Posted on 09/05/2020 7:22:34 AM PDT by SeekAndFind
Take a look at the back of the box from which you unpacked your iPhone and you'll see this: "Designed by Apple in California Assembled in China."
Reading this tagline might trigger a vision in your mind of Jonathan Ive, Apple's legendary chief design officer, dropping the drawings and technical specs for the next-generation iPhone into a (highly secure) shared folder that its low-cost suppliers in China can access as they manufacture and assemble the product by the millions.
But as Apple CEO Tim Cook recently pointed out, this picture wouldn't tell the entire story of how an iPhone actually gets made today, or why Apple prefers to make them in China. At the Fortune Global Forum in Guangzhou in early December (my firm, McKinsey & Company, was the Knowledge Partner), I listened to Cook as he explained why Apple continues to favor China as its central base for manufacturing iPhones:
The number one reason why we like to be in China is the people. China has extraordinary skills. And the part that's the most unknown is there's almost two million application developers in China that write apps for the iOS App Store. These are some of the most innovative mobile apps in the world, and the entrepreneurs that run them are some of the most inspiring and entrepreneurial in the world. Those are sold not only here but exported around the world.
Highly skilled software developers developing apps for the App Store are one reason Apple likes to be in China. But the depth of highly skilled labor in the manufacturing space is why Apple makes its iPhones there:
China has moved into very advanced manufacturing, so you find in China the intersection of craftsman kind of skill, and sophisticated robotics and the computer science world. That intersection, which is very rare to find anywhere, that kind of skill, is very important to our business because of the precision and quality level that we like. The thing that most people focus on if they're a foreigner coming to China is the size of the market, and obviously it's the biggest market in the world in so many areas. But for us, the number one attraction is the quality of the people.
Citing an example of the type of a highly skilled supplier Apple works closely with, Cook talked at length about recently visiting one company that it has collaborated with for several years:
I visited ICT--they manufacture, among other things, the AirPods for us. When you think about AirPods as a user, you might think it couldn't be that hard because it's really small. The AirPods have several hundred components in them, and the level of precision embedded into the audio quality--without getting into really nerdy engineering--it's really hard. And it requires a level of skill that's extremely high.
And the idea that Apple simply hands over the design to a company like ICT, which just manufacturers according to spec, is simply untrue, says Cook:
It's not designed and sent over--that sounds like there's no interaction. The truth is, the process engineering and process development associated with our products require innovation in and of itself. Not only the product but the way that it's made, because we want to make things in the scale of hundreds of millions, and we want the quality level of zero defects. That's always what we strive for, and the way that you get there, particularly when you're pushing the envelope in the type of materials that you have, and the precision that your specifications are forcing, requires a kind of hand-in-glove partnership. You don't do it by throwing it over the chasm. It would never work. I can't imagine how that would be.
Addressing the designed-in-California, made-in-low-cost-China impression that many people have--an impression reinforced by the tagline that is printed on every box containing a new iPhone--Cook had this to say:
There's a confusion about China. The popular conception is that companies come to China because of low labor cost. I'm not sure what part of China they go to, but the truth is China stopped being the low-labor-cost country many years ago. And that is not the reason to come to China from a supply point of view. The reason is because of the skill, and the quantity of skill in one location and the type of skill it is.
And China has an abundance of skilled labor unseen elsewhere, says Cook:
The products we do require really advanced tooling, and the precision that you have to have, the tooling and working with the materials that we do are state of the art. And the tooling skill is very deep here. In the U.S., you could have a meeting of tooling engineers and I'm not sure we could fill the room. In China, you could fill multiple football fields.
Cook credits China's vast supply of highly skilled vocational talent:
The vocational expertise is very very deep here, and I give the education system a lot of credit for continuing to push on that even when others were de-emphasizing vocational. Now I think many countries in the world have woke up and said this is a key thing and we've got to correct that. China called that right from the beginning.
This article also appeared on LinkedIn.
Watch the entire interview with Tim Cook at the Fortune Global Forum:
Who were Apple’s competitors in 1999/2000? Apple was always more expensive than the PC clones, and it’s customer base was unique and loyal. They didn’t have to go to China, but I’m sure it augmented profits substantially. They deserve credit of being the first to voluntarily return some manufacturing to the US in 2013, but that doesn’t absolve them from their current behavior and the comments made by Cook. They are now a huge company, and have the capability to modernize US computer and phone manufacturing to the point of being the best and most efficient in the world. To me, they have a responsibility to do this.
This article is a rehash about a speech Tim Cook presented before a convention of Chinese Tech leaders and Chinese tech resellers in CHINA in early December 2019. Consider his audience and what he was intending to accomplish before you bash him. This article, publish ten months later is intended to inflame and engender negative emotions in the USA by being taken out of context and out of literal location and cultural audience, and out-of-context snippets presented to a different technology non-sales oriented, alternate culteral audience with a completely different world view, which was done in what was intended to be FUD (Fear, Uncertainty, and Doubt) Season, to impact Apple’s stock in the three-week lead up to a major product announcement event, the introduction of Apple’s IPhone 12 line, and likely Apple Silicon powered Macs, the first major change in processors in Apple computers since Apple announced the moved to Intel back in 2001. Such articles as these are intended to depress the value of AAPL common stock so speculators can short or buy on advance knowledge. The stock makes big moves around such big announcements. . . But Apple changed the announcement date by a month on very short notice due to Covid concerns, causing the timing of these FUD articles to misfire.
To answer you question about who were Apple’s competition in 1999 and 2000. Just prior to then, Apple’s previous president/CEO had authorized the licensing of the MacOS to other computer manufacturers in the US and overseas. They could make Mac clones, but had to buy the OS from Apple. In late 97, Steve Jobs was brought back as interim CEO and immediately cancelled that licensing program. In the five years it was in place, approximately 130 different companies started making Mac Clones.
Apple was competing with all of those, even though they were not making any more, they were depleting their inventories and even before that they generally sold for lower prices than Apple Macs for equivalent hardware.
In addition, Apple was competing against all PC clones on the US market, including a new market in Window iMac look alike PCs, and Windows was trying to make headway into desktop publishing market and graphics, which was essentially a Mac market.
As for your assertion that Macs were always more expensive than PC clones, that’s not really true. I’ve done price comparisons over the years, and you have to do equivalent to equivalent to test that. Apple has never played in the bargain basement. Compare equivalent quality component, and you found PCs and Apple Macs were competitive. One interesting comparison was the original Macintosh on release sold for $2495. This was preclone era except for Compact which was a luggable. The only comparable was the IBM. it’s list was $1995, so pundits were having a field day with the Apple being more expensive than the IBM. But, what they weren’t saying was that $1995 PC in 1984 was stripped: only 16k of RAM, No floppy, no OS. No monitor. The Macintosh came complete and included some actual usable software. To make it work you needed to add peripherals.
The original Mac came with a built in B/W monitor, 128K RAM, A built in 3.5in floppy drive, keyboard, a mouse (what’s that?), two useable programs (MacPaint, MacWrite, and an operating system... all for $2495. To get a workable IBM-PC that one could actually use, you had to add an OS $130.00, a Green or amber screen Monitor $360, one or preferably two floppy drives. $199 each, and at least another 48K of RAM. $200. That’s $899 in extras to get a minimally working PC without software. A total of $2894 plus sales tax. WordPerfect for PC was $299. I’ll grant you it was $349 for Mac.
When clones came out, there was downward price pressure on the PC market and bundling of the computer instead of customizing everything became common. Faster speed processors, HDs etc, more RAM, Lovely competition. . , that original 1984 Macintosh price Of $2495 is the equivalent of $6,225 in 2020 dollars. The complete IBM-PC, $7,210. If there’d been no inflation or improvements in efficiency in manufacturing since 1984, you’d be able to buy an entry iMac for $194.00 today. Got side tracked. When clone PC-ATs came out, I priced equivalently setup RAM and 40MB HD PC and Mac system with same amount of RAM. AApple had maintained the same $2495 for the Mac, plus there was an extra charge for the HD upgrade. Brought it to $3495. The clone PC-AT which my office bought, This time with a color monitor (WOW, four colors, including that horrid pinkish purplish, ugh!) came to $4644. It included two floppies. Mac was cheaper. Meanwhile, my $3000 Amiga with more RAM, and 360MB of HD was faster than both and was running both Mac and MS-DOS and hardware multitasking in 4096 colors and I had four 3.5" floppies.
I remember well, Nikita pounding his shoe on his desk at the UN when he told us that.
Ever think where those intricate computerized boards are made? They are designed here of course but manufactured and made into a plugin module elsewhere, no sophistication required to assemble. We crush industry here making them cost ineffective so companies move. Other countries save their manufacturing companies by charging import duties that force the cost of imported products to be as expensive as the home grown products. Has Trump taught us nothing? The people benefit most from cheap products, manufactures the least, unless they are assemblers.
B$. You know squat about their products and seem completely oblivious as to why people buy Apple. They don't don't worship Cook they like the software that runs on their products it is as simple as that. Well of course they also love that a lot of stuff won't run on Apple products. Apple customers didn't blink when they dropped Power PC because Apple OS would still live on Intel and it will continue on Apple Silicon. The hardware is a nice plus but most people could care less about the things that excite geeks, casual users out number power users a few thousand too one so they appeal to the majority.
So, researching a product and its features and cost is nothing that you’d do. Figures with someone of your basic intellect.
Thanks for that very informative response. I didn’t realize the context in which Cook’s remarks were made. I have also recently learned that Cook and Ivanka Trump made a joint pitch to promote tech education in the US.
That’s a really hilarious comment, SkayDancer. The fact is that the vast majority of Apple Mac users have been Windows PC users and are the equivalent of bilingual language speakers who know more about both systems than do you. They have done their homework in making their choice where it is you who have not.
For example, it is we who know that Macs can run all versions of Microsoft DOS and Windows software, Linux software, UNIX™ Software, and, of course, it’s own OS software, along with multiple other operating systems, often simultaneously, which a Windows PC cannot. When I was running my cross-platform consulting business full time, my main Mac Pro platform often had nine OS’s running simultaneously.
IBM, Inc., yes, that IBM, will willingly tell all comers they did their homework and switched ALL 400,000 of their employees worldwide over to an Apple hardware based company on the desktop because they learned they could save over $85 million a year in tech support and overall cost of ownership for their computers and mobile devices over the competition. Trouble tickets for desktop computers fell by 90%. Where before they had to have one IT department employee for every 200 installed computers, they learned they could operate Macs with one IT guy for every 2000 Macs. Once IBM accounted for every cost involved, they found that total support cost savings was between $273 to $543 savings per year for each Apple computer installation over the competing PCs. In addition, it turned out the Apple’s had a 2.5 times longer useful life span older PCs.
So, yes, Apple users HAVE done their homework and very few of them ever go back. The most common comment from a Windows to Mac switcher is “Why did I wait so long?” Most of us got damned tired of working ON our computers and preferred USING our computers to get work done.
You, on the other hand, because you really don’t know these advantages and benefits of Apple, went low and used ad hominem attack on itsahoot to insult him, denigrating his intelligence to supposedly boost yours. Not good form, SkyDancer.
The same corporation will have a different pay scale for workers doing the same job depending on where they work. For example, a worker doing a receptionist job for ZYX multinational in San Francisco, California, will get twice the amount of pay as a receptionist, doing exactly the same work, working for ZYX multinational in Stockton, California, only 90 miles away, due to the cost of living differential in San Francisco.
What’s funny, is that SF receptionist may actually LIVE in Stockton, preferring to commute four hours a day round trip for the pay differential, rather than pay $4000 a month for a two bedroom apartment in the SF when for $1600 she can rent a four bedroom house in Stockton. Or the receptionist may opt to live in Tracy, California, 30 minutes closer to San Francisco, and pay $2000 a month rent for an equivalent four bedroom home, driving an hour to where BART can be boarded for the ride into SF, cutting the round trip to three hours. (Note, these are rush hour times. Non-rush hour, the trip to SF can take only 1.5 hours from Stockton... but worst rush hour, with frequent accidents, it could be five hours one way.)
Saw your profile page. Figures.
Non sequiturs get you nowhere. Try again, SkyDancer.
By the way, looking at your profile page, you confirm my contention that to a woman, conservative women are incredibly accomplished and good looking. Thanks for being a Freeper. You really should try using Apple products. You might be surprised.
Seen you around here and already know what you are.
By the way, loved the childhood supergirl photo.
Well thanks for that; I’ve used Apple products and don’t like or care for them. I have better features on my SAMSUNG iPad at a lesser price. I used to laugh whenever Apple announced a new iPhone and people standing in line for hours to get one. What’s the latest price? Something around $1,000?
:)
Implied ad hominem insults are worth nothing. Not even a good try, Janey.
Hi.
Did the article mention slave labor or forced labor?
How about military applications the CCP gains from Apple?
How about all the Chinese in America that are Americans? They would be happy to be employed.
Tim, it’s the “low” labor costs.
Come on man!
5.56mm
Well let it go, Mmm, ‘Kay?
Thanks Swordmaker. Thirty years in this battle and getting too old to care. Some of my equipment is 20 years old and still ticking but now the tech has way outgrown my needs or skills. Enjoy your threads even when the stealth Samsung employees invade.
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