhairguy]

Apple's supply chain strangling was more interesting when they had more common parts with the rest of the industry. My first iPhone was almost off-the-shelf parts.

Today the iPhone 4S has a screen no Android phone uses (that I know of). The iPad uses a resolution most Android tablets don't use. Apple uses a special CPU no one uses. Flash memory seems to be the largest commonality.

 

[Wonderful Pork]

It's already been pointed out Apple didn't invent the form factor in the first place.

By the way, Intel, not Apple coined the term Ultrabook and pushed for their development. The term is even an Intel trademark. Yup, natural progression of technology.

Apple has never called the MacBook Air an ultrabook (other people may put it in the same category though). And Intel didn't start using the term until May 2011. MacBook Air was announced at Macworld 2008 in January, and was probably be worked on for a good 2 years prior to that. So a 3-5 year difference between Apple releasing it and Intel announcing Ultrabooks. Likely because it didn't sell so well for 3 years.

 

[Zaap]

Apple has never called the MacBook Air an ultrabook (other people may put it in the same category though). And Intel didn't start using the term until May 2011. MacBook Air was announced at Macworld 2008 in January, and was probably be worked on for a good 2 years prior to that. So a 3-5 year difference between Apple releasing it and Intel announcing Ultrabooks. Likely because it didn't sell so well for 3 years.

And as gone over:

'Ultrabook' was specifically used in this thread as something that wouldn't exist without Apple, when in fact: similar slim notebooks DID exist before Apple's and the very term is a trademark of a company other than Apple. In short: not much that actually supports the claim.

Also in general: pointing up a single product design being copied by Asus isn't a valid argument as to the whole would ultraportables exist or not without Apple, it's a completely separate issue.

 

[Patranus]

Meh, semantics, how about "wouldn't exist in their current form"

Went from a carbon copy of Blackberry (the hottest phone on the market at the time) to a carbon copy of the iPhone (the hottest phone on the market).

 

[Zink]

I can see one major theme developing in the discussion here. With many of these products Apple used strong corporate vision and marketing, combined with its top notch supply chain management to push technological progression forward. A strong unified vision for the future of consumer technology (Jobs) combined with brutally effective supply chain management (Cook) allowed apple to push the "natural progression of technology" to be in full production shipping millions of devices before other companies even knew what the product was.

One part of this is that Apple's vision and marketing effectively defined what the progression of technology has been. It makes sense that ultrabooks are simply the natural progression of technology given the hardware available today but it was Apple that had the vision to define how the technology we had two years ago would be used today. Before the Air there were many competitive options such as netbooks and ultra-portables but none of these companies had the vision or technology to make an "ultrabook" and commit to manufacturing millions of them a year ago.

The technology part of that last point is also very important. The core technologies needed for these products were not available as cheap mass produced parts in quantities of millions before Apple stuck its hand in the supply chain. Apples strategy of taking a vision for a product to the extreme by putting in orders for millions of components pushes mass produced technology forward much faster than it could move otherwise. This supply chain management allows Apple to get consumer technology for a new product months before other companies can because they are supporting a single vision for a product with contracts that represent billions of dollars in guaranteed revenue for manufacturers.

From what I can see it looks like a prefect strategy for consumer technology but it takes a pretty insane level of precision to pull off. The company has to fully commit to one design so failure isn't really an option. Like others have said, the iPad would have been a flop if Apple upper management hadn’t had the vision and control to pull the software, hardware, mass production, marketing, and design aspects into perfect harmony. The HP Touchpad/Palm Pre are obviously a special case given the success of Android products but you can see how even big companies are able to match Apple in so many of these respects and still fail miserably. Some of this is surely that Apple had the vision to be first to market with these types of products but there are many other aspects to these failures that show just how much Apple just has nailed down in the vision and technology department.

powerful vision + supply chain badassery = "natural progression" before it has happened