Suppliers Squeezed as Apple Cuts Components Orders

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Bolaji Ojo
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Re: Suppliers squeezed
Bolaji Ojo   1/14/2013 3:13:41 PM

Barbara, Your comments included several valid points. Pricing was considered irrelevant in the case of Apple because it was assumed people would be ready to pay a premium for its products. That was the case until competing products became "competitive," that is, they matched and in cases exceeded Apple devices.

The second equally important point you made is the forecast Apple had for its products. The company failed to correctly read market conditions. I've noted for a while that rivals had to "get it right" otherwise they would be burried under the Apple avalanche. In reality, though, they were bound to eventually hit the mark through sheer determination and the reality that their businesses could go under if they failed to match Apple's design and production efficiencies. What Apple needed to do was anticipate this and try to stretch it out as much as possible. The executives also should have been checking out rivals' products and the consumers' acceptance level for these products. This would have been considered as they planned production forecasts. It's possible they believed their own hype.

The real issue here is where do suppliers go from here? Apple is still a major consumer of electronic parts and I can't imagine any supplier lucky to have its products designed into its devices turning down orders because one set of forecasts were off.

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Production Synthesizer
not surprised.
rohscompliant   1/14/2013 2:15:11 PM

I believe that Samsung is pretty well vertically & horizontally integrated; more so than Apple? They put their own stuff into their own phones as a result they have a better handle on costs......no? After seeing what the new Samsung phones can do over this past weekend I am not surprised that they have a larger market share. We gave one of our adult children a new IPhone5s for Xmas and after using it a bit I asked him why his new phone is better tham my IPhone 4S......he had no concrete answers that it was........good thing he got a bunch of Apple Gift cards.......so he can buy all the new peripheral accesories required since they changed their connection points........not a smart customer loyalty move.........APPLE is going to have to get it's act together again....get off their high horse.

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Supply Network Guru
every dog
FLYINGSCOT   1/14/2013 12:55:56 PM

I wonder if Apple reign is coming to an end or at least a rock patch in the road.  I speak to a lot of people these days who seem delighted with their Droid phones and even the latest Nokia Windows phones are being well received (according to my one man straw poll that is)

Barbara Jorgensen
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Suppliers squeezed
Barbara Jorgensen   1/14/2013 10:53:04 AM

This will be particularly bad for companies that count Apple as their single largest customer. Although most component makers don't use Apple's name, a few chip makers rely on Apple for more than 50 percent of their quarterly revenue. As analysts pointed out last year, Apple is an economy in and of itself, so it's going to hurt everyone in its supply chain.

I know many iPhone users that aren't happy with the costs associated with the iPhone 5 and are perfectly happy with the iPhone4S. I think Apple overestimated itself this time by introducing a product that's not compatible with many of its own accessories; requires lots of data but is otherwise similar to prior products.

I also wonder if pricing isn't beginning to play a role. At Samsung's prices, I'm willing to try new things (a tablet, for example) without feeling gypped if it doesn't live up to expectations.

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