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Not controlled the whole economic chain, but knows and manages the costs of said chain. Switching over to Intel after Motorola proved itself unmanageable. Kee

Not controlled the whole economic chain, but knows and manages the costs of said chain. Switching over to Intel after Motorola proved itself unmanageable. Keeping OS development inhouse instead of buying from MS. These are managed costs. Dell gets basically blackmailed by Wintel, Apple has an alternative for everything they buy.

krmmalik 17y ago
So it's ultimately the management of this process to enable better value creation right?
Tichy 17y ago
I have troubles understanding that. What does know and manage the costs mean? Surely every manufacturer knows how much their supplies cost? Of course if you have more options (inhouse dev, other suppliers), you have more leverage and control. But there is a limit. I still don't see what is to learn from the snippet - that if you control the whole production chain, you can make it big? Hardly? Switching to Intel was a huge success for Apple, if I remember correctly. Also, for the iPad it is only the chip that Apple creates themselves. Or are they also creating their own IPS panels and SSD disks now? I wouldn't be surprised if the panel cost more than the chip.
- krakensden 17y ago
  You are right. But the ARM ecosystem is different from the x86 one. Apple is doing something closer to system integration than CPU design, they almost certainly couldn't afford to do that and keep up with the Joneses (Intel, AMD, ARM, IBM). The screens and drives are also from third parties.
- silentpartner 17y ago
  > What does know and manage the costs mean? That means if your supplier starts trying to screw you with higher pricing, you switch to another one. It's about options, not literal control. > Switching to Intel was a huge success for Apple Is your left brain not talking to your right brain or something?
- reggieband 17y ago
  > Surely every manufacturer knows how much their supplies cost? They know the price today, but not the price next year. Think about Apples predicament with PowerPC not that long ago. It probably cost them quite a lot to make the change to Intel. I think A4 is a hedge against that same situation happening again - where they face a technical challenge altering their platform to avoid a critical performance disadvantage. > Also, for the iPad it is only the chip that Apple creates themselves. From a performance (battery and speed) standpoint the chip is probably more important than the display panels. Disks and RAM are debatable. AFAIK they manufacture the controllers for those though. That allows them tight integration with their OS. That is definitely an advantage since they can write their code with a much more limited architecture in mind. All this being said, I doubt this is an advantage that will last. Companies that specialize generally outpace companies that generalize. I wouldn't be surprised if in 5 years, once Intel or whoever catches up with a chip specialized for this type of hardware, then Apple switches back. This is really more a first mover advantage. They get to come out of the gate with a better overall package because they rolled their own practically everything (and can you think of anyone else who could ... from chip to OS and most of the inbetween). Remember this is a new category of product - the types of internal components well-suited to this type of technology are not in wide spread production at the moment. By the time they are turned into commodities Apple hopes to have a market lead.
- access_denied 17y ago
  manage the costs == doing something about it

krmmalik 17y ago

So it's ultimately the management of this process to enable better value creation right?

Tichy 17y ago

I have troubles understanding that. What does know and manage the costs mean? Surely every manufacturer knows how much their supplies cost? Of course if you have more options (inhouse dev, other suppliers), you have more leverage and control. But there is a limit. I still don't see what is to learn from the snippet - that if you control the whole production chain, you can make it big? Hardly? Switching to Intel was a huge success for Apple, if I remember correctly. Also, for the iPad it is only the chip that Apple creates themselves. Or are they also creating their own IPS panels and SSD disks now? I wouldn't be surprised if the panel cost more than the chip.

krakensden 17y ago
You are right. But the ARM ecosystem is different from the x86 one. Apple is doing something closer to system integration than CPU design, they almost certainly couldn't afford to do that and keep up with the Joneses (Intel, AMD, ARM, IBM). The screens and drives are also from third parties.
silentpartner 17y ago
> What does know and manage the costs mean? That means if your supplier starts trying to screw you with higher pricing, you switch to another one. It's about options, not literal control. > Switching to Intel was a huge success for Apple Is your left brain not talking to your right brain or something?
reggieband 17y ago
> Surely every manufacturer knows how much their supplies cost? They know the price today, but not the price next year. Think about Apples predicament with PowerPC not that long ago. It probably cost them quite a lot to make the change to Intel. I think A4 is a hedge against that same situation happening again - where they face a technical challenge altering their platform to avoid a critical performance disadvantage. > Also, for the iPad it is only the chip that Apple creates themselves. From a performance (battery and speed) standpoint the chip is probably more important than the display panels. Disks and RAM are debatable. AFAIK they manufacture the controllers for those though. That allows them tight integration with their OS. That is definitely an advantage since they can write their code with a much more limited architecture in mind. All this being said, I doubt this is an advantage that will last. Companies that specialize generally outpace companies that generalize. I wouldn't be surprised if in 5 years, once Intel or whoever catches up with a chip specialized for this type of hardware, then Apple switches back. This is really more a first mover advantage. They get to come out of the gate with a better overall package because they rolled their own practically everything (and can you think of anyone else who could ... from chip to OS and most of the inbetween). Remember this is a new category of product - the types of internal components well-suited to this type of technology are not in wide spread production at the moment. By the time they are turned into commodities Apple hopes to have a market lead.
access_denied 17y ago
manage the costs == doing something about it