Wouldn't it make sense for Apple to start buying up manufacturing capacity?

[desura]

Just directly own it? Part of the reason that rivals were able to so quickly catch up (and arguably eclipse) the iPhone is because Apple sources so many of its parts from 3rd party suppliers, who then I assume used the expertise gained and capital investments to also sell to others, or make their own, like Samsung

When they make their own parts, like the A7 processor, no one else can touch it.

This would basically raise a "moat" around its business. I mean, their cash levels mean that they have enough to buy Samsung, no?

 

[Zaap]

I mean, their cash levels mean that they have enough to buy Samsung, no?

HAHA...!

No.

 

[MongGrel]

He he he.

 

[ChAoTiCpInOy]

They're fine with the current arrangement. Foxconn or others own the plant and the workers, but Apple purchases the equipment necessary to produce the items.

 

[FoxFifth]

... I mean, their cash levels mean that they have enough to buy Samsung, no?

They are in the ballpark. Cash reserves of $158B and Samsung has a market cap of $187B.

 

[SKORPI0]

OP, are you kidding? :whiste:

Apple, Inc.
Founded April 1, 1976, Cupertino, California
Revenue

US$ 170.910 billion (2013)
[2] Operating income

US$ 48.999 billion (2013)
[2] Net income

US$ 37.037 billion (2013)
[2] Total assets

US$ 207.000 billion (2013)
[2] Total equity

US$ 123.549 billion (2013)[2]

Samsung
Founded - 1938
Revenue

US$ 327 billion (FY 2013)
[1] Net income

US$ 30.1 billion (FY 2013)
[1] Total assets

US$ 590.4 billion (FY 2013)
[1] Total equity

US$ 256.3 billion (FY 2013)[1]

 

[dma0991]

From the Jony Ive biography book that I read, Apple used to have manufacturing facilities in the past but they were sold. It makes no sense for Apple to have Foxconn's manufacturing capacity as they wouldn't need to bear the cost of maintaining such facilities and be more flexible in terms of the desired output.

Foxconn can allocate manpower that isn't used by Apple to other companies that require products to be manufactured but an Apple owned manufacturing facility will only manufacture Apple products and they won't have the flexibility of making use of the unused manpower.

Apple can choose to make everything under one roof it they desired but does making every component outweigh the cost needed to spend in acquiring talent and development time?

 

[mikegg]

Just directly own it? Part of the reason that rivals were able to so quickly catch up (and arguably eclipse) the iPhone is because Apple sources so many of its parts from 3rd party suppliers, who then I assume used the expertise gained and capital investments to also sell to others, or make their own, like Samsung

When they make their own parts, like the A7 processor, no one else can touch it.

This would basically raise a "moat" around its business. I mean, their cash levels mean that they have enough to buy Samsung, no?

Absolutely not. The reason why they use suppliers and rely on 3rd parties is because of competition. Companies compete for contracts with Apple. They'll lower their prices, improve process, improve quality over time because they are competing.

This was basically how Toyota came to dominance.

 

[Zaap]

OP, are you kidding? :whiste:

It's not just laughable from a $ standpoint, its laughable from an international standpoint.

You may as well ask if Apple has enough cash to buy a quarter of South Korea, and if anyone would actually agree to sell it to them even if there was some way in hell that they did.

The answer is a big laughable no.

 

[Rakehellion]

They are in the ballpark. Cash reserves of $158B and Samsung has a market cap of $187B.

That's like a college kid taking out a loan to buy a brand new jetski. A completely unnecessary purchase. They should buy Intel instead. :awe:

An Apple-owned Samsung would make a pretty badass monopoly though.

 

[Rakehellion]

Though Apple has been scooping up a lot of businesses over the past few years.

I think they have enough on their plate right now with the Beats acquisition.

 

[desura]

Foxconn can allocate manpower that isn't used by Apple to other companies that require products to be manufactured but an Apple owned manufacturing facility will only manufacture Apple products and they won't have the flexibility of making use of the unused manpower.

That's the point I"m trying to get at in the OP. Why did Apple's lead with the iPhone 4 and iPad 2 evaporate so quickly? Because it didn't have exclusive access to the factories. They used contract factories, which then made phones for other manufacturers using the gained know-how.

Hypothetically, if Apple had been able to own the factories from the time of the original iPhone to today, then it is plausible that Samsung would never have been able to come up with the galaxy line at all.

 

[dma0991]

That's the point I"m trying to get at in the OP. Why did Apple's lead with the iPhone 4 and iPad 2 evaporate so quickly? Because it didn't have exclusive access to the factories. They used contract factories, which then made phones for other manufacturers using the gained know-how.

Hypothetically, if Apple had been able to own the factories from the time of the original iPhone to today, then it is plausible that Samsung would never have been able to come up with the galaxy line at all.

How difficult would it be to walk up to a store, buy an iPhone, disassemble it and get your engineers to reverse engineer it? There's no point in having secrecy at the factory level when the parts are readily available; just some assembly required.

The first iPhone itself doesn't stray far from the basic set of components (cellular, CPU, memory, etc)necessary for a functioning phone. It is unlikely that you couldn't find the same basic set of components found in a typical phone prior to the iPhone.

Stiff competition aside, the barrier of entry into the smartphone market isn't as difficult as competing against Intel in making a better CPU. It is in fact so easy to enter that not only do we have major international brands (Samsung, LG, Apple, etc) in the market, there are also local brands (Xolo, Xiaomi, Oppo) which just serve to prove that anybody with sufficient knowledge about it can repackage basic components into a sellable product.

 

[Zaap]

That's like [UCLA] taking out a loan to buy [Harvard]

A little closer to scale of ridiculousness.