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September 26, 2005
Apple's Friends are Foreign
Posted by Dana Blankenhorn
Last week's tirade by Motorola CEO Ed Zander, set alongside the nasty noises about Apple from music publishers , Microsoft's noise about its entry into the market and iSuppli's autopsy of the iPod Nano design all point to one salient point.
Apple's friends are foreign.
Over half the device's hardware cost is going to Samsung, which supplied the flash memory. Samsung is giving Apple a 40% discount on that memory, according to iSuppli, meaning Apple can cut its prices on the existing device if sales remain soft. The iSupply analysis does not reveal who supplied the plastic case, which is drawing strongly negative reviews.
In its move from being a computer company to a consumer electronics company Apple has to manage this kind of transition. It has to source from overseas suppliers, assemble at the lowest possible cost, yet maintain control over the result so that its designs won't be ripped-off by other Asian companies.
Apple's move into the content space puts it in direct conflict with many American companies which supply content and depend on having a lot of outlets so they can maintain control over pricing and the conditions under which consumers use their material. Apple has taken this away.
What's ironic in all this is that Apple's position is vital to the future of America's position in both electronics and content.
- People have proven that they won't buy content unless they accept the terms and conditions of its sale, a point the U.S. based music companies still have yet to accept. Apple is forcing them to accept this.
- Apple is the only U.S. company with a major position, and any control, in the consumer electronics space. Without Apple, the U.S. has no seat at this table.
As much as Steve Jobs may infuriate you, in other words, he's the only dog you have in this hunt. He's the closest thing to a friend you've got. Even though all his friends are foreign.
How long can he walk the tightrope?
Watch and see.
Comments (2)
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Dana Blankenhorn has been a business journalist for over 25 years and has covered the online world professionally since 1985. He founded the "Interactive Age Daily" for CMP Media, and has written for the Chicago Tribune, Advertising Age, and dozens of other publications over the years.
1. Chris on September 26, 2005 01:22 PM writes...
Astute analysis. Well done.
Permalink to Comment2. Brad Hutchings on September 26, 2005 08:19 PM writes...
I don't know what to tell you Dana, except that I bought one from an Apple Store 10 minutes after they were off the palettes and into the store's inventory, and yes, after a couple weeks, it isn't as new as it was, but it doesn't have scratches that make it unusable. It's been in my pocket, left out on the counter, etc. Frankly, the metal back of the thing seems to show more abuse than the plastic front!
I suspect that what you're seeing here with the scratch issue and the cracked screen complaints is a combination of FUD and unreasonable people who expect to be able to abuse the hell out of the little thing and have it stay perfect. Not to be mean or lookist, but I have a feeling that the people whining the loudest look more like Linux User Group types than typical customers you might find in an Apple store. But that's just my guess...
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