Admittedly much of this has the sound and fury of an Apple Fan boi, but there may be something here. In the last several years Apple has found a way to capitalize on some of their inherent advantages (vertical integration unlike any competitor). All of the PC competitors to Apple merely buy various pieces of hardware, and slap a Microsoft OS on it. Apple has spent blood and treasure over the years competing with PC hardware vendors (Dell, Hp, et.al.) as well as OS manufacturers (Microsoft), and has capitalized upon some lucrative niches.
When you look at apples recent history (i.e. the last 10 years) you can see this strategy working more and more. A great example would be HP being forced to develop WebOS for its latest tablet creation. It looks like apple has found the weak spot between the hardware and software vendors, and may become the first company with a gross evaluation of more than a trillion dollars.
This is a lot of black turtlenecks for Steve Jobs…
Apple Buys the Future
http://www.fastcompany.com/1758338/apples-not-buying-more-chips-than-everyone-else-its-buying-a-future
In 2010 Apple spent more bucks to buy more semiconductor hardware than its next biggest rivals in the computing and mobile tech world, including HP, Samsung, and Dell. In fact, Apple became the biggest buyer in the world among OEM firms. And it’s likely to increase its buy 20% or more this year.
Big whoop, you say? Remember: Semiconductors are at the heart of chips. Chips power computers. Computers power lots of innovation. And innovation powers the future of business and everyday life. Fire up the old transitive property and… Apple’s trying to buy the future of everything.
iSuppli’s figures show that Apple lagged HP and Samsung in semiconductor spending in 2009–HP is one of, if not the world’s biggest, seller of PCs, and Samsung sells just about every other kind of electronic gizmo, as well as computers. But in 2010, Apple ramped up its chip spending to $17.5 billion, up 80% from 2009–and $2.4 billion ahead of HP. In 2011, Apple’s expected to extend this lead ahead of HP to $7.5 billion; spending by both HP and Samsung are expected to be flat.
Ow. Math hurts. So think on this: By aggressively expanding its purchase of chip hardware, well ahead of its peers, and probably enabled by its huge cash reserves, Apple is doing two things at once. It’s going to make it trickier for its competition to access key bits of silicon-based hardware, worsening a situation we’ve already seen happen in the tablet and smartphone markets. There are only so many fab plants pushing this stuff out–particularly NAND Flash, which Apple’s using inside its mobile devices and, increasingly, Macs.
Plus, it’s ensuring its hardware is ubiquitous, in as many hands as swiftly as possible. We’re not talking Macs here, though they are in the mix (and are now achieving more PC market share in enterprise than before). But primarily we’re talking iPads and iPhones in the newly minted "post-PC" era. And it’s not just private users–it’s enterprise, too (because people are taking their shiny iPads into work and demanding they function on the network, because they’re better than the old Dell machines running patched XP that sits on their desks). When companies that use Apple’s hardware to power their executives’ work think "We need to do [insert something clever] with our gadgets/research/customer interface," their next thought will be, "We need an iPad app to do that/help do that/find out if people want to do that."
Yes, there may be technically better hardware, or a more open platform. But Apple’s user-friendly "It just works" schtick is real–and the average Joe looks for this sort of thing, along with future-facing high-tech-sounding stuff like iCloud. See how it fits together when you follow the money?
How Apple stays years ahead of the competition
http://www.tipb.com/2011/07/05/apple-stays-years-competition-massive-amounts-money
There’s a fascinating answer up on Quora that suggests how Apple uses their massive $70 billion bank account to literally stay years ahead of the competition when it comes to manufacturing and components.
Apple actually uses its cash hoard in a very interesting way to maintain a decisive advantage over its rivals: 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.
Apple’s Products Can’t Be Beaten Because They Use Tech from the Future
http://www.cultofmac.com/apples-products-cant-be-beaten-because-they-use-tech-from-the-future/103454
This is the reason why two years after the iPad, no one can release a sub-$500 tablet that is nearly as well built or constructed. And it’s why the iPhone 4′s Retina Display still has no competition. It’s tech from the future.
