Even then, it wasn't due to being "a master of the supply chain". The 1.8's were very new when they decided to go with it and they were really the only ones using them in large quantities initially. Today, Apple is able to control supply chain dynamics for pretty much almost any component, regardless of how established the supply chain is. Once Apple comes in and says "mine" it is pretty much a kick in the nuts for competitors to try to get supply.
Having said that, Cook has been an absolute genius in getting operations like supply management running like silk.
Though I don't have any evidence to back it up() I have the impression much of their supply chain control is from similar situations like the 1.8 drives. apple sees an opportunity with a technology and commits to large orders to get a good price. When the 1.8s were new no one including apple was using them in large quantities( by definition ). Apple takes a risk(build it and they will come) by commiting to a large order and often it has payed off for them. Everyone else sees the success and goes knocking on doors to get similar components but finds that there isn't any extra capacity immediately.
I'm not sure I understand the distinction between your first and last sentence
[QUOTE=Curmudgeon; Under normal markup, the part that costs $10 less would simply make the retail cost $10 less. [/QUOTE]
That's not normal markup. What your describing is actually no markup at all. Markup is the price going up at each stage of manufacturing ,distributing, and retail sale.
This looks like a first-mover advantage for Apple. Because they stuck with the ultraportable concept and kept refining it, getting it right last year and perfecting it this year, they are ahead of the game.
Perhaps the "Ultrabook" makers need to be a little less wedded to the idea of making carbon copies of the MacBook Air and just making nice ultraportables. The Samsung Series 9 and Sony Vaio Z are two good examples of PCs that don't try to copy the MacBook Air, but instead seek out their own niches.
From Intel's perspective, while they have really pushed the Ultrabook concept, in the end, does it really matter to them whether they sell a Sandy Bridge or Ivy Bridge processor to ASUS or HP rather than Apple? As long as there is demand from the MacBook Air crowd, isn't a sale a sale?
I'm sorry, but until iPods and iPhones propelled Apple into a dominant market position for said devices, Apple was NOT AT ALL known for being a master of the supply chain!! I don't know who counts ~5-7 years as "long"
If you buy in bulk and have a lot of cash that's pretty much all it takes to become a "master of the supply chain for overseas components"
In the 1980s, Apple had a sophisticated JIT manufacturing plant in Fremont CA:
Sorry, but it doesn't help. I think you're reading me or the article backwards. We're not talking about how $10 can add $100 to the price. Instead, we're talking about a savings of $10. A negative number. If something costs $10 less to make at wholesale, how does it end up being $100 less at retail? This is multiples of subtraction. Under normal markup, the part that costs $10 less would simply make the retail cost $10 less. How does it make it $100 less? The fiberglass case being thrown in for free? Is there is some inherent manufacturing technique with fiberglass that saves money over manufacturing with aluminum.
One component of pricing a product is to mark up the product costs based on forecasted sales.
With a low forecast, the markup will generally be higher to meet profit objectives.
Let's assume, that our product with a milled metal case has a total parts cost of $200.
Now, to meet the profit objective for the product, the the company marks it up 400%: parts cost $200 + $800 markup == $1,000 Selling price.
So now, the company decides to use a fiberglass case reducing the parts cost by $20 ($10 x 2).
Our new calculation is: parts cost $180 + $720 markup == $900 Selling price.
Voila! $1000 - $900 == $100 savings.
Admittedly, this is a simplistic example. But many companies will use this as an initial approach -- then test their markup formulae/assumptions
by calculating details -- cost of money, inventory, plant and equipment, handling, manufacturing, warehousing, distribution, sales, G&A... and profit.
I must add that pricing/forecasting is a black art.
When IBM introduced the Selectric "Golf Ball" typewriter in the 1960s it was priced at about $320.
The story was that IBM forecast that they could meet their profit objective with a price of $160.
Finally, the masters of this black art like Apple and Tim Cook -- likely start the process in reverse with a price and profit objective. Then they focus on the details which will allow them to meet these goals with the resources and risk they want to commit.
Then, they continuously monitor/sample and refine the details to assure they attain their goals as the market changes. Certain things are weighted differently than others -- sex (market appeal), integration with other plans, competition, opportunity, etc.
For example, Apple may choose to use an A5 chip in the iPhone 5 where the A4 would be adequate -- by increasing the use of the A5, Apple gains sex appeal, can reduce the A5 cost and apply that to increased margin on the iPad -- or the ability to reduce the iPad price to stave off competition.
The Plastic Industry Council would like to take this opportunity to remind you that plastic is the wonder material of the 20th Century that can be easily produced cheaply and modeled into just about any shape and property.
Though I don't have any evidence to back it up() I have the impression much of their supply chain control is from similar situations like the 1.8 drives. apple sees an opportunity with a technology and commits to large orders to get a good price. When the 1.8s were new no one including apple was using them in large quantities( by definition ). Apple takes a risk(build it and they will come) by commiting to a large order and often it has payed off for them. Everyone else sees the success and goes knocking on doors to get similar components but finds that there isn't any extra capacity immediately.
I'm not sure I understand the distinction between your first and last sentence
The distinction is that Cook, regardless of his genius, was not responsible for the 1.8 choice. That was Rubinstein. Cook perfected their supply chain management, but is a fairly recent phenomenon. He's only been COO since 2007 though he was SVP for a few year before. Describing them as long time 'masters of supply chain management' is a bit of a stretch.
Today, yes they can bet big on a new component, process or vendor and control the market. The difference between the 1.8" drives and today is that Apple was able to 'control' that market only because no one else was using them. Today they can disrupt global supplies for any component or part regardless of how well established the market is. They can take the most common components, like memory, and make th scarce. They didn't have that sort of influence 10 years ago.
With all of the mentions of fiberglass, I haven't seen any comments on fiberglass' durability over time. From the automotive industry, my experience with fiberglass has usually been pretty poor, with products warping/cracking over time and paint spidering. I've also noticed that it tends to be very difficult to get a nice smooth finish on fiberglass (as mentioned previously), which seems easier to do on aluminum. Not that anyone makes dropping their laptop a habit, but I also believe aluminum handles that impact better than fiberglass.
with respect to carbon fiber: as far as I know it, carbon fiber has always been a rigid material, while steel and aluminum are "benders." seems to me that aluminum is better for this application, but I haven't followed this vein of manufacturing for a while, so my knowledge may be out of date.
With all of the mentions of fiberglass, I haven't seen any comments on fiberglass' durability over time. From the automotive industry, my experience with fiberglass has usually been pretty poor, with products warping/cracking over time and paint spidering. I've also noticed that it tends to be very difficult to get a nice smooth finish on fiberglass (as mentioned previously), which seems easier to do on aluminum. Not that anyone makes dropping their laptop a habit, but I also believe aluminum handles that impact better than fiberglass.
You do raise a good point, but cars are used a lot longer than computers, in terms of replacement cycle, 5 years for a computer is akin to 15 years on a car. I think most cars experience a far greater range of temperature ranges than computers.
Quote:
with respect to carbon fiber: as far as I know it, carbon fiber has always been a rigid material, while steel and aluminum are "benders." seems to me that aluminum is better for this application, but I haven't followed this vein of manufacturing for a while, so my knowledge may be out of date.
As I understand it, thin sheet carbon fiber is more flexible than similar thickness of sheet metal. You get your rigidity in curves and bends.
As it is, both materials seem implausible for very thin computers.
Sorry, but it doesn't help. I think you're reading me or the article backwards. We're not talking about how $10 can add $100 to the price. Instead, we're talking about a savings of $10. A negative number. If something costs $10 less to make at wholesale, how does it end up being $100 less at retail? This is multiples of subtraction. Under normal markup, the part that costs $10 less would simply make the retail cost $10 less. How does it make it $100 less? The fiberglass case being thrown in for free? Is there is some inherent manufacturing technique with fiberglass that saves money over manufacturing with aluminum.
The way I understand it is: If we had to get the chassis done in mag-aluminium, we will charge $100 more for the laptop. If we use fibreglass, it will be cheaper than metal, so we will throw the customer a bone and not charge them $100 more.
The distinction is that Cook, regardless of his genius, was not responsible for the 1.8 choice. That was Rubinstein. Cook perfected their supply chain management, but is a fairly recent phenomenon. He's only been COO since 2007 though he was SVP for a few year before. Describing them as long time 'masters of supply chain management' is a bit of a stretch.
Today, yes they can bet big on a new component, process or vendor and control the market. The difference between the 1.8" drives and today is that Apple was able to 'control' that market only because no one else was using them. Today they can disrupt global supplies for any component or part regardless of how well established the market is. They can take the most common components, like memory, and make th scarce. They didn't have that sort of influence 10 years ago.
Ok I think I see what you're saying. I thought you were contradicting yourself in your first and last sentence but you're saying that their skill in the supply chain has been a progression over the years.
I guess what I was talking about (now that i'm thinking more about it) isn't about the supply chain at all but the way apple designs. What parts are available in quantity and making something that sells so well that those quantities are unavailable when others come knocking. Wasn't there an excess of memory on the market 4years or so ago? I guess the difference you're pointing to is that they didn't cause shortages of components like the 1.8 drive (I don't think). Now of course they are not only buying up all there is but possibly helping finance expansion of some suppliers.
This post of mine could have been shorter if I had simply typed "I agree".
Apple clearly want to continue to improve their existing performance in this area, as all manufacturers will have to given the inexorable price rise of raw materials, so I can't imagine them ditching the aluminium any time soon now that they have latched on to it.
Apple, in addition to gaining advantages by setting up long-term purchase contracts with suppliers for key components, also have been reported as direclt partnering with fabricators to set-up the plants, with the result that Apple gets x numbers of years of exclusive production from the plant, after which they simply get preferencial handling and the plant is opened up to supply other interests as well.
Apple, in addition to gaining advantages by setting up long-term purchase contracts with suppliers for key components, also have been reported as direclt partnering with fabricators to set-up the plants, with the result that Apple gets x numbers of years of exclusive production from the plant, after which they simply get preferencial handling and the plant is opened up to supply other interests as well.
Yes. I think they've been doing that at least as far back as the 30" Cinema display. From what I gather, Apple paid a good chunk of money to LG to help them build the factory that makes the panel for the 30", and it was exclusive to them for maybe a year. I think Apple and Compaq kicked in money to Pioneer to make the first of some kind of DVD drive (I forget which kind) and it was exclusive to those two companies for a little bit, so it's a practice that has some precedence. So it's not like Apple is necessarily squeezing the supply, they often help make supply available by financing the means to produce more.
I'm not sure why these reports indicate that Intel is pushing the ultra book standard in competition to Apple - since Apple is probably one of Intel's largest customers!
Doesn't make sense that Intel would be pushing it - I can understand if multiple Windows PC manufacturers are, but is Intel really pushing?
I mean this article finally mentioned "Intel and its partner PC makers" but it still seems silly to me. Is there any reference where Intel itself is actively involved?
Comments
Even then, it wasn't due to being "a master of the supply chain". The 1.8's were very new when they decided to go with it and they were really the only ones using them in large quantities initially. Today, Apple is able to control supply chain dynamics for pretty much almost any component, regardless of how established the supply chain is. Once Apple comes in and says "mine" it is pretty much a kick in the nuts for competitors to try to get supply.
Having said that, Cook has been an absolute genius in getting operations like supply management running like silk.
Though I don't have any evidence to back it up(
I'm not sure I understand the distinction between your first and last sentence
That's not normal markup. What your describing is actually no markup at all. Markup is the price going up at each stage of manufacturing ,distributing, and retail sale.
Perhaps the "Ultrabook" makers need to be a little less wedded to the idea of making carbon copies of the MacBook Air and just making nice ultraportables. The Samsung Series 9 and Sony Vaio Z are two good examples of PCs that don't try to copy the MacBook Air, but instead seek out their own niches.
From Intel's perspective, while they have really pushed the Ultrabook concept, in the end, does it really matter to them whether they sell a Sandy Bridge or Ivy Bridge processor to ASUS or HP rather than Apple? As long as there is demand from the MacBook Air crowd, isn't a sale a sale?
This thread has gone down hill in record time. I blame the Nazis.
Agreed. Hitler has put cranky dust in the water.
I'm sorry, but until iPods and iPhones propelled Apple into a dominant market position for said devices, Apple was NOT AT ALL known for being a master of the supply chain!! I don't know who counts ~5-7 years as "long"
If you buy in bulk and have a lot of cash that's pretty much all it takes to become a "master of the supply chain for overseas components"
In the 1980s, Apple had a sophisticated JIT manufacturing plant in Fremont CA:
http://www.facebook.com/pages/Fremon...5098570?v=info
It was state-of-the-art for manufacturing and supply chain management,''
Sorry, but it doesn't help. I think you're reading me or the article backwards. We're not talking about how $10 can add $100 to the price. Instead, we're talking about a savings of $10. A negative number. If something costs $10 less to make at wholesale, how does it end up being $100 less at retail? This is multiples of subtraction. Under normal markup, the part that costs $10 less would simply make the retail cost $10 less. How does it make it $100 less? The fiberglass case being thrown in for free? Is there is some inherent manufacturing technique with fiberglass that saves money over manufacturing with aluminum.
One component of pricing a product is to mark up the product costs based on forecasted sales.
With a low forecast, the markup will generally be higher to meet profit objectives.
Let's assume, that our product with a milled metal case has a total parts cost of $200.
Now, to meet the profit objective for the product, the the company marks it up 400%: parts cost $200 + $800 markup == $1,000 Selling price.
So now, the company decides to use a fiberglass case reducing the parts cost by $20 ($10 x 2).
Our new calculation is: parts cost $180 + $720 markup == $900 Selling price.
Voila! $1000 - $900 == $100 savings.
Admittedly, this is a simplistic example. But many companies will use this as an initial approach -- then test their markup formulae/assumptions
by calculating details -- cost of money, inventory, plant and equipment, handling, manufacturing, warehousing, distribution, sales, G&A... and profit.
I must add that pricing/forecasting is a black art.
When IBM introduced the Selectric "Golf Ball" typewriter in the 1960s it was priced at about $320.
The story was that IBM forecast that they could meet their profit objective with a price of $160.
The IBM board said: "Double it!"
It was a resounding success!
http://en.wikipedia.org/wiki/IBM_Selectric_typewriter
Edit:
Finally, the masters of this black art like Apple and Tim Cook -- likely start the process in reverse with a price and profit objective. Then they focus on the details which will allow them to meet these goals with the resources and risk they want to commit.
Then, they continuously monitor/sample and refine the details to assure they attain their goals as the market changes. Certain things are weighted differently than others -- sex (market appeal), integration with other plans, competition, opportunity, etc.
For example, Apple may choose to use an A5 chip in the iPhone 5 where the A4 would be adequate -- by increasing the use of the A5, Apple gains sex appeal, can reduce the A5 cost and apply that to increased margin on the iPad -- or the ability to reduce the iPad price to stave off competition.
+1
and what input method would they use to put out the fires from excessive heat?
Urine a lot of trouble if you have to ask that...
WTF?!?! PC notebooks are trying to compete with Apple price points (and can't)?! At what point did the tables turn and where the fuck have I been?!!
The tables turned a long time ago, except people were still brainwashed into thinking that Macs were more expensive than generic PCs.
Though I don't have any evidence to back it up(
I'm not sure I understand the distinction between your first and last sentence
The distinction is that Cook, regardless of his genius, was not responsible for the 1.8 choice. That was Rubinstein. Cook perfected their supply chain management, but is a fairly recent phenomenon. He's only been COO since 2007 though he was SVP for a few year before. Describing them as long time 'masters of supply chain management' is a bit of a stretch.
Today, yes they can bet big on a new component, process or vendor and control the market. The difference between the 1.8" drives and today is that Apple was able to 'control' that market only because no one else was using them. Today they can disrupt global supplies for any component or part regardless of how well established the market is. They can take the most common components, like memory, and make th scarce. They didn't have that sort of influence 10 years ago.
with respect to carbon fiber: as far as I know it, carbon fiber has always been a rigid material, while steel and aluminum are "benders." seems to me that aluminum is better for this application, but I haven't followed this vein of manufacturing for a while, so my knowledge may be out of date.
With all of the mentions of fiberglass, I haven't seen any comments on fiberglass' durability over time. From the automotive industry, my experience with fiberglass has usually been pretty poor, with products warping/cracking over time and paint spidering. I've also noticed that it tends to be very difficult to get a nice smooth finish on fiberglass (as mentioned previously), which seems easier to do on aluminum. Not that anyone makes dropping their laptop a habit, but I also believe aluminum handles that impact better than fiberglass.
You do raise a good point, but cars are used a lot longer than computers, in terms of replacement cycle, 5 years for a computer is akin to 15 years on a car. I think most cars experience a far greater range of temperature ranges than computers.
with respect to carbon fiber: as far as I know it, carbon fiber has always been a rigid material, while steel and aluminum are "benders." seems to me that aluminum is better for this application, but I haven't followed this vein of manufacturing for a while, so my knowledge may be out of date.
As I understand it, thin sheet carbon fiber is more flexible than similar thickness of sheet metal. You get your rigidity in curves and bends.
As it is, both materials seem implausible for very thin computers.
WTF?!?! PC notebooks are trying to compete with Apple price points (and can't)?! At what point did the tables turn and where the fuck have I been?!!
Its all in the name, kind hermit. You have been on an island!
Sorry, but it doesn't help. I think you're reading me or the article backwards. We're not talking about how $10 can add $100 to the price. Instead, we're talking about a savings of $10. A negative number. If something costs $10 less to make at wholesale, how does it end up being $100 less at retail? This is multiples of subtraction. Under normal markup, the part that costs $10 less would simply make the retail cost $10 less. How does it make it $100 less? The fiberglass case being thrown in for free? Is there is some inherent manufacturing technique with fiberglass that saves money over manufacturing with aluminum.
The way I understand it is: If we had to get the chassis done in mag-aluminium, we will charge $100 more for the laptop. If we use fibreglass, it will be cheaper than metal, so we will throw the customer a bone and not charge them $100 more.
The distinction is that Cook, regardless of his genius, was not responsible for the 1.8 choice. That was Rubinstein. Cook perfected their supply chain management, but is a fairly recent phenomenon. He's only been COO since 2007 though he was SVP for a few year before. Describing them as long time 'masters of supply chain management' is a bit of a stretch.
Today, yes they can bet big on a new component, process or vendor and control the market. The difference between the 1.8" drives and today is that Apple was able to 'control' that market only because no one else was using them. Today they can disrupt global supplies for any component or part regardless of how well established the market is. They can take the most common components, like memory, and make th scarce. They didn't have that sort of influence 10 years ago.
Ok I think I see what you're saying. I thought you were contradicting yourself in your first and last sentence but you're saying that their skill in the supply chain has been a progression over the years.
I guess what I was talking about (now that i'm thinking more about it) isn't about the supply chain at all but the way apple designs. What parts are available in quantity and making something that sells so well that those quantities are unavailable when others come knocking. Wasn't there an excess of memory on the market 4years or so ago? I guess the difference you're pointing to is that they didn't cause shortages of components like the 1.8 drive (I don't think). Now of course they are not only buying up all there is but possibly helping finance expansion of some suppliers.
This post of mine could have been shorter if I had simply typed "I agree".
http://www.apple.com/environment/#recycling
Apple clearly want to continue to improve their existing performance in this area, as all manufacturers will have to given the inexorable price rise of raw materials, so I can't imagine them ditching the aluminium any time soon now that they have latched on to it.
Actually, I suspect that a laptop case shaped like this would be great!
... and be very easy to produce.
And after a full day of reports/photos/hacking/whatever, you could take your laptop out for a round of Ultimate Frisbee!
Apple, in addition to gaining advantages by setting up long-term purchase contracts with suppliers for key components, also have been reported as direclt partnering with fabricators to set-up the plants, with the result that Apple gets x numbers of years of exclusive production from the plant, after which they simply get preferencial handling and the plant is opened up to supply other interests as well.
Yes. I think they've been doing that at least as far back as the 30" Cinema display. From what I gather, Apple paid a good chunk of money to LG to help them build the factory that makes the panel for the 30", and it was exclusive to them for maybe a year. I think Apple and Compaq kicked in money to Pioneer to make the first of some kind of DVD drive (I forget which kind) and it was exclusive to those two companies for a little bit, so it's a practice that has some precedence. So it's not like Apple is necessarily squeezing the supply, they often help make supply available by financing the means to produce more.
Doesn't make sense that Intel would be pushing it - I can understand if multiple Windows PC manufacturers are, but is Intel really pushing?
I mean this article finally mentioned "Intel and its partner PC makers" but it still seems silly to me. Is there any reference where Intel itself is actively involved?