...from:
http://arstechnica.com/business/news/2011/11/pc-shipments-could-drop-more-t…
PC shipments could drop 10% due to hard drive shortages
By Jon Brodkin | Published 9 days ago
The widespread flooding in Thailand that disrupted operations at hard disk drive factories will lead to significantly declining PC shipments, say market analysts. Thailand accounted for 40 to 45 percent of worldwide HDD production in the first half of 2011, but flooding has impacted more than a dozen factories,according to IDC.
Much of the PC production for the fourth quarter of 2011 occurred before the flooding, or can be completed with existing drive inventory. But overall PC production will still decline this quarter and drop even further in the beginning of 2012, with normal operations not expected to return until the second half of next year, IDC said. "PC shipments will decline between 2.2 percent and 3.4 percent in the fourth quarter from a year earlier, down from a prior forecast for 5.1 percent growth," Bloomberg reported, quoting IDC numbers. "In the first quarter, shipments may drop by 1.8 percent to 13.4 percent. IDC had projected a gain of 8.2 percent."
Goldman Sachs is also projecting PC shipment declines of 3 percent year-over-year in the current quarter, and an 8.5 percent drop in the first quarter of 2012, according to Bloomberg. Goldman Sachs further said Microsoft's profit and sales will decline because fewer Windows PCs will be sold. IDC noted that hard drive prices are rising "as demand exceeds supply and manufacturers face increased costs for components, expedited shipments, and shifting of production to new locations." Pricing won't stabilize until June.
The smaller hardware vendors are likely to lose out. "In response to the crisis, priority will be given to the large PC manufacturers that drive HDD shipment volumes as well as to the high-margin products used in enterprise servers and storage," IDC Research Vice President John Rydning said in a press release. In the PC category, the biggest impacts will be on emerging markets, netbooks, and entry-level consumer PCs.
.....well, use lasers to drill some holes, of course.
...from:
http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers…
TECHNOLOGY November 03, 2011, 4:50 PM EDT
Apple's Supply-Chain Secret? Hoard Lasers
The iPhone maker spends lavishly on all stages of the manufacturing process, giving it a huge operations advantage
Illustration by Alex Eben Meyer
By Adam Satariano and Peter Burrows
Satariano is a reporter for Bloomberg News. Burrows is a senior writer for Bloomberg Businessweek, based in San Francisco.
About five years ago, Apple (AAPL) design guru Jony Ive decided he wanted a new feature for the next MacBook: a small dot of green light above the screen, shining through the computer’s aluminum casing to indicate when its camera was on. The problem? It’s physically impossible to shine light through metal.
Ive called in a team of manufacturing and materials experts to figure out how to make the impossible possible, according to a former employee familiar with the development who requested anonymity to avoid irking Apple. The team discovered it could use a customized laser to poke holes in the aluminum small enough to be nearly invisible to the human eye but big enough to let light through.
Applying that solution at massive volume was a different matter. Apple needed lasers, and lots of them. The team of experts found a U.S. company that made laser equipment for microchip manufacturing which, after some tweaking, could do the job. Each machine typically goes for about $250,000. Apple convinced the seller to sign an exclusivity agreement and has since bought hundreds of them to make holes for the green lights that now shine on the company’s MacBook Airs, Trackpads, and wireless keyboards.
Most of Apple’s customers have probably never given that green light a second thought, but its creation speaks to a massive competitive advantage for Apple: Operations. This is the world of manufacturing, procurement, and logistics in which the new chief executive officer, Tim Cook, excelled, earning him the trust of Steve Jobs. According to more than a dozen interviews with former employees, executives at suppliers, and management experts familiar with the company’s operations, Apple has built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store. Because of its volume—and its occasional ruthlessness—Apple gets big discounts on parts, manufacturing capacity, and air freight. “Operations expertise is as big an asset for Apple as product innovation or marketing,” says Mike Fawkes, the former supply-chain chief at Hewlett-Packard (HPQ) and now a venture capitalist with VantagePoint Capital Partners. “They’ve taken operational excellence to a level never seen before.”
This operational edge is what enables Apple to handle massive product launches without having to maintain large, profit-sapping inventories. It’s allowed a company often criticized for high prices to sell its iPad at a price that very few rivals can beat, while still earning a 25 percent margin on the device, according to the estimates of Piper Jaffray analyst Gene Munster. And if the latest rumors are to be believed, Apple’s operational expertise is likely part of what gives the company enough confidence to enter the notoriously cutthroat television market by 2013 with a TV set that would tightly integrate with existing Apple software like iTunes. The widespread skepticism over Apple’s ability to compete in such a price-sensitive market, where margins are often in the single digits, is “exactly what people said when Apple got into cell phones,” says Munster.
Apple began innovating on the nitty-gritty details of supply-chain management almost immediately upon Steve Jobs’s return in 1997. At the time, most computer manufacturers transported products by sea, a far cheaper option than air freight. To ensure that the company’s new, translucent blue iMacs would be widely available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space, says John Martin, a logistics executive who worked with Jobs to arrange the flights. The move handicapped rivals such as Compaq that later wanted to book air transport. Similarly, when iPod sales took off in 2001, Apple realized it could pack so many of the diminutive music players on planes that it became economical to ship them directly from Chinese factories to consumers’ doors. When an HP staffer bought one and received it a few days later, tracking its progress around the world through Apple’s website, “It was an ‘Oh s—’ moment,” recalls Fawkes.
That mentality—spend exorbitantly wherever necessary, and reap the benefits from greater volume in the long run—is institutionalized throughout Apple’s supply chain, and begins at the design stage. Ive and his engineers sometimes spend months living out of hotel rooms in order to be close to suppliers and manufacturers, helping to tweak the industrial processes that translate prototypes into mass-produced devices. For new designs such as the MacBook’s unibody shell, cut from a single piece of aluminum, Apple’s designers work with suppliers to create new tooling equipment. The decision to focus on a few product lines, and to do little in the way of customization, is a huge advantage. “They have a very unified strategy, and every part of their business is aligned around that strategy,” says Matthew Davis, a supply-chain analyst with Gartner (IT) who has ranked Apple as the world’s best supply chain for the last four years.
When it’s time to go into production, Apple wields a big weapon: More than $80 billion in cash and investments. The company says it plans to nearly double capital expenditures on its supply chain in the next year, to $7.1 billion, while committing another $2.4 billion in prepayments to key suppliers. The tactic ensures availability and low prices for Apple—and sometimes limits the options for everyone else. Before the release of the iPhone 4 in June 2010, rivals such as HTC couldn’t buy as many screens as they needed because manufacturers were busy filling Apple orders, according to a former manager at HTC. To manufacture the iPad 2, Apple bought so many high-end drills to make the device’s internal casing that other companies’ wait time for the machines stretched from six weeks to six months, according to a manager at the drillmaker.
Life as an Apple supplier is lucrative because of the high volumes but painful because of the strings attached. When Apple asks for a price quote for parts such as touchscreens, it demands a detailed accounting of how the manufacturer arrived at the quote, including its estimates for material and labor costs, and its own projected profit. Apple requires many key suppliers to keep two weeks of inventory within a mile of Apple’s assembly plants in Asia, and sometimes doesn’t pay until as long as 90 days after it uses a part, according to an executive who has consulted for Apple and would not speak on the record for fear of compromising the relationship.
Not every supplier gives in. An executive who works with a major parts manufacturer says that Apple’s bargaining tactics tend to exert downward pressure on prices, leading to lower profits and margins. After months of negotiations, the company declined a $1 billion payment from Apple that would have required the supplier to commit much of its manufacturing capacity to Cupertino’s products. The executive familiar with these talks, who asked not to be named because the discussions were not public, says that while deals featuring $1 billion in cash up front are basically unheard of, his company didn’t want to be too dependent on Apple—and didn’t want to help it deflate prices.
Apple’s control reaches its crescendo in the leadup to one of its famed product unveilings, a tightly orchestrated process that has been refined over years of Mac, iPod, iPhone, and iPad debuts. For weeks in advance of the announcement, factories work overtime to build hundreds of thousands of devices. To track efficiency and ensure pre-launch secrecy, Apple places electronic monitors in some boxes of parts that allow observers in Cupertino to track them through Chinese factories, an effort meant to discourage leaks. At least once, the company shipped products in tomato boxes to avoid detection, says the consultant who has worked with Apple. When the iPad 2 debuted, the finished devices were packed in plain boxes and Apple employees monitored every handoff point—loading dock, airport, truck depot, and distribution center—to make sure each unit was accounted for.
Apple’s retail stores give it a final operational advantage. Once a product goes on sale, the company can track demand by the store and by the hour, and adjust production forecasts daily. If it becomes clear a given part will run out, teams are deployed and given approval to spend millions of dollars on extra equipment to get around the bottleneck.
Apple’s enormous profits—its gross margins were 40 percent last quarter, compared with 10 to 20 percent for most other hardware companies—are in large part due to this focus on operations, which is sure to remain a priority under Cook. The new CEO is known to give colleagues copies of Competing Against Time, a book about using supply chains as a strategic weapon in business. According to Martin, the logistics executive, Cook uses a catchphrase to hammer home the need for efficiency: “Nobody wants to buy sour milk.”
...from:
http://theunderstatement.com/post/11982112928/android-orphans-visualizing-a…
October 26, 2011785 notes
Android Orphans: Visualizing a Sad History of Support
The announcement that Nexus One users won’t be getting upgraded to Android 4.0 Ice Cream Sandwich led some to justifiably question Google’s support of their devices. I look at it a little differently: Nexus One owners are lucky. I’ve been researching the history of OS updates on Android phones and Nexus One users have fared much, much better than most Android buyers.
I went back and found every Android phone shipped in the United States1 up through the middle of last year. I then tracked down every update that was released for each device - be it a major OS upgrade or a minor support patch - as well as prices and release & discontinuation dates. I compared these dates & versions to the currently shipping version of Android at the time. The resulting picture isn’t pretty - well, not for Android users:
Other than the original G1 and MyTouch, virtually all of the millions of phones represented by this chart are still under contract today. If you thought that entitled you to some support, think again:
7 of the 18 Android phones never ran a current version of the OS.
12 of 18 only ran a current version of the OS for a matter of weeks or less.
10 of 18 were at least two major versions behind well within their two year contract period.
11 of 18 stopped getting any support updates less than a year after release.
13 of 18 stopped getting any support updates before they even stopped selling the device or very shortly thereafter.
15 of 18 don’t run Gingerbread, which shipped in December 2010.
In a few weeks, when Ice Cream Sandwich comes out, every device on here will be another major version behind.
At least 16 of 18 will almost certainly never get Ice Cream Sandwich.
Also worth noting that each bar in the chart starts from the first day of release - so it only gets worse for people who bought their phone late in its sales period.
Why Is This So Bad?
This may be stating the obvious but there are at least three major reasons.
Consumers Get Screwed
Ever since the iPhone turned every smartphone into a blank slate, the value of a phone is largely derived from the software it can run and how well the phone can run it. When you’re making a 2 year commitment to a device, it’d be nice to have some way to tell if the software was going to be remotely current in a year or, heck, even a month. Turns out that’s nearly impossible - here are two examples:
The Samsung Behold II on T-Mobile was the most expensive Android phone ever and Samsung promoted that it would get a major update to Eclair at least. But at launch the phone was already two major versions behind — and then Samsung decided not to do the update after all, and it fell three major OS versions behind. Every one ever sold is still under contract today.
The Motorola Devour on Verizon launched with a Megan Fox Super Bowl ad, while reviews said it was “built to last and it delivers on features.” As it turned out, the Devour shipped with an OS that was already outdated. Before the next Super Bowl came around, it was three major versions behind. Every one ever sold is still under contract until sometime next year.
Developers Are Constrained
Besides the obvious platform fragmentation problems, consider this comparison: iOS developers, likeInstapaper’s Marco Arment, waited patiently until just this month to raise their apps’ minimum requirement to the 11 month old iOS 4.2.1. They can do so knowing that it’s been well over 3 years since anyone bought an iPhone that couldn’t run that OS. If developers apply that same standard to Android, it will be at least 2015 before they can start requiring 2010’s Gingerbread OS. That’s because every US carrier is still selling - even just now introducing2 - smartphones that will almost certainly never run Gingerbread and beyond. Further, those are phones still selling for actual upfront money - I’m not even counting the generally even more outdated & presumably much more popular free phones.
It seems this is one area the Android/Windows comparison holds up: most app developers will end up targeting an ancient version of the OS in order to maximize market reach.
Security Risks Loom
In the chart, the dashed line in the middle of each bar indicates how long that phone was getting any kind of support updates - not just major OS upgrades. The significant majority of models have received very limited support after sales were discontinued. If a security or privacy problem popped up in old versions of Android or its associated apps (i.e. the browser), it’s hard to imagine that all of these no-longer-supported phones would be updated. This is only less likely as the number of phones that manufacturers would have to go back and deal with increases: Motorola, Samsung, and HTC all have at least 20 models each in the field already, each with a range of carriers that seemingly have to be dealt with individually.
Why Don’t Android Phones Get Updated?
That’s a very good question. Obviously a big part of the problem is that Android has to go from Google to the phone manufacturers to the carriers to the devices, whereas iOS just goes from Apple directly to devices. The hacker community (e.g. CyanogenMod, et cetera) has frequently managed to get these phones to run the newer operating systems, so it isn’t a hardware issue.
It appears to be a widely held viewpoint3 that there’s no incentive for smartphone manufacturers to update the OS: because manufacturers don’t make any money after the hardware sale, they want you to buy another phone as soon as possible. If that’s really the case, the phone manufacturers are spectacularly dumb: ignoring the 2 year contract cycle & abandoning your users isn’t going to engender much loyalty when they do buy a new phone. Further, it’s been fairly well established that Apple also really only makes money from hardware sales, and yet their long term update support is excellent (see chart).
In other words, Apple’s way of getting you to buy a new phone is to make you really happy with your current one, whereas apparently Android phone makers think they can get you to buy a new phone by making you really unhappy with your current one. Then again, all of this may be ascribing motives and intent where none exist - it’s entirely possible that the root cause of the problem is just flat-out bad management (and/or the aforementioned spectacular dumbness).
A Price Observation
All of the even slightly cheaper phones are much worse than the iPhone when it comes to OS support, but it’s interesting to note that most of the phones on this list were actually not cheaper than the iPhone when they were released. Unlike the iPhone however, the “full-priced” phones are frequently discounted in subsequent months. So the “low cost” phones that fueled Android’s generally accepted price advantage in this period were basically either (a) cheaper from the outset, and ergo likely outdated & terribly supported or (b) purchased later in the phone’s lifecycle, and ergo likely outdated & terribly supported.
Also, at any price point you’d better love your rebates. If you’re financially constrained enough to be driven by upfront price, you can’t be that excited about plunking down another $100 cash and waiting weeks or more to get it back. And sometimes all you’re getting back is a “$100 Promotion Card” for your chosen provider. Needless to say, the iPhone has never had a rebate.
Along similar lines, a very small but perhaps telling point: the price of every single Android phone I looked at ended with 99 cents - something Apple has never done (the iPhone is $199, not $199.99). It’s almost like a warning sign: you’re buying a platform that will nickel-and-dime you with ads and undeletable bloatware, and it starts with those 99 cents. And that damn rebate form they’re hoping you don’t send in.
Notes on the chart and data
Why stop at June 2010?
I’m not going to. I do think that having 15 months or so of history gives a good perspective on how a phone has been treated, but it’s also just a labor issue - it takes a while to dredge through the various sites to determine the history of each device. I plan to continue on and might also try to publish the underlying table with references. I also acknowledge that it’s possible I’ve missed something along the way.
Android Release Dates
For the major Android version release dates, I used the date at which it was actually available on a normal phone you could get via normal means. I did not use the earlier SDK release date, nor the date at which ROMs, hacks, source, et cetera were available.
Outside the US
Finally, it’s worth noting that people outside the US have often had it even worse. For example, the Nexus One didn’t go on sale in Europe until 5 months after the US, the Droid/Milestone FroYo update happened over 7 months later there, and the Cliq never got updated at all outside of the US.
Thanks primarily to CNET & Wikipedia for the list of phones.↩
Yes, AT&T committed to Gingerbread updates for its 2011 Android phones, but only those that had already been released at the time of the July 25 press release. The Impulse doesn’t meet that criterion. Nor does the Sharp FX Plus.↩
A couple of samples just from the past week: 1, 2 - in comments.↩
