supply chain
Latest
Apple to create 500 jobs in Cork, Ireland
Apple announced today that it will expand its headquarters in Cork, Ireland. "Apple has been in Cork for over 30 years and we are thrilled to be expanding our presence there," an Apple spokesman told the Irish Times. "Our plans will add over 500 new jobs to support our growing business across Europe." The Cupertino Company is meeting with local officials, the IDA Ireland and the Minister for Jobs Richard Burton who says this expansion "is a huge boost for the country." Apple's current plant in Cork was opened in 1980 and was the first non-US headquarters for the company. The Holyhill location now employs 2,800 people who work in backend, supply chain and distribution operations for Europe.
Report suggests Apple had best November ever
If you think Apple's finances have been flying high in 2011, just wait. A report by Brian White of Ticonderoga Securities shows that the company's supply chain is showing record sales for November. In turn, that could indicate record sales for Apple products during the holiday season. As reported on AppleInsider, White watches the "Apple Barometer," an index of Taiwanese suppliers who make the components for Apple's products. Over the last six years, the barometer has shown an average two percent month over month growth. The numbers for November were huge, with supply chain sales up a full 17 percent over those for October. The October numbers were a bit lower than usual due to Apple ordering many Macs, iPad 2s, and iPhone 4S units during the previous quarter, and that was reflected in the lower Apple stock prices seen in November. In the last quarterly earnings conference call, Apple CFO Peter Oppenheimer told analysts that he expected Apple to set new company records for iPhone and iPad sales during the December quarter. The Apple Barometer numbers seem to indicate that Oppenheimer's forecast was right on the money, and Apple's stock should move higher as a result.
Exploring Apple's supply chain secrets
One of the unsung heroes in the success of Apple over the past ten years or so has been the ability for the company to take control of manufacturing, procurement, and logistics of its products in ways that are completely innovative. In a Bloomberg Businessweek post yesterday, writers Adam Satariano and Peter Burrows did a deep dive into what makes Apple so successful in terms of operations -- an area where Apple CEO Tim Cook excels. According to the article, 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 occasional ruthlessness -- Apple gets big discounts on parts, manufacturing capacity, and air freight." The supply-chain management success story apparently began when Steve Jobs returned to Apple in 1997. At that time, most computer manufacturers shipped their products by sea, which was much less expensive but also slower. Jobs wanted to ensure that the translucent blue iMacs that had just been introduced would be available for Christmas 1998, so he had the company pay $50 million to buy up all available holiday air freight space. Companies such as Compaq later tried to book air transport for holiday shipments, only to find that Apple had monopolized the space. Apple's ability to manufacture a product and ship it right to a customer's door began with the iPod era, and an ex-Hewlett Packard exec recalls that an HP staffer bought one and received it a few days later, watching its progress from factory to home on Apple's website. Mike Fawkes, who was the supply-chain chief at HP, recalls that "it was an 'Oh s---' moment." By doing this, Apple was able to avoid keeping large inventories of product on hand Apple also buys up speciality equipment, including customized lasers that are used to poke the almost-invisible holes that are used to emit a green dot of light on many of the company's products, including the MacBook Pro and MacBook Air, as well as the Wireless Keyboard and Magic Trackpad. Those machines cost about $250,000 each, and Apple has bought literally hundreds of them to add a touch to its products that few people may notice. The Bloomberg Businessweek article is a good read, and fascinating for anyone who has an interest in what goes on behind the scenes at Apple.
Sony Ericsson posts surprising Q2 loss, blames Japanese earthquake
Many analysts and market watchers were expecting a strong Q2 earnings report from Sony Ericsson today, but the company took them by surprise, posting a net loss of some €50 million (about $70.5 million), compared with a net gain of €12 million (around $17 million) at the same time last year. The manufacturer also sold only 7.6 million phones during the quarter, marking a 31 percent year-on-year decrease, while overall revenue fell from €1.76 billion (about $2.5 billion) last year to €1.19 billion (almost $1.7 billion) during Q2 2011. CEO Bert Nordberg attributed much of the decline to the Japanese earthquake, which disrupted the venture's supply chain, resulting in the loss of around 1.5 million devices. The report comes after Sony Ericsson launched a widespread cost-cutting campaign and re-focused its efforts on smartphone production, which comprised more than 70 percent of all sales during Q2, compared with just 40 percent at the end of last year. For a more thorough breakdown, head past the break for the full press release.
Analyst ups AAPL on strong projected iPad, iPhone sales
Canaccord Genuity analyst T. Michael Walkley remains bullish on Apple pointing to strong iPhone and iPad sales in June. He's so confident in Apple that he boosted his iPhone sales estimate from 75.5 million million to 77.3 million in 2011. He also predicts Apple will sell a whopping 100.2 million iPhones and 55.1 million iPads in 2012. As others have said before him, Walkley notes that Apple will continue to lead both the tablet and smartphone market. So what does these numbers mean for the average joe? More iPhones and iPads in circulation, greater incentive for developers to jump into the iOS ecosystem and extra cash for Apple to pump into research and development for the next generation iOS devices. Sounds good, doesn't it?
Apple keeping iPhone 5 suppliers mum about launch date
In a research note, Analyst Brian White with Ticonderoga Securities suggests Apple is being extra secretive with its Asian suppliers when ordering parts for the iPhone 5 and is still quietly preparing the next generation handset for a June or July launch. White writes, "Although we do not have a smoking gun that definitively rules out a delayed autumn unveiling or one that supports a launch this summer, there is a pattern of activity in motion with the supply chain that makes us question a delayed launch." Circulating rumors suggest Apple may release the iPhone 5 in the fall instead of the summer as it has done in the past. Analysts making this prediction have pointed to a lack of component orders for the iPhone which should have been made if the Cupertino company was targeting a June launch. Other rumors point to a significant overhaul of iOS which may include a cloud-based file locker and music streaming service that could debut this fall along with new iPhone and iPod touch hardware. White also confirms other reports that suggest Apple is using its cash reserve to secure components for its iPad 2, iPhone and iPod touch. Apple is reportedly offering upfront cash payments to suppliers to keep its production line flowing while blocking out competitors that are not as cash-rich as Apple.
Sony Ericsson Xperia Neo delayed to Q3, Arc and Play facing limited supply due to Japanese quake
There hasn't been much good news coming out of Japan lately and this sadly keeps up with the unhappy trend. Sony Ericsson has officially bumped the broad launch (it's already available in limited quantities) of its Xperia Neo handset to at least July, explaining the delay as the result of "supply chain disruptions." Additionally, the Xperia Arc and Play devices, two other members of the company's new Android Gingerbread family, will be available in smaller volume than expected, at least for the near term. We guess that might go some way to explaining why the Xperia Play failed to reach some UK carriers in time for its April 1st launch date. Skip past the break for a statement from Sony Ericsson, who promises to be more explicit about the situation when it delivers its latest quarterly results on April 19th.
Apple's touch panel demand helped delay RIMs PlayBook
RIM announced its PlayBook tablet last year, and eager BlackBerry fans have been waiting months for this QNX-based tablet to debut. According to a rumor from Digitimes, this wait was made even longer thanks to Apple and its stranglehold on the touch panel market. Asian supply chain sources suggest Apple used its treasure chest of cash to secure touch panels for its iOS devices, leaving other manufacturers out in the cold. RIM reportedly delayed the PlayBook while it secured touch panels and put the finishing touches on its tablet OS. Digitimes is notoriously hit or miss with its insider information, but in this case, its report may be accurate. Apple is known for its ability to secure critical device components from Asian suppliers before its competition. A few years ago Apple cornered the market on NAND Flash for its iPhone and iPods while other manufacturers were left scrambling for the scraps.
Cover lens supply key for 2011 iPad 2 shipment goal
A report out of Digitimes suggests the supply of cover lenses for touch panel modules may influence Apple's future production rate of its popular iPad 2. Sales of the iPad 2 have exceeded expectation, and Apple reportedly shipped 2.4 to 2.5 million tablets in March alone. Conservative estimates predict Apple may ship over 4 million units per month in the upcoming financial quarter. Asian supply sources hint that the ability of Apple to meet this growing demand for its popular tablet device hinges on the ability of manufacturers to produce this necessary lens component. Currently, Taiwan-based TPK Touch Solutions, G-Tech Optoelectronics and more are expanding their manufacturing capacity and ramping up production of these cover lenses. In the end, this component may not delay production of the iPad 2, but it does reveal the struggle parts manufacturers encounter when a new device taxes their production line.
Apple could agree to component price hike to secure touchscreens
Contending with seemingly insatiable demand for its new iPad 2, Apple is pondering paying higher prices for touch panel components, according to a report from DigiTimes on Wednesday. Manufacturers in Taiwan claim Apple is more open to certain price hikes during negotiations as the California company tries to secure a sufficient supply of components for its popular touchscreen products. Higher component prices, in the short term, will shrink Apple's gross margins on three of its hottest selling products: the iPad, iPhone and iPod touch. But securing adequate availability of touch panels should help the company relieve some of the constraints in its global supply chain. Such a deal would also put pressure on other consumer electronics companies to pay more for the components they need to build competing tablet computers and smartphones. Apple currently faces incredible pressure from consumers and shareholders to address bottlenecks in the supply chain for its successful families of touch panel devices. Lead times for the new iPad 2 ballooned to 4–5 weeks in its first few days on the US market, and the tablet goes on sale to a broader, global market this Friday. Apple reportedly expects to ship 40 million iPads in 2011. The company is also expected to launch its next generation iPhone later this year. The earthquake and tsunami that struck Japan earlier this month further fueled concerns over possible touch panel supply shortages. According to AppleInsider, a recent report suggested Foxconn, Apple's manufacturing partner, has only two or three weeks' worth of touch panels stockpiled. If the situation in Japan doesn't improve, Foxconn could deplete its stock of touch panel components. Despite these concerns, DigiTimes believes Apple is well positioned to weather a shortage of touch panels. Apple has already booked an estimated 60 percent of the world's touch panel output capacity. As the global market leader in touchscreen devices, Apple will continue to control the lion's share of the world's touch panel supply and enjoy lower component pricing than its competition. "Supply for touch panel[s]...will be more smooth for Apple," concluded DigiTimes. [via AppleInsider]
Report: Apple's inventory woes fixed for holiday shoppers
A number of analysts are expecting inventory shortages to restrict holiday gadget sales. However, Forbes reports that Apple will be able to avoid the pinch. Jason Busch, the founder and Managing Director of advisory firm Azul Partner, expects Apple to keep holiday shoppers happy for three main reasons. Busch says that firstly, Apple has "superior" forecast accuracy than its competitors. Keeping a close eye on where their inventory is at all times, Apple is able to control the particulars accurately, although they don't always get it right. For example, when a new iteration of a product is released -- like the new MacBook Air -- stock of the previous version will dry up in the weeks leading to that release, demonstrating Apple's precision in inventory management. Secondly, Busch says Apple is "at the top of the [inventory management] food chain" because of its sheer weight in the consumer electronics market. "Apple controls so much volume that it has greater influence over its suppliers, at multiple levels," says Busch. Finally, Apple can build strong lead times for its most popular products. For instance, the iPad was released in April allowing for strong supply chains to be established well before the expected holiday demand. Gartner supply chain analyst Mickey North Rizza affirms this by saying, "Because Apple brought out the iPad in April, they have had time to ramp things up. Apple's efforts to build a supply chain for each product will continue to create a distinct advantage in the marketplace." With iPhone 4 and iPad supply shortages having been recently resolved, Apple smoothed the kinks in its related supply chain. Either way, if you're looking to buy a loved one some Apple gear during this festive period, we'd recommend starting early, just to be on the safe side. [via MacDailyNews]
EVE Evolved: EVE Online's not-so-free market
One of the most talked-about features of EVE Online is its player-run economy. Due to over 330,000 players living on one server, the markets have reached a critical mass where the laws of economics play out in a very effective manner. When there's a demand for something, no matter how obscure the item or low the demand, you can be sure there are dozens or hundreds of pilots trying their best to supply it. The in-game economy mirrors real-life economic situations so closely that CCP even hired a dedicated economist to analyse the market and advise CCP of any problems that arise. EVE's economy is often referred to as a pure free market, but that isn't technically true. At its heart, EVE is still a game designed and implemented by a team of developers. All MMO economies require some degree of control and intervention for the game to remain playable. In EVE, this comes in the form of careful balance of supply and demand via changes to game mechanics and drop rates. There are also a number of more direct passive influences on the market, such as NPC market orders and insurance. In this economic article, I look at a few of the influences that constrain free-market economics in EVE.
Wii shortage finally nearing its end, says GameStop exec
We never, ever thought it'd take this long, but we've finally received a sign that the Wii supply and demand might be nearing some equilibrium, almost two and a half years later. According to GameStop SVP Bob McKenzie, the retailer now has a couple weeks' worth of supply, which seems to be fairly unprecedented given the numerous shortage stories we've heard over the console's 852-day lifespan. That's not to say the console's popularity is waning -- it's still topping US sales charts, and according to NPD, pushed over 750,000 units last month. So now that one shortage might be nearing its end, how about Nintendo find a way to keep Wii Fit in stock?[Via Joystiq]Read - McKenzie on Wii supplyRead - February NPD figures
GameStop on Wii: 'Three years later, we finally have enough'
Three years and countless lives lost later, it appears that Nintendo's Wii has finally found equilibrium in the epic battle between supply and demand. GameStop SVP of Merchandising Bob McKenzie, speaking with embedded reporters from Gamasutra, expresses the company finally has enough inventory on the shelf, with at least a couple weeks worth of supply.As for software, McKenzie sees EA Sports Active being another hit for the console, stating that the pawnshop conglomerate was surprised by the popularity of Wii Fit. Although this talk of Wii sales equilibrium sounds lovely in March, that doesn't guarantee it'll hold true once the holidays come around. But, at least, the concept of balance in the Wii supply chain is a tangible idea after all these years.
Nintendo cranking on Wii production for the holidays, still making no promises
Hard to believe, nay, mind-boggling, that two full years after Nintendo launched the Wii in America we're still looking at shortages. In the midst of "economic turmoil," no less. Back in April, Reggie Fils-Aime proclaimed that he was "passionately upset" about the difficulty consumers were having in finding Wii consoles, and now that yet another holiday season is upon us, it's clear that he's made some changes. In a recent interview with the Los Angeles Times, he admitted that Wii production was up from 1.6 million units per month (during this time last year) to 2.4 million units per month (now), though he wouldn't go so far as to say you'd have an easy time finding one. In fact, he stated that "once you see [a Wii console] on the shelf, you ought to buy it." Also of note, those still scouting a Wii Fit may be in luck, as the Big N could decide to ship more units to America rather than Europe now that the greenback is gaining strength versus the euro. Good luck hunting -- we'd recommend you start looking, um, yesterday.Update: Looks like Ninty's already turning up the burners -- that's a heretofore-unbelievable shot of Wii stock at reader Roberto's local Best Buy in West Paterson, New Jersey.[Via GameDaily]Read - Reggie Fils-Aime interviewRead - Analyst's take Wii Fit shipments
Guts of BlackBerry Bold found to cost $170
Not that it really matters to consumers one way or another -- after all, if you want a Bold, you'll pay the asking price -- but recent analysis by research firm iSuppli has found that parts and materials used to make the device "cost $158.16, and that assembly and testing add another $11.25, for a total cost of $169.41." Just for comparison, the Curve costs a cool $103 to build, and assuming RIM can sell the Bold to carriers at around $350, it'll net a gross margin of around 45% before R&D costs, software, marketing, shipping and freebies given to obscenely wealthy celebs are taken into account. The report (er, the part about the nice margins) should come as welcome news to shareholders, who have recently been worried that the current economic situation may keep individuals from snatching up new 'Berrys at a breakneck pace. Now, if only RIM / AT&T would let the thing get through testing, we'd be all set to contribute to those margins here in the US. Ahem.
Nintendo: Wii shortage causing planning problems
When Reggie Fils-Aime talked to Reuters a few days ago, we were so focused on the Nintendo of America president's displeasure with unofficial Wii bundles that we didn't even notice the Reggginator acknowledging the business problems Wii shortages are causing his company. "The level of demand we are facing complicates all of our future business planning," Fils-Aime told Reuters. "All of that becomes a much tougher exercise until we have supply and demand curves that intersect."The hard-to-predict hardware supply complicates other company decisions, Fils-Aime said, such as how many units of Wii Fit to produce. "We at Nintendo America are focused on getting to the point when any consumer can walk into any of our retailers and find a Wii," he said. "Then we can plan, on an ongoing basis, the rest of the business."It might seem a little ridiculous for Fils-Aime to be complaining about the problems the shortages are causing Nintendo. After all, if this was really a concern, couldn't they just spend whatever it takes to turbo-boost the supply chain? Then again, that added expense could become a liability down the road if and when the current Wii mania eventually starts its downturn. Whatever the case, we're pretty sure that any supply problem so dire that it forces a company to pull advertising is less than ideal. We're just saying, is all.
Samsung resumes chip production, minifies losses
Merely hours after Samsung was staring at "at least" $54 million in losses from an unexpected power outage at its Giheung complex, the firm is now reporting that the half dozen production lines are "fully operational." Moreover, the outfit is now projecting losses to peak at around $43 million, which actually doesn't sound too horrific compared to prior estimates. It was noted, however, that the disruption could extend a shortage of NAND flash memory through "at least the first half of August," and reports are already claiming that prices of select NAND chips have risen "6.3-percent to a record $19.02."
TI launches second-generation RFID silicon
With corporate giants like Wal-Mart embracing RFID in every potential nook and cranny of their supply chain, it's becoming quite the profitable little cottage industry, and Texas Instruments apparently wants a bigger piece of the pie. With the announcement of its EPC second-generation UHF-based RFID silicon, the company has blazed its own trail by insourcing the fabrication of its tags and marketing the new chips to retailers who rely on fast-paced data transmissions in their manufacturing and distribution channels. The new Gen 2 silicon obviously has complex underpinnings responsible for the changes; as TI states, it's developed "on the most advanced analog process node at 130 nanometer and with a built-in Schottky diode [saywha?] for more efficient conversion of RF signal energy." While that may not mean much to you, the skinny is that these new tags have increased chip-to-reader sensitivity, so more packages can be read at a faster pace from a greater distance than before. What this provides end-users with is greater flexibility, which has been a issue with passive RFID thus far -- new wafers and chips can be placed in more varied locations on pallets, boxes, and even flexible packaging such as bags, without fear of slipping under the radar (literally). And, as always, while retailers may dig the the increased read-range, we're sure it won't be long before the privacy advocates introduce a high-proximity RFID scrambler just in case these tags make the jump from packaging to people.
