From the very foundation, Apple has constantly been one of the first companies that appear in mind when it comes to innovation, unconventional approach and hi-tech. Today we can say with confidence that the timely (and in general well-administrated) launch of three key products – iMac, iPod, iPhone – is the main reason behind the great success of technological giant from Cupertino. At the same time, we usually lack confidence when the question arises of how exactly these devices made their way to the customer.
Recently American journalist Brian Merchant presented a book entitled «The One Device», in which he disclosed the story of the iPhone invention process, seemingly leaving no more exciting details to other researchers. So what I’m proposing is to take a closer look at the unexciting one, or, being serious, at the one concerning production. The fact is, Apple almost doesn’t assemble its own devices in-house – this stage is predominantly provided by outsourcing.
Financial specialists emphasize that resorting to outsourcing services completes a business strategy, helps an organization to develop faster (and rightly so), but in this case, we are facing the phenomenon when the essential activity part of a company valued at over US$700 billion is simply entrusted to its partners. Once again, manufacturing, assembling and partly supplying of electronics are being done through other companies while all that’s left in its pure form for Apple Inc. is designing and branding (pic by Matthew Griffin, technology expert writing for CIO).
As you can see, Samsung and Taiwanese manufacturer Foxconn are actively involved in Apple’s activity. South Korean conglomerate usually takes responsibility for fabrication components like screens, batteries, processors and so on used in assembling final devices – that’s what Chinese do afterward. Sure, these two are not only having a special contract with Apple. Worth to mention German Bosch, US Qualcomm, Japanese Sony and Sharp, Singaporean Hi-P, Dutch NXP also engaged in production stages. Want a tough number? According to Forbes, it would cost Tim Cook US$4.2 billion if he decided to bring manufacturing of iPhones alone to the USA.
Okay, let’s think why what’s happening is happening. One of the key goals pursued by anyone who decided to take advantage of outsourcing can be briefly described as «getting benefits from the attraction of third-party assistance which would occupy the area where my organization for some reasons isn’t operating just as effectively». Such step allows freeing internal resources letting ad hoc people do what no one inside the company objectively can do better at the moment, and apply these freed resources to doing what the company IS already the best at. That was, of course, extremely simplified representation of complex outsourcing mechanism, but it needed to be stated in order for me to bring my vision displayed below.
Now, why are you buying Apple products? I assume most often the answer is simple and obvious: because it’s Apple. This means it’s a brand. This means it has a self-sufficient absolutely recognizable design (greetings to the great Jonathan Ive); this means it’s a universal symbol. Implying you definitely care about usability, technical characteristics, screen glass material, iTunes version, Touch ID reliability etc., you still care about things that were under the spotlight of everyone’s attention ten, twelve, nineteen years ago when the first models of iPhone, iPod, iMac were released. It’s important for you what’s inside the device, though not as important as it would be if you were present at Apple II personal computer introducing, isn’t it?
What you really care about nowadays – especially if you’re not living in America – is how not to cover an apple logo on the rear panel with your fingers while talking on the phone, and so not to seem worse than your colleagues are. Eventually, you’re not buying Apple; you’re buying materialized results of its designing and branding strategy, something that could have never been done so well (maybe best of all in the world) if the company had distributed its power between all the links of the supply chain instead of using outsourcing.
Based on this you can understand why I’ve chosen Apple for my example, rather than any other big firm like Sony, Microsoft, Acer or Canon. Rather than hundreds, thousands of others. Undoubtedly there are lots of good illustrations of successful outsourcing; Apple is just the most demonstrative one in the context of how they’ve reached the scale.
And since Apple has gifted us with the most defining personal devices of our century it’s also the most forceful example. Just imagine never knowing an iPhone the way you always knew it.