Tuesday, July 5, 2011

How Apple Stays Ahead of Its Competition




Here's an interesting explanation of how Apple uses its cash to stay ahead of its competition. The information comes via an anonymous poster on Quora, in response to the question: 'What would make sense for Apple to use its $51+ billion in cash for a strategic acquisition?'

Basically, Apple is said to invest in the construction of factories in order to obtain exclusive rights to the output of that factory for a set period of time.

Tim Cook hinted that was the case in a conference call this January where he announced that Apple has entered into secret long term component supply contracts worth $3.9 billion over the next two years.

"On the operational side of house," Cook stated, "we've historically entered into agreements with others to supply; largest one was with flash memory suppliers back in 2005 that totaled over a $1 billion, because flash would become increasingly import across product line and industry."

Continue reading below for the more detailed explanation...

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When new component technologies (touchscreens, chips, LED displays) first come out, they are very expensive to produce, and building a factory that can produce them in mass quantities is even more expensive. Oftentimes, the upfront capital expenditure can be so huge and the margins are small enough (and shrink over time as the component is rapidly commoditized) that the companies who would build these factories cannot raise sufficient investment capital to cover the costs.

What Apple does is use its cash hoard to pay for the construction cost (or a significant fraction of it) of the factory in exchange for exclusive rights to the output production of the factory for a set period of time (maybe 6 - 36 months), and then for a discounted rate afterwards. This yields two advantages:

1. Apple has access to new component technology months or years before its rivals. This allows it to release groundbreaking products that are actually impossible to duplicate. Remember how for up to a year or so after the introduction of the iPhone, none of the would-be iPhone clones could even get a capacitive touchscreen to work as well as the iPhone's? It wasn't just the software - Apple simply has access to new components earlier, before anyone else in the world can gain access to it in mass quantities to make a consumer device. One extraordinary example of this is the aluminum machining technology used to make Apple's laptops - this remains a trade secret that Apple continues to have exclusive access to and allows them to make laptops with (for now) unsurpassed strength and lightness.

2. Eventually its competitors catch up in component production technology, but by then Apple has their arrangement in place whereby it can source those parts at a lower cost due to the discounted rate they have negotiated with the (now) most-experienced and skilled provider of those parts - who has probably also brought his production costs down too. This discount is also potentially subsidized by its competitors buying those same parts from that provider - the part is now commoditized so the factory is allowed to produce them for all buyers, but Apple gets special pricing.

Apple is not just crushing its rivals through superiority in design, Steve Jobs's deep experience in hardware mass production (early Apple, NeXT) has been brought to bear in creating an unrivaled exclusive supply chain of advanced technology literally years ahead of anyone else on the planet. If it feels like new Apple products appear futuristic, it is because Apple really is sending back technology from the future.

Once those technologies (or more accurately, their mass production techniques) become sufficiently commoditized, Apple is then able to compete effectively on cost and undercut rivals. It's a myth that Apple only makes premium products - it makes them all right, but that is because they are literally more advanced than anything else (i.e. the price premium is not just for design), and once the product line is no longer premium, they are produced more cheaply than competitor equivalents, yielding higher margins, more cash, which results in more ability to continue the cycle.




*thanks iclarified*

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- Posted using my iPhone 4

iPad 2 Jailbreak Gets Leaked Again




Another person has shamelessly leaked Comex's unfinished jailbreak of the iPad 2. This time its Ryan Vanniekerk who managed to find the files after Comex had moved them to a different location on his server.

Since these files are unfinished, buggy, and stolen from Comex we had not planned to publish the story; however, other iPhone related sites have been posting about Vanniekerk's how to. We've been told that these beta jailbreaks could do permanent damage to your device and thus we strongly recommend users do not attempt this jailbreak and wait for the official release which is expected soon.

As we noted earlier you can follow us on Twitter and Facebook for updates using the links at the bottom of the page.


*thanks iclarified*

Our new Forum is now open here or on the top tabs marks Forums, please register and post.. For the latest limera1n, rubyra1n, and all tech stories, follow us on Twitter at @iphonepixelpost or @limerain_com
And like our Facebook page www.iPodSets.com
- Posted using my iPhone 4

JailbreakMe.com Is Being Updated With iPad 2 Jailbreak?




JailbreakMe.com is now showing a 'We'll be back soon.' sticky note suggesting that the site may be undergoing updates before the release of the iPad 2 jailbreak.

Apple typically posts the exact same sticky note when it takes down the Apple Store ahead of new releases.

Earlier today a leaked conversation between Comex and MultiMediaWill indicated that the jailbreak was coming today.

We'll let you know as soon as it is released. You can follow us on Twitter or Facebook using the links at the bottom of the page.



*thanks iclarified*

Our new Forum is now open here or on the top tabs marks Forums, please register and post.. For the latest limera1n, rubyra1n, and all tech stories, follow us on Twitter at @iphonepixelpost or @limerain_com
And like our Facebook page www.iPodSets.com
- Posted using my iPhone 4