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Apple's OEM FoxConn Launching Its Own Retail Stores

Tyler Durden's picture


Two weeks ago, when summarizing the state of the US vs China escalating patent war (for now manifesting itself in the courtroom brawl between Apple and Samsung, but soon to drag many more comparable companies down in drawn out litigation), we observed that while AAPL may have the upper hand, iPhone 5 map fiasco notwithstanding, that "the Chinese politburo can one day decide to pull FoxConn's operational license, in the process bankrupting AAPL overnight" if China really wanted to turn the tables. Obviously, this was the "thought experimental" MAD outcome which leads to loses for everyone involved: both Apple and China (where Apple's contract manufacturer FoxConn employs over 1 million workers). There is one other alternative: that FoxConn, by now having reverse engineered the peak of Apple's brilliance (whose latest evolutionary step was "lighter" and "longer", which anyone could have come up with), decides to brave it alone, and instead of being a contract manufacturer, to simply slap on a FoxConn sticker, a la Acer and ASUS, and sell all Apple-equivalent products at 50% off while collecting all the revenue. Impossible, you say, Apple would never allow it? It is already happening, first in high-growth Brazil, where FoxConn is now launching its own stores.

From Valor International:

Chinese contract manufacturer Foxconn, which produces Apple's Iphone, will create a direct to consumer store at its new R$1 billion factory in Itu, in the state of São Paulo, offering several of the brands manufactured by the company. The plant's project was presented Thursday in the São Paulo's state government headquarters. It will be the 9th Foxconn factory in Brazil, but the first not to be created in leased land, representing a more permanent home for the Chinese giant. The new factory will employ between 5,000 to 10,000 people up to 2016.

As to what products will FoxConn will sell, it is for now unclear but will likely focus initially on merely being a reseller of Apple and other beneficiaries of its OEM supremacy. If this is the route Hon Hai's factories decide to go, it means that the "magic" of the Apple retail experience will soon be rapidly commoditized, once the inventory of the Apple store is replicated down the street at another retail location, one which has its own selling culture.

One thing is certain: if and when it so chooses, FoxConn having reverse engineered a stunning half of the world's entire OEM electronic device product flow, will have its choice of what it wants to bring direct to retail. As a reminder:

Apple’s position as the world’s leading computing device company has driven manufacturing partner, Foxconn, to seize an astonishing 50 per cent of the world’s electronic manufacturing services market, said iSuppli today. Half of the world’s production of consumer electronics devices come from a Foxconn factory, with Apple’s production demand driving this record, iSuppli explains. This is now an Apple world.


“Foxconn’s customers are some of the hottest companies in the electronics business today, most notably Apple,” said Thomas Dinges, iSuppli associate. “As Apple and others have gained share, so has Foxconn.”


With revenue of $17.1 billion, Taiwan’s Foxconn, aka Hon Hai Precision Industries, was the dominant EMS provider in the first quarter of 2010, dwarfing No. 2 player Flextronics International, which posted revenue of $5.9 billion during the same period. Apple represents the fastest-growing customer for Foxconn, which manufactures products including the iPad and the iPhone 4.

In simple terms it's called "economy of scale", or in this case "monopoly", and soaring leverage to do whatever FoxConn chooses. Even if that means taking on some of its core OEM customers: after all where are they going to go?

Which begs the question: what happens to Apple margins and future innovation cycle if it ever were to lose its primary OEM channel should the infighting between the US, Korea (Samsung) and China (HTC), aka West vs East, continue escalating? Not to mention its $600 billion market cap.

And even if FoxConn merely becomes a reseller of Apple and other brands, how long until people realize that at the end of the day absent the creative genius that took Apple to the pinnacle of electronic device innovation under Steve Jobs, all it really is, is a sticker of a fruit affixed to a bunch of products made and packaged by a company operating out of China, which also is the beneficiary of the GDP boost courtesy of iPhone 5 sales, not the US - all the US consumer gets is the credit card bill to fund Chinese economic growth.


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Sat, 09/22/2012 - 14:54 | 2820701 Azannoth
Azannoth's picture

Yeah? eat this -> Eisenhower's Death Camps

Sat, 09/22/2012 - 16:06 | 2820820 AldousHuxley
AldousHuxley's picture

outsourcing, offshoring come full circle

as soon as asian slave wage factories get monopoly and get state sponsored commercial copying perfected, apple pie will rot.


roman empire ended when they promoted non-citizens in the high ranks of military who soon wanted independence and roman citizens forgot how to fight.


steve job's legacy on full display.

Sat, 09/22/2012 - 19:09 | 2821052 Sofa King
Sofa King's picture

Did anybody stop to think that this is why Apple has been cracking dorm on patents lately.  Doesn't really matter much, Foxconn has Apple by the balls...evidently the Chinese have not forgotten the works of Sun Tzu.  I talked about this scenario with some die hard Apple drones a few years ago and the response I received is that Apple is the innovation and ideas and without that you have nothing...wrong, labor is everything.  It's all a result of this environment that we have developed where it is more important to have a higher education that a noble craft.  Read a book last summer, I believe it was called "The Puritan Gift", the author gave a great name for what we have, which a large amount of people in "The Cult of the (So-called) Expert"...absolutely brilliant, but i digress. Bottom line, Apple will pay for it's greed and stupidity.  Foxconn can market to quite a few billion people who will gladly ignore US Patent laws.  The result is that Apple will be forced to manufacture locally and be priced out of the market, Foxconn will then move in and take over the scraps.  Why now?  Well it's apparent with this latest iteration of the iPhone, that there is not much left that is required to be furnished in a cellphone; Cloning may commence at full speed.



Sat, 09/22/2012 - 19:53 | 2821086 r3phl0x
r3phl0x's picture

I completely agree, the question is whether it's possible to make money shorting it, or whether Apple will just buy enough influence with the Fed/WallSt to keep the stock price rising 100% a year forever on printed money. Income be damned; there is room left for at least a 3-4X higher P/E! Got to keep up appearances, you know.

Sat, 09/22/2012 - 21:58 | 2821228 hangemhigh
hangemhigh's picture

TO: Sofa King

Did anybody stop to think that this is why Apple has been cracking dorm on patents lately. Doesn't really matter much, Foxconn has Apple by the balls...evidently the Chinese have not forgotten the works of Sun Tzu.

M chinx has done stole the golden fleece and hi-jacked the cardinal rule of global capitalism:

you can do anything you can get away with.    

I want my simulacra........and I want it………….now


Sat, 09/22/2012 - 23:45 | 2821341 old naughty
old naughty's picture

Doesn't matter how you look at it, it is a cycle end --- when copycats fight it out in a dog-eat-dog stage. The more innovative (if you can call them that) ones may last a bit longer, but the aura (eh, protective shield) is going fast and the biggest will fall harder.

It's all part of the plan.

Sun, 09/23/2012 - 14:36 | 2822467 Cathartes Aura
Cathartes Aura's picture

that "aura" you mention is just a brand-ing, like a cattle mark of ownership, designed to show loyalty to a corporation. . . that the Job is done, and all that's left is the i-dea becomes obvious.

of course, there will always be fans who live through their brands, but the life-cycle of this i-dea grows increasingly shorter as time speeds up.

oh, and karma, yeah.

Sun, 09/23/2012 - 13:31 | 2822317 theprofromdover
theprofromdover's picture

US Patent laws were created to make lawyers money.

You can basically patent anything, and then stand back to watch your lawyers fight someone else's lawyers for who has primacy.

The system should allow any patent until it has be rigorously checked against everything already registered.

But that would be common sense, how can you make a fat buck out of that ...


Come buy my satsumaphone6, fully patented.

Sat, 09/22/2012 - 16:19 | 2820842 Quinvarius
Quinvarius's picture

Nothing is more cruel than the cruelty dished out during a civil war.

Sat, 09/22/2012 - 19:37 | 2821079 Ying-Yang
Ying-Yang's picture

The irony of it all is Apple who is flush the cash could have paid Americans to make products in the US and not have this problem. Apply this thinking to all American based greedy global corporations. Reggie will have an infomercial about this soon.

Sun, 09/23/2012 - 09:08 | 2821785 flattrader
flattrader's picture

Fuck Apple.   It will get what it deserves.  Jobs got a good dose of so-called "karma" himself.

>>>Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.

The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products<<<

Mon, 09/24/2012 - 09:27 | 2823976 Shizzmoney
Shizzmoney's picture

This just in: Corporations actually really, really, Communism.

At some point, the externalities of outsourcing with out leverage the benefits corporations have had for the last 40 years. 


Sat, 09/22/2012 - 14:58 | 2820710 vast-dom
vast-dom's picture

this is what happens when US companies save by outsourcing.

Sat, 09/22/2012 - 15:23 | 2820741 palmereldritch
palmereldritch's picture

Only after complete de-industrialization and bankruptcy can the planned feudal gulag state begin to roll out

EDIT for Addendum:

WASHINGTON – At a time when states are struggling to reduce bloated prison populations and tight budgets, a private prison management company is offering to buy prisons in exchange for various considerations, including a controversial guarantee that the governments maintain a 90% occupancy rate for at least 20 years.

The $250 million proposal, circulated by the Nashville-based Corrections Corporation of America to prison officials in 48 states, has been blasted by some state officials who suggest such a program could pressure criminal justice officials to seek harsher sentences to maintain the contractually required occupancy rates.

"You don't want a prison system operating with the goal of maximizing profits," says Texas state Sen. John Whitmire, a Houston Democrat and advocate for reducing prison populations through less costly diversion programs. "The only thing worse is that this seeks to take advantage of some states' troubled financial position.

States Selling Prisons -- Including Inmates -- to Private Industry

As cash-starved state governments scrape their way through this so-called recovery, they might as well hang signs with this message on their capitals: "Everything must go."  States are hemorrhaging workers and selling off assets at a startling rate as they grapple with anemic tax revenues and dwindling federal dollars. So dire are the states' economic woes that, in recent years, they've begun offloading a more unusual type of property: prisons.

Another growth industry in our Age of Incarceration is prison labor, putting inmates to work making everything from uniforms to furniture for a few cents an hour. As historians and TomDispatch regulars Steve Fraser and Joshua Freeman explain, prison labor has a long and sordid history that should make us anxious indeed for our own degraded economic moment.  Leasing prisoners to companies at wages from hell is a "Yankee invention" dating back almost 200 years that was modern then and, frighteningly enough, couldn’t be more modern today

Sat, 09/22/2012 - 15:42 | 2820781 vast-dom
vast-dom's picture

yeah mr stigmata Chris Hedges discussed that the other day. so here we have the future iFuck gadget assembly workers; better than the chain gang and certainly more profitable than Chinese workers (for prison industry, Apple and NASDAQ) -- maybe the hedge funds can game this a bit more.

if we take the Foucaltian discipline and punish approach we have certainly gone backwards in methods of control, but that is because TPTB are less intelligent and can't see that there is no need to imprison the sheeple and still they can derive cheap labor, since they are already inmates for reasons i'm much too lazy to enumerate...

Sat, 09/22/2012 - 15:46 | 2820796 palmereldritch
palmereldritch's picture

We have to keep our minds free at least, the main battle necessary to win the war...They can't take that can they ?...

Sat, 09/22/2012 - 16:10 | 2820805 vast-dom
vast-dom's picture

that is preisely my (Foucalt's) point -- they already have taken the freedoms of mind away or at very least limited the possibilites through idealogical state apparatuses of mostly the most banal kinds. and now the soda that rots your mind/body is the soda that is limited in size for more state control over that which is already a low-grade indoctrination of both body and mind and as such gives great returns: coca-cola co. + 16 oz. LAW + etc. + etc. + etc.


unfortunately Apple does not have a lab-grade SECRET formula; just wait till the Chinese hack the Coke formula and give new meaninging to Chinese PeePee Cola. (Kinda amazing how a secretive company is essentially open source when compared to high-fructose syrup poison water.)

Sat, 09/22/2012 - 16:13 | 2820831 palmereldritch
palmereldritch's picture

I'm sure Monsanto is working on just the right dosage as we post...

Sat, 09/22/2012 - 16:23 | 2820848 vast-dom
vast-dom's picture

yeah...i have the first edition 3 stigmata...looking for Ubik........

Sat, 09/22/2012 - 16:44 | 2820884 palmereldritch
palmereldritch's picture

A first edition...that's amazing.  A true treasure. That book is seriously trippy...the only thing weirder is how PDK was seemingly a precog himself envisioning their transhumanist agenda. Ubik is fantastic too btw.

My greatest book treasure is a dog-eared paperback of Fear and Loathing in Las Vegas.  Far from a first edition but autographed by Hunter himself.  Hard to get first edition and autographed ebooks these

Sat, 09/22/2012 - 16:51 | 2820893 vast-dom
vast-dom's picture

i have true first Fear and Loathing, but not signed........very cool that Hunter signed yours! A lot of the PDK books were treated as disposable so tough to get....collecting books............

Sat, 09/22/2012 - 17:09 | 2820914 palmereldritch
palmereldritch's picture

I agree....that's where garage sales in old neighborhoods or goodwill stores come in handy...the treasures are out there...Keep it real vast-dom. Cheers!

Sat, 09/22/2012 - 17:27 | 2820940 disabledvet
disabledvet's picture

"do not be the story." Hunter S Thompson. Oooops. Too late...

Sat, 09/22/2012 - 17:44 | 2820962 vast-dom
vast-dom's picture

he WAS the story = GoNzo even during the Great Shark Hunt, tho less so....


i think he also said do not green arrow yourself...oh well....

Sat, 09/22/2012 - 19:46 | 2821084 Ying-Yang
Ying-Yang's picture

The question remains.... will this news impact Apple stock? I think so. So little time so many hedge funds in the hotel.

Stay thirsty my friends.

Sat, 09/22/2012 - 21:49 | 2821219 RockyRacoon
RockyRacoon's picture

I remember having found a 1st of Been Down So Long It Looks Like Up To Me on a dusty shelf in an Ozark junk store.  I saw it and thought, "No way!".  But... way.   There she sat on on the shelf with a bunch of otherwise dollar-value hardbacks.  I looked around furtively, like I'd just spotted a $100 bill on the floor.  Surely everybody in the store knew I was essentially stealing this book!  Grabbed a half-dozen of the other books, put the jewel in the middle of the stack and got them all for $5 at the register.   It was a very nice copy with DJ and all.  I only read my paperback reprint, saving this one for posterity.

Sat, 09/22/2012 - 15:47 | 2820799 Dr. Engali
Dr. Engali's picture

Just when you think you couldn't be more disgusted of direction the country is headed something else turns up. It won't be long before we are back public lynchings, and televised executions.

Sat, 09/22/2012 - 17:05 | 2820910 edifice
edifice's picture

A la, "The Running Man?" :)

Sat, 09/22/2012 - 17:28 | 2820944 MiltonFriedmans...
MiltonFriedmansNightmare's picture

I prefer looking ahead to Hunger Games.

Sat, 09/22/2012 - 16:01 | 2820813 tenpanhandle
tenpanhandle's picture

to call slave labor a "yankee invention" completely diverts the truth and turns the arguements which contain this into a complete lie and therefor propaganda bullshit.  A half truth is a whole lie.

Sat, 09/22/2012 - 17:44 | 2820966 sessinpo
sessinpo's picture

Agreed. Slavery has been around for thousands of years.  palmereldritch is insincere at best in the post and a douche bag at least for not recognizing this.

The same goes for those anti american post that use things such as colonialism for the ills of the world when the fact is nations have colonized other areas for thousands of years - certainly long before america ever existed.


Liberals have no lows they can reach, but they try.

Sat, 09/22/2012 - 18:14 | 2820998 palmereldritch
palmereldritch's picture

Ad hominem.  Awesome.

Why don't you read the article and look at the context instead of excising one statement? The context was organized prison labour forces dating from the 1820s...kinda like the Shawshank Redemption.  There's a movie explanation for you, given your pathetic reading comprehension. I never said they invented slavery. Nice try.

Added bonus: 'Liberal'.  Your programming is primitive...isn't it?

Sat, 09/22/2012 - 16:23 | 2820852 Uber Vandal
Uber Vandal's picture

Already, some companies are closing facilities due to prison labor in the USA:|newswell|text|Home|s


 A company that makes clothes for the U.S. military will shutter plants in Alabama and Mississippi, shedding about 260 jobs total, as federal inmates begin manufacturing the apparel inside prisons.

Federal Prison Industries, which operates plants inside federal corrections facilities, is not allowed to sell inmate products to private companies, but it can sell to government agencies. The federal law that created the prison industries requires federal agencies to buy inmate-made items even if they are more expensive than like items made by private companies. 



Sun, 09/23/2012 - 00:52 | 2821448 Vlad Tepid
Vlad Tepid's picture

One kind of prisoner making threads for another one.  How ironic.

Sat, 09/22/2012 - 16:39 | 2820872 dark pools of soros
dark pools of soros's picture

"Another growth industry in our Age of Incarceration is prison labor, putting inmates to work making everything from uniforms to furniture for a few cents an hour"


no more need for FoxConn..and the new jobs program is, go steal something, get caught and get a job!!!   (might be hard getting caught in this country though)

Sat, 09/22/2012 - 18:28 | 2821019 palmereldritch
palmereldritch's picture

Just keep up to date on your taxes. 

Taxes that are owed to those same criminals that own the FED, the six primary predatory banks, the private prison industry and thus the emerging gulag economy.

Max Keiser on the global prison economy:

Sat, 09/22/2012 - 17:27 | 2820939 MiltonFriedmans...
MiltonFriedmansNightmare's picture

This is what happens when you fuck a stranger in the ass!

Sat, 09/22/2012 - 22:05 | 2821237 palmereldritch
palmereldritch's picture


Sat, 09/22/2012 - 17:47 | 2820969 Ignorance is bliss
Ignorance is bliss's picture

Let's hope they fracking learn the lesson before we have no infrastructure left to rebuild upon.



Sat, 09/22/2012 - 19:50 | 2821087 Ying-Yang
Ying-Yang's picture

We have the resources and people to rebuild. There are a bunch of good people to have a do over. Keep the faith brother!

Sun, 09/23/2012 - 01:29 | 2821487 Karlus
Karlus's picture

Whats to prevent AAPL from pivoting to Mex? I hear they pretty much buy all the equipment for their suppliers anyhow.

If China burns AAPL, whats to keep .gov from marking all of their T-billz invalid?

Sat, 09/22/2012 - 15:00 | 2820713 jonjon831983
jonjon831983's picture

Not to put it down or say it is fine, but atrocities are done by all sides - it is shrugged off as "it's war".

Humans are... human.


If these things are "revealed" now, imagine what could be hidden out there about all sides.

Sat, 09/22/2012 - 16:40 | 2820878 dark pools of soros
dark pools of soros's picture

That guy is always spouting off about Nazis..  what about the Bolshevik stavation of the Kulaks?  Jews ran that show

Sat, 09/22/2012 - 19:18 | 2821059 palmereldritch
palmereldritch's picture

Perhaps more Hegelian dialectic? 

Those forces, Nazism and Zionism appear to have more in common than one would be expected to believe.  Both have a history of being anti-human and anti-Jew.

Sat, 09/22/2012 - 16:33 | 2820856 shovelhead
shovelhead's picture

Does the iphone have an Angry Nazis game?

Sat, 09/22/2012 - 17:36 | 2820951 zerozulu
zerozulu's picture

One day, when US will not be the super power, newspaper will print pictures from Abu-garib, Iraq, Afghanistan, drone kills from Pakistan and Palestine.

Sat, 09/22/2012 - 18:53 | 2821036 Real Estate Geek
Real Estate Geek's picture

. . . and Philadelphia, and Poughkeepsie, and Phoenix, and Portland, and Park City, and Palm Beach, and Prescott, and . . .


Sat, 09/22/2012 - 19:52 | 2821089 Ying-Yang
Ying-Yang's picture

In other words don't hide out in a city that begins with a P.

Mon, 09/24/2012 - 09:20 | 2823950 slaughterer
slaughterer's picture

Wasn't "Fox Force 5" the name of the TV pilot that the Uma Thuman character in "Pulp Fiction" starred in for her 15 minutes of fame? 

Sat, 09/22/2012 - 14:49 | 2820689 Yen Cross
Yen Cross's picture

 I hope they give Samsung first "dibs" on shelf space!

Sat, 09/22/2012 - 14:49 | 2820692 css1971
css1971's picture

But can Chinese people really get away with wearing black turtleneck pullovers?

Sat, 09/22/2012 - 14:58 | 2820712 walcott
walcott's picture

Yes! Loyd Blankfein as the Green Hornet and Bruce Lee as Kato

Sat, 09/22/2012 - 15:01 | 2820721 css1971
css1971's picture

I disagree, as does google. I was about to make the following edit:

Holy shit. I just googled "black turtleneck" and a million pictures of Steve Jobs appeared. It would seem that nobody else on the planet can get away with wearing black turtleneck sweaters.

Apple is safe, the fanboys will have no other messiah.

Sat, 09/22/2012 - 14:50 | 2820693 Azannoth
Azannoth's picture

Hey listen and I want to be Absolutely Clear about this.. You(Apple) did Not Build That! ;)

Sat, 09/22/2012 - 17:06 | 2820911 hmmmstrange
hmmmstrange's picture

We, the Chinese buit it.

Sat, 09/22/2012 - 14:55 | 2820696 palmereldritch
palmereldritch's picture

  All your phone are belong to i !

Sat, 09/22/2012 - 14:57 | 2820708 Winston Churchill
Winston Churchill's picture


Sat, 09/22/2012 - 15:06 | 2820717 dwdollar
dwdollar's picture

Does Apple even design its products beyond the "brainstorming smart-board phase" where 20-something yuppies and old hippies lounge around sipping ventis all day? I'm sure Foxconn can find enough Chinese to fill that role especially if Apple innovation stagnants like it appears to be doing. Besides, it's chip and component designers who do all the brain surgery. Board level design is cake anymore.

Sat, 09/22/2012 - 16:15 | 2820835 laomei
laomei's picture

They just dig through white paper of tech from a year or two ago and google images of 60s designs and slap it together, call it "inspired" and walk away laughing with a 50% margin while their iFans scream at the sane world about how they are superior because they have an overpriced thingy that will have a street value of $0 in a year.


Everything else, the actual technology, it's just outsourced anyways.  Which is why all their "patents" are on stupid bullshit.

Sat, 09/22/2012 - 15:08 | 2820743 walcott
walcott's picture

FoxConn: Phone Call Scene

Sat, 09/22/2012 - 15:10 | 2820746 insanelysane
insanelysane's picture

Do business in countries with no labor laws at your own peril.  They also don't have other laws as well.

Sat, 09/22/2012 - 15:22 | 2820757 Mikey Big-D Ickscott
Mikey Big-D Ickscott's picture

Apple is doomed for failure, there's no loyalty anymore. I don't like Apples, Oranges, or even Strawberries for that matter. Give me an old fashioned Banana with some ridges that feel like veins - and I won't leave my room for days.

Sat, 09/22/2012 - 16:05 | 2820819 LULZBank
LULZBank's picture

Mickey G Spot?

Sat, 09/22/2012 - 15:22 | 2820763 pufferfish
pufferfish's picture

Isn't copyright a funny thing.

Wonder what Samsung have to say about this?

Switzerland's Schweizerische Bundesbahnen, or Swiss Federal Railway service, has accused Apple of using their iconic clock in its Clock app for iPad without permission,according to a report in the Swiss newspaper Blick [Google Translate].

Sat, 09/22/2012 - 15:38 | 2820787 palmereldritch
palmereldritch's picture

How did Einstein miss that patent?

Sat, 09/22/2012 - 17:53 | 2820960 Id fight Gandhi
Id fight Gandhi's picture

Exactly. He worked as a patent clerk and took others ideas and made them his. Clever.

Sat, 09/22/2012 - 18:45 | 2821028 palmereldritch
palmereldritch's picture

Probably before his time. Relatively speaking...


Sat, 09/22/2012 - 19:56 | 2821094 Ying-Yang
Ying-Yang's picture

+ E=MC2

Sat, 09/22/2012 - 16:37 | 2820866 Urban Redneck
Urban Redneck's picture

Steve Jobs wasn't even born when SBB launched that design, and the licensing history is older than Apple itself.

Samsung ain't Switzerland and Apple makes a much less risky target than a TBTF US bank...

Sat, 09/22/2012 - 15:42 | 2820791 TrustWho
TrustWho's picture

Payback to stupid greedy American CEOs and the stupid arrogant globalization political elite. Other cultures like their cultures and laugh at American arrogance. America's greatest generation protected their intellectual property---maybe because they were patriots or maybe because they were pragmatists, but they recognized competitors would cut their throats to take what they had.

Sat, 09/22/2012 - 16:37 | 2820868 e-recep
e-recep's picture

you have never been a business manager, have you? if your competitors outsource because it costs less, you HAVE TO outsource, too. otherwise, you'll go bust.

hell yeah, foreigners learn stuff this way. but that's life, you can't win forever, get over it.

expect to work for chinese wages coz that's where the once affluent west is heading to. it will happen, sooner or later.

Sat, 09/22/2012 - 18:26 | 2821014 TrustWho
TrustWho's picture

Yes, I have been business manager. The kleptocracy set the rules of the game to benefit the few and rape the many so num-nuts like you can say "low price wins".

The future is worse, because your daughter will be a prostitute for a chinese brothel. Payment is due!

Or, you are a selfish SOB and never had kids, so your gene pool has been terminated.

Sat, 09/22/2012 - 18:52 | 2821037 e-recep
e-recep's picture

so you'd stubbornly source locally while your competitors would outsource and easily beat your price and you call yourself a business manager?? what kind of retard are you?

Sat, 09/22/2012 - 20:20 | 2821127 KK Tipton
KK Tipton's picture

The race to the bottom has hit bottom.

Outsourcing has hollowed out the USA. Backlash is coming to a city near you.


I'm gonna modify Buckminster Fuller a bit here:

"Only people with Integrity are going to make it".

Everybody else is the walking dead going through the motions.

Sat, 09/22/2012 - 20:07 | 2821117 Ying-Yang
Ying-Yang's picture

I have run businesses and made a good living but you are dead wrong. It is about being too greedy and not caring about where you live or your employess. If you don't have the profits that is one thing but Apple could have manufactured here the the US and paid its employees instead of offshoring. You drink the kool-aid of the global elite pushing the NWO.

It is a moral choice of American corporations to offshore jobs.

Sat, 09/22/2012 - 22:44 | 2821269 NidStyles
NidStyles's picture

Corporations only have one worry, and that is to the shareholder's. Moral concerns have no meaning or measure when it comes to the concern of the shareholders.

Sun, 09/23/2012 - 09:52 | 2821823 TrustWho
TrustWho's picture

Another simpleton num-nut. Board of Directors and corporate management have a responsibility to create the best competitive strategy for the owners who are shareholders. Protecting intellectual property and minimizing competitive threats are as impotant parts of that strategy as maximizing short turn profit margins.

Sun, 09/23/2012 - 23:56 | 2823421 Ying-Yang
Ying-Yang's picture

You don't piss in the pool you swim in or do you?

Sun, 09/23/2012 - 09:59 | 2821830 flattrader
flattrader's picture

Henry Ford, aside from some suspect politics, was a genius.

Sat, 09/22/2012 - 15:42 | 2820792 BurningFuld
BurningFuld's picture

Look at Apple's Balance sheet it has pretty much zero tangible assets as a percent of what it is currently (cough cough) worth.

Sat, 09/22/2012 - 17:14 | 2820921 DeadFred
DeadFred's picture

Unless you count cash. But who likes cash. If the the Poliburo shut Foxconn and Apple drops below $150 I'm buying. (Not until then though)

Sun, 09/23/2012 - 04:46 | 2821621 Parrotile
Parrotile's picture

Fancy catching a falling knife then?? If the Chinese High Command decide to stuff Apple, then Apple shares will be sailing WELL South of $150 - $1.50 could be a realistic possibility.

Apple doesn't MAKE anymore - they exported the MAKING ability to others, who are surprisingly JUST as smart as other Engineers, and JUST as capable of producing a quality product.

Sun, 09/23/2012 - 11:50 | 2821836 flattrader
flattrader's picture

Hardware is dead.

So, is Apple.

All this crap is nothing more than a commodity now...nothing magic...unless you are willing to be fooled by the magician.

Remember what happened to desktop computers?  When people just had to have a Gateway or a Dell?

icrap will be the same way soon...just a matter of time...

Read the article above...hand out tablets like business card...get where this is headed?

Sun, 09/23/2012 - 16:13 | 2822638 Cathartes Aura
Cathartes Aura's picture

thanks for that link, recommended read.

and, as usual, the comment thread there is even more fun - roll on the future! 

go long pirates!  arrrhh.

Sat, 09/22/2012 - 21:56 | 2821225 RockyRacoon
RockyRacoon's picture

Looks like Apple is the ultimate platform company.  Sarah Lee was good at it some years ago.  It can work if planned that way.  Hard to do if that's not a true objective.   Makes ya wonder.... Hmmmm.

Sat, 09/22/2012 - 22:09 | 2821242 palmereldritch
palmereldritch's picture

Which raises the philosophical question:

Have they become an ETF of themselves?

Sat, 09/22/2012 - 15:46 | 2820797 ffart
ffart's picture

all the US consumer gets is the credit card bill to fund Chinese economic growth.


I thought they got a phone, too.

Sat, 09/22/2012 - 17:05 | 2820909 Colonel Klink
Colonel Klink's picture

Yep Amurikans seem to end up with the same.  A bill and a declining asset.  Soon to be worthless, especially when dropped in a toilet.

Sun, 09/23/2012 - 04:50 | 2821623 Parrotile
Parrotile's picture

Or as in the regularly reported case of the IPhone variants, when deciding to install Apple-approved software upgrades - "install firmware upgrade, junk 'phone".

Maybe this is why "people prefer Samsung"!! - they actually DO last longer . . . .

Sun, 09/23/2012 - 15:52 | 2822611 ffart
ffart's picture

You know that the firmware and software on a phone are completely different things, right?

Sat, 09/22/2012 - 16:00 | 2820809 spanish inquisition
spanish inquisition's picture

Edit: The implications for the new emerging part time temporary professional line waiting job market growth in the US is staggering.

Sat, 09/22/2012 - 16:07 | 2820821 LULZBank
LULZBank's picture

I once saw an unbranded Chinese mobile phone that could take 2 SIMS. You switch it off and on again it activates the other SIM. Pretty impressive. Nice design and all but was kinda crude, like would'nt last more than a few months.

Though they could have developed it for better.

Sat, 09/22/2012 - 16:19 | 2820843 laomei
laomei's picture

That's not anything really all that special to be honest with you.  I have a D2G.  I flashed the CDMA to China Unicom and I have a GSM card from China Mobile plugged in.  Swap to whatever radio I feel like and it works like a charm.  Plugging in a CDMA card overrides the programming on the unit itself, so it's not like I'm limiting myself either.  


That's my "work phone".  My "roughing it" phone is a Nokia 1100, which is honestly the best god damn phone ever built.

Sat, 09/22/2012 - 17:02 | 2820906 LULZBank
LULZBank's picture

I like Nokia too. Durable and longer lasting battery and fit for the purpose.


- Sent from my iPhone.

Sat, 09/22/2012 - 18:10 | 2820994 css1971
css1971's picture

Nokia do dual sim phones. No need to switch them off, they can both be listening simultaneously, though only one sim can be used to communicate at a time.


Sat, 09/22/2012 - 16:13 | 2820830 CheapBastard
CheapBastard's picture

I already have the iPhone7. I just taped my i3 + i4 together. Can't really tell the difference and it's much cheaper.

Sat, 09/22/2012 - 17:13 | 2820920 JohnKozac
JohnKozac's picture

CB, you're killing AAPL's business !


You're one cheap bastard !!!

Sat, 09/22/2012 - 17:25 | 2820936 a growing concern
a growing concern's picture

That'll also give you cancer twice as fast and put you out of your misery sooner.  Winning!

Sat, 09/22/2012 - 16:17 | 2820836 Mine Is Bigger
Mine Is Bigger's picture

Could it be even Foxconn is worrying about China destabilizing due to the increasingly frustrated peasants?

Or is it simply becoming difficult to find enough number of willing slave laborers in China?

Sat, 09/22/2012 - 17:46 | 2820904 laomei
laomei's picture

They ain't "slaves" by any means.  Rent is 100 kuai a month for dorms better than colleges have, food in the canteen is 4 RMB a meal.

4*3*30 = 360 RMB a month in food for a total of 460 a month in living expenses. (about $70 a month).

Except, that's from ABC, not from reality.  Dorms OFF campus rent for 400~500 a room, and young people like to have that privacy.  Those living ON campus get their dorms, food and utilities for free.


Wages... There's an average of 2500 a month.  It's tax free.  30,000 RMB a year if you work "average" and live in the dorms. Except that's not reality either.  That's including new arrivals on probation with limited responsibilities.  In 6 months, most who stuck on, get bumped into the 3000~3500 base wage.  BUT, there's also the yearly bonus, which is based on the work unit.  The most basic is 1 month's average bonus.  The average worker gets 3~4 times the average month's pay as a bonus.

So... take away the newbies and assume a 3000+4x, and you're looking at 48,000 RMB a year in tax-free compensation with no living expenses actually required.  $7600 a year, which ain't all that bad.  These workers are not coming from the cities, they are coming from the countryside.  Work for 2 years and there's enough saved to buy a decent house back home.  Work for half a year and you have a decent car.  They have over a million workers NOT because of slavery, but because this is a HUGE step up for where they are coming from.

Furthermore, comically, how much does rent and food and transport in the US cost the average minimum wage worker?  Not to mention taxes.  Please tell me again, who are the slaves?



Here's a job ad for the chengdu factory.  New arrivals, no skills needed.

Base wage: 1550 a month.

Work schedule: Work 6, rest 1 (most would actually prefer to work all 7 though)

Overtime is 9.6 RMB, weekends 13.2, holidays 19.6

Food and housing are included and not deducted from wages

You get a bonus of 150 RMB for meeting production levels, but it can be increased or decreased based on how you actually do

If you last 3 months your base is increased to 1790

If you last 6 months it's upped to 2010.

If you last 9 months, upped again to 2230

After 1 year, you're at 2630.

You get an extra 15 per day for working the night shift

You get a 300 bonus for your birthday

The annual bonus varies from group to group and is not specified, but again, from actual people talking, it's 3~4 months bonus on average.

After aquiring new skills you get either a 100 or 200 RMB raise

Social insurance is paid entirely by the company

Outstanding employees get an additional 1000 bonus at the end of the year

The campus has a bunch of free sports facilities, a library a movie theatre, health clinics, and pretty much everything you need to live decently along with social activities and clubs that are organized.



That 2500 average? It's for new employees (who are not allowed on night shift till the 3rd month), before they get any raises, bonuses or anything else.  Just the 1550 + overtime.  Keeping that pace up, just meeting production levels and working at night.  This is 26 days of work per month.

After 1 full year, learning 3 new 100 RMB skills, one per quarter, keeping the same pace, working at night, getting that 4 months of average wage as a bonus, meeting production but not excelling or getting any special recognition.  That's 52,280 a year working 9.25 hours a day on average. Or about $8300 a year.  Again, with no living expenses actually required if you are just there to work your ass off.  Just as you are, at that point, no new skills, change nothing at all, year #2 is at 67,000 RMB or $10,700.  Again, tax free with no living expenses.  Of course, by then, you're basically guaranteed to have been promoted.


For the sake of comparison.  In Beijing (one of the most expensive cities to live in), the median household income is at 100,000 per year.  

How many minimum wage earners in the US can pack away $10k or even $8k a year in cash savings?  Furthermore, Even if they do manage to pack away $18k over 2 years, how far will it actually get them in life?  Goes a hell of a lot further in a small village here than you could imagine.  More than enough to start a company, more than enough to buy a house outright.

Sat, 09/22/2012 - 18:42 | 2821027 TrustWho
TrustWho's picture

I agree; however China's problem is 1.2 million Chinese, the growing gap between rich & poor, and rapidly aging population. Growth demands growth and Chinese workers have little protection when work slows or stops.

Sat, 09/22/2012 - 19:09 | 2821053 laomei
laomei's picture

It's a problem *in the cities*.  The depression of Foxconn is caused by migrant workers coming off the farm, living near the city, liking the city, and not being able to afford the city.  They see others their age driving nice cars, getting married, having nice things, and they can't afford any of it, or slap together any plans to get there themselves.  Realists who focus more on what they CAN accomplish in this life with their high-school education take every advantage they can to earn and save every penny they can, so they can go back to their village, get married and ensure the next generation has a better shot.


The 90s generation is an impatient generation.  They get to Beijing/Shanghai, do their college and are determined to stay in Beijing/Shanghai.  They see the local wages and want in on it.  Of course, they could pick another city that's cheaper to live in and has more jobs suited to them, but cost of living seems to be something that isn't being taught to this generation.  They also don't want okish jobs, they want great jobs... and great jobs are great because there are fewer of them than there are okish jobs.  Everyone wants to work in government or at a MNC, and they'll do it for cheap just to get their foot in the door.

It's also a "face" thing.  It's kinda shameful to come back to where you started from, even if you are doing much better than the previous generation and your cohorts who didn't get that education.  Not everyone is gonna get a villa in Beijing in this lifetime, no matter how hard you work, odds are pretty fucking stacked against you.

Sat, 09/22/2012 - 21:54 | 2821222 palmereldritch
palmereldritch's picture

Sounds like a ripe environment for organized crime...not to be confused with the politburo variety

Sun, 09/23/2012 - 10:05 | 2821833 TrustWho
TrustWho's picture

Thanks for your thoughtful reply. The issue facing China that concerns me most is the proportion of males to females. I have seen reports as high as 35 million unmatched men. Women have always civilized the boys, so uncivilized 35 million men sounds like trouble.

How does Chine manage these unmetched men?

Sat, 09/22/2012 - 18:56 | 2821040 Mine Is Bigger
Mine Is Bigger's picture

Hi, thank you for the info.

I wonder how much overtime they put in and if they can choose not to do overtime.

Do you know if they have to sign some kind of tightly binding job contract?

Sat, 09/22/2012 - 19:30 | 2821073 laomei
laomei's picture

Overtime: They come there to work, and work they do, if they don't want to work, there are others who will gladly take their place.  Them's the breaks kiddo.  Social insurances (healthcare, pension, unemployment, etc) are NOT required by law for hourly workers.  But Foxconn pays it all anyways INCLUDING the employee half of it.  If they have to hire more people because you're not working overtime, it's gonna have an impact financially, and the employer side of that stuff is rather large, even at low wages there are minimums that the employee does not see even if they pay their half themselves.

Contract: They are hourly wage employees, no binding contracts... hence, you can see they get raises for sticking to it each quarter.  They can (and do) leave anytime they want to... this isn't a prison.  Labor law prohibits those binding multi-year contracts you're thinking of.  If they are put into place, for one it becomes pretty much impossible to fire someone, there is a large signing bonus, and there is a large completion bonus.  There's a schedule for this, but fuck if I know where it is and I don't know it off the top of my head either.  That signing bonus is something that must be returned if the contract is broken by the employee.  No compete clauses are also illegal, the only trick about them is that the employer is required to pay a *large* bonus to the now-former employee for NOT joining the competition.  Lock out periods are prohibited and unenforceable.


Of course, on the other hand, there are also fines and penalties in place, because these are unskilled laborers coming in fresh and people dying is a bad thing.

Sat, 09/22/2012 - 20:06 | 2821112 ParkAveFlasher
ParkAveFlasher's picture

Sounds great, Laomei.  Where do I sign up?  Oh the spots are competitive and you are a recruiter?  You'd like me to kick back HOW MUCH?

-100 Laomei.  Nice try, though.

The more things change ...

Sat, 09/22/2012 - 20:21 | 2821133 laomei
laomei's picture

I have zero affiliation and I honestly don't give a shit about them.  All I cared about was digging out the truth, and I got that truth from online forums that employees post on, job ads, and the foreign media that "exposed" the factories.  That post took way too fucking long because the research was done in real time as was the number crunching.  If you care to poke around, you can see the stuff I posted verified.


As for the labor laws.... Um, I own a few businesses here, where I live, in China.  I have employees and am VERY familiar with labor laws, as I have been here long enough (way too fucking long) to see how they have changed over time.  If it was virtual slavery, I would have posted that too.  Facts are biased though apparently, to a reality that you don't appreciate or like very much.

Sat, 09/22/2012 - 21:48 | 2821218 palmereldritch
palmereldritch's picture

Any comments on the medium term impact on demographics for the labor force as the result of China's one-child policy, notwithstanding the gender direction towards a male dominant skew?

Sat, 09/22/2012 - 22:52 | 2821273 laomei
laomei's picture

It's an asian thing.  It would happen with or without the policy.


There are also countries around that don't have enough men.  I'm sure it'll work out somehow.


Medium term impact on the aging of the population... either there will be some more relaxation of the policy to balance, Or, you'll be seeing by 2020 (average age hits 37) there has been a massive effort to move up the value chain and ensure that those in prime earning years are making prime money to support the system and pensions.  Chinese government is anything but stupid.  They can't wave a magic wand and fix it all, but they can do their best to create an environment that helps sort this crap out.  It's not gonna be blindsiding them, and as long as it doesn't turn into a realpolitik mess like it has in other countries, I don't see it becoming a huge issue.

Sat, 09/22/2012 - 23:19 | 2821287 palmereldritch
palmereldritch's picture

Just another aspect of the ultimate managed economy.

But from an indigenous cultural perspective, the lack of women for pending reproduction to serve an even stasis should be the real challenge.  Go long import brides and cultural diminishment?

Would be ironic if deflationary/reproductively they became Japan 2.0 tho....given all the theatric dogma of late...

Sun, 09/23/2012 - 19:09 | 2822966 Cathartes Aura
Cathartes Aura's picture

I'm late to this thread, so this may not be seen by you laomei - but I too appreciate your perspective on the Foxconn subject, wondering if you could comment on this story from earlier in the year?

Students of nursing, languages, music and art are being corralled into internships of between three and six months, during which 10-hour days and seven-day weeks are not unusual, according to Sacom and a number of Chinese media reports, which claim colleges and universities are acting as employment agencies, sending their pupils to Foxconn not for relevant training, but to bolster the workforce during summer and winter holiday periods.

I've read other versions, including that the students are required to work for no pay - but I'd just like to read your response to this, as you've spent some actual time looking into Foxconn.  seems like they'd not be hurting for even temp/holiday workers from what you've posted here. . .

as to the male/female ratio - with so many Chinese males "doing business" globally, being reported in various places - it's not out of the realm of possibility that many will marry where they find themselves, further mingling the human DNA - which may be an agenda, but I can't say it's a bad one to overcome inherent bias & prejudice.


Sun, 09/23/2012 - 21:26 | 2823196 laomei
laomei's picture

Now THAT shit IS fucked up.  Zero defense for it.  What you are seeing is a legit program that's had the crap abused out of it.  The motivation for turning a blind eye on the Foxconn side.... no fucking clue.

Sun, 09/23/2012 - 22:18 | 2823270 Cathartes Aura
Cathartes Aura's picture

thanks for your reply, which made me smile, in agreement.

like fruit, all things ripen, hit their peak, then spoil. . .


Sun, 09/23/2012 - 08:09 | 2821740 ParkAveFlasher
ParkAveFlasher's picture

Always trust the Chinese internet for unbiased accounts.

I don't know what's worse, panda propaganda on this side of the pond or that one.

As the owner of a few businesses, do youdirectly hire laborers yourself or are you do contract manufacture like every other business in the usa?  Do you own a brand or a factory?  Check your story, you've delivered nothing but secondhand stats that may or may not be factual.  

"Ummmm I checked the classifieds."  Thanks, you've added tons of value to the thread.

Sun, 09/23/2012 - 09:55 | 2821826 laomei
laomei's picture

I directly hire employees, most prefer to work as freelancers though or at least start out that way and come on as full-time once the workload eats too much time.  No factory setup here, we provide business services, market intelligence and consulting.


The 2500 figure is actually from a third party investigation, as is the hours/days worked.  Other stuff is mostly gathered and verified here: employee-run forums, unaffiliated with the company itself.


Only reason I bothered with the classified ad was because it spelled out things rather nicely.

Sat, 09/22/2012 - 20:17 | 2821125 Mine Is Bigger
Mine Is Bigger's picture

Thank you again for your detailed information.

It was very informative.  

I really appreciate your generosity.



Sat, 09/22/2012 - 20:28 | 2821143 laomei
laomei's picture

No prob... You caught me at a point in time where I am stuck on US time and my work load for the weekend is coming in spurts, that unfortunately I have to be awake for.  Gotta pass that time between spurts somehow, might as well at least *try* to accomplish something marginally productive (also interesting).

Sun, 09/23/2012 - 07:34 | 2821716 GCT
GCT's picture

Laomei thanks for posting insights into your culture.  I appreciate it.  Alot of people have never lived in the Far East.  I have for 7 years and what our MSM states as slave labor is just more propaganda.   Foxconn makes more then just apple phones.  Most likely the computers we are using have motherboards made by foxconn.

At one time you could go to jail for sending PC to China and we did indeed protect our trade secrets in this country.  Apple makes their equipment there because the bottom line is profits.  The iPhone cost 325 to make there as opposed to making it here in the USA for 600.   I was reading in the Asian Times how the Foxconn workers revolted when Foxconn tried to cut back overtime.

Sat, 09/22/2012 - 16:33 | 2820859 orangegeek
orangegeek's picture

Apple is just creating its own competition. Android has multiple vendors.  Apple needs the same.


Cisco did the same thing with Huawei.

Sat, 09/22/2012 - 16:53 | 2820865 Floodmaster
Floodmaster's picture

Dieter Rams should sue apple for one Gazillion Dollars.


Apple's design team in action...

Sat, 09/22/2012 - 16:56 | 2820902 newworldorder
newworldorder's picture

This is all about globalization and the riches it brings to companies like APLL and power to the governments where large factories are located at.

Little to no wage competion is such a grand bargain, protected by the Navy as it guarantees open sea lanes for trade. All accomplished on the voluntary payment of taxes on the taxpayer dime.

"Tell me it aint so Joe - Tell me it aint so?"

Sat, 09/22/2012 - 17:03 | 2820907 dolph9
dolph9's picture

This was bound to happen sooner than later.

Look at California, it's a failed state.  That's what happens when you have bloated government providing endless benefits to bureaucrats and illegal residents, and it's most successful company outsources production to China to save costs, all so that more gadgets with endless upgrades can be sold to sheeple.

Not too smart.

Sat, 09/22/2012 - 17:11 | 2820915 Oldrepublic
Oldrepublic's picture

Swedish company outsources to low cost countries like the USA!

Sat, 09/22/2012 - 17:23 | 2820932 straightershooter
straightershooter's picture

WOW! Bloody Brilliant!


(i)fox cons (i)apple? Who could have thought of?

Remember, do whatever i you have, simply don't get ima (hint: a chinese slogan expressing disdainfully disrespect for  matters ranging from poor performance to Mitt Romney debacle; where i alludes to ignorance, incompetence, insignificance, impotence and innuendo. )

Sat, 09/22/2012 - 17:40 | 2820954 bilejones
bilejones's picture

"the state of the US vs China escalating patent war (for now manifesting itself in the courtroom brawl between Apple and Samsung,"


Last time I looked Samsung was a South Korean company.

Sat, 09/22/2012 - 17:41 | 2820958 JamesBond
JamesBond's picture

all the US consumer gets is the credit card bill to fund Chinese economic growth


well, the US APPL investor hasn't done too badly the pat ten years



Sat, 09/22/2012 - 17:46 | 2820967 css1971
css1971's picture

Just as long as everyone doesn't try to cash out everything will be fine.

Sat, 09/22/2012 - 17:54 | 2820977 sessinpo
sessinpo's picture

And that can be said of any market in a given time period. How about those NDX (Nasdaq) buyers in 1999. How about the buyers of the commodity of corn recently.  How about the housing bubble. Give me a break dude.

Don't tell me your broker, financial advisor or whoever hasn't told you the the caveat "Past performance is no guarantee of future returns"

I'd like to like to help you free your mind, but people that make statments like that generally have their head shoved so far up their ass, it's unretrievable.



Sun, 09/23/2012 - 10:11 | 2821839 nowhereman
nowhereman's picture

And don't forget the sales tax collected from all those brainless line standing zombies,  yes sir, everybody's a winner.

Sat, 09/22/2012 - 17:57 | 2820980 LG_Knight
LG_Knight's picture

I love all that is ZH... except this inept bashing of Apple.   What do you have against the most innovative company in the history of computing and consumer electronics?  Aren't Libertarians supposed to celebrate / at-least-acknowledge heroic achievement?

As I am likely the only one reading this site to have led a (highly successful) consumer electronics organization, allow me to highlight the innovation in the iPhone 5 that you and the unwitting financial media are missing:   They made a precision-crafted 4G LTE smarphone that is only 7.7 mm thin!   That's about 20% thinner than any other LTE device in addition to 20% lighter.

Hah.   No big deal, you say.   Well, you are flat ignorantly wrong.   To achieve this dimension, Apple had to reinvent the mobile camera (z-dimension is by far the most challenging), the battery technology (leading the industry), the aluminum enclosure manufacturing process, the SIM card design and... most important and most challenging ... design LTE antennas to fit in this thin a package.

Not one of you could possibly appreciate the challenge of desiging 20% THINNER ANTENNAS.   I do appreciate it, because we did it at my prior firm (3G only, a herculean, near impossible task).   Folks, not one other smartphone company would dare lead the 4G revolution in designing/creating-from-scratch antenna technology such as this.  Or they would have!

Finally, from a consumer psychology perspective, Apple is applying the same precision-crafting excellence to smartphones as they did to PCs with the Macbook Air.   Competitors still build plastic pieces of shit.   Financial types simply cannot understand the value of this, just as Apple's PC competitors of the distant past didn't.

So, SHUT THE FUCK UP about Apple until you grasp what innovation in this field truly is.




Sat, 09/22/2012 - 18:25 | 2821012 laomei
laomei's picture

Apple didn't reinvent shit.  Other companies who were given desired spec sheets did all the real work.  Apple just put it in a shiny box with patented round corners.

Sun, 09/23/2012 - 01:04 | 2821465 e-recep
e-recep's picture

the east is efficient when it comes to manufacturing but it still lacks the creativity the west has. that shiny box with patented round corners is called design and requires free mind. something the loyal and obedient east still is short of...

software is also another aspect where the east is lagging badly, mostly because it has nothing to do with manufacturing but everything with design and creativity.

Sat, 09/22/2012 - 19:23 | 2821057 css1971
css1971's picture

Have you looked up the dictionary definition of "innovation". I'll help you with it. "something new or different introduced"

Thinner is not new or different, it's merely the same, but thinner. No innovation involved or Kate Moss would be Miss Innovation 2012. This is normal for Apple though they are and have always been followers. iPod, iPhone, iMac. Following where others have led but with an eye to the aesthetic tastes of anal retentives. Very successful business model, no money spent on research or development means huge margins.

I'll link to a photo of Apple's pre and post "innovation".

Did you see that extra row of icons? Wow, innovative.

How about instead; wireless charging so no more cables, or a 40 megapixel camera which can zoom forever, or a camera with optical image stabilisation which can take amazing night shots, or augmented reality city lens which knows everything round about you, or NFC for payments and authentication, or offline navigation which works in crap reception areas instead of directing you out to the middle of fucking nowhere before stranding you, or a screen which is happy with gloves. These are all innovations, and they all make phones better to use.

Thinner, doesn't fucking cut it when it comes to the use of the word innovation, so shut the fuck up with your whining.

Apple are so far behind by now it's laughable. However there are very large numbers of sheeple who are perfectly happy to pay again for a warmed over rehash of what they've already got. It's comforting. Pipe and slippers stuff.


(p.s. long NOK)

Sat, 09/22/2012 - 19:24 | 2821067 Sofa King
Sofa King's picture

They did innovate but now Foxconn will replicate and sell cheaper...that is the point of this article.  It's not bashing Apples creativity just it's stupidity, they should have kept the manufacturing under wraps but they gave away the key to the patent office for market share and that will lead to their ultimate decline.  You know the saying, You can't put the genie back in the bottle.

I will give a small example of a gentleman I know who use to manufacture and sell fur coats in Manhattan, some Big Chill deal-makers sold him on the idea of moving his manufacturing to China.  They took care of all of the details, developing the factory, staffing the facility, the whole nine-yards, all he had to do was train the people, source the materials and continue the business relationships. Well, let's just say with in a year, he was no longer in that business...yet all his old clients continue to get their stock at better prices from this nice little manufacturing company in China, and the items were just like the ones he use to sell to them.



Sat, 09/22/2012 - 19:26 | 2821069 Dburn
Dburn's picture

So, SHUT THE FUCK UP about Apple until you grasp what innovation in this field truly is.


Then after doing this, they gave the instructions on how to build it too China. HAHAHAHAHA. You STFU  Douche-Muffin


Sun, 09/23/2012 - 09:47 | 2821818 Non Passaran
Non Passaran's picture

I gave you a -1 for this (and a +1 for the first, long comment above).

Yes, it's silly to give away know-how, but you can't really tell whether all the IP that was mentioned belongs to Apple. If they ask a supplier to make a thinner camera, it's the supplier's know-how. Maybe they have a "two quarters sole customer" advantage or some other agreement that gives them certain lead time over competitors, but even if they do, that's the reason to outsource manufacturing and ramp up sooner rather than do it yourself and start selling this shit 2 weeks before Samsung.


Sat, 09/22/2012 - 20:03 | 2821106 Floodmaster
Floodmaster's picture

Ascend P1 S 6.68 mm, Oppo Finder 6.65mm, World's most advanced mobile operating system ? :: Windows Phone 8

Sat, 09/22/2012 - 22:23 | 2821251 palmereldritch
palmereldritch's picture

Great comment.  The lawsuit at least recognized the supremacy of innovation which is what patents are supposed to protect.  No wonder the Galaxy SIII is so 'innovative'...its greatest innovation is its willful lack of diligence in respecting established patents.

Oh well...after the injunctions Samsung will still have that cool elbow-swipe function.

IMO there's so much delusional Toyota MR2 = Ferrari logic-envy in this

Wed, 09/26/2012 - 01:03 | 2830940 MeelionDollerBogus
MeelionDollerBogus's picture

Most innovative? The Amiga was a better computer when it and the Apple IIe were co-existing. The G1 has always been a better phone than the iPhone since they coexisted - cheaper and more durable.

The touch-screen wasn't invented by Apple, only purchased, and I don't like touch-screens to begin with. I like tactile keys and I want a display that gets brighter in the sun rather than invisible - Mirasol displays from Qualcomm do that, first without colour, now with colour.

Innovative? MacInTrash / Crapple have not been innovative any time in my life and I remember using those ugly IIe's in school. I used C64's at the time as well and they were better and anyone old enough to know is aware enough to remember that's not saying much.

Sat, 09/22/2012 - 18:22 | 2821008 Marley
Marley's picture

Out sourcing of profits.  Yippee!

Sat, 09/22/2012 - 18:24 | 2821011 Lost Wages
Lost Wages's picture

Hopefully FoxConn will build all its stores on the first floor, in case any of their new employees try to jump out the window.

Sat, 09/22/2012 - 19:10 | 2821054 Dburn
Dburn's picture

The Scenario envisioned here is not too far off. In fact, it's a sure bet that it's happening unofficially in China. Recall that the Chinese duplicated an APPLE STORE right down to all the products without anyone realizing it for a time. How did this happen? No one really answered it. Based on my early experiences in importing in the 80s and 90s, let me offer this up.

Back in the 80s one of the main exports from Korea where clothes , sneakers etc. The Korean Won, the Yen and The NT dollar too were very weak ( The Yen was 250 in the 80s) against the dollar . The Koreans would get an order and then usually have a small percentage of the order overrun. It  got paid for by the manufacturer with some minor tweaking of prices and last minute changes in Pro Forma Invoices that were used against letters of credit. 

The overage was then sold out the back door sans label. A market opened in Korea. Americans soon found out about this market and flooded to it to buy name brand clothing at 25% and less of retail. I was amazed at the "exact replicas" of some of the designer labels when  a Korean Business associate went "ahem"...

China has always been the red envelope society (Taiwan too). That meant, if you got a purchasing agent's job, that entitled you to a kick back from which ever suppliers you chose to produce a product delivered in a red envelope. It was so bad, that Formosa Plastic, the largest company in Taiwan at the time made probably the first major cost saving use of personal computers. Sellars never met a purchasing agent. All of it was done by computer. The purchasing agent was assigned a numerical ID. Raw Material, parts and supplies  were put out for bid and Formosa Plastic flourished. As a side note , it was run with an iron fist by a 89 year old CEO. For them to make that rapid assimilation of personal computers , meant the problem was going parabolic enough that the CEO probably said "Go for it". At the time, Taiwan had a larger Reserve than Japan. 

China started to come into play in the late 80s when Taiwanese businessman secretly went over there and set up factories. There were two components that drove this at the time. Monthly wages for Tawain factory workers were starting to hit $600 a month and the Stock Market did a 2000 type Nasdaq. The whole country became Day Trades as it went from 3000- 9500 in a very short time. Not only were wages high, there was a shortage of workers until the market crashed. (Sound Familiar?)

"All politics is local" could never be more true than China. Corruption was rampant over there. Once the right public officials were paid off ( cheap too) including the PRC Army, factories begin to appear with managers and  workers who knew no concept of deadlines, quality and competition. That quickly changed. China made the same technological leap that took Japan 40+ years to accomplish. 

I have watched in horror as US Companies have taken their manufacturing over to China. It used to be somewhat of a hassle for a Chinese business to copy an American product in that it took them more than a day and less than a week. Now , all of the Bill of Materials, schematics, prototypes and accompanying people were handed to them on a silver platter. Why copy, when people are saying "Here is how you build it". American and European Companies directed by American consulting companies, PE companies and wall street have been turning over the family Jewels for the "promises" of access to a HUGE market in China. What a load of shit. I cannot believe they fell for it. Ask Microsoft what access means. They sell about a billion dollars of product in China and they gave the source code of their OS to the Chinese Govt? Why only a Billion? They are competing with th4e street vendors who sell DVDs with a $100,000 worth of software on it for $3.00.

Apple thought it's edge was its experience in manufacturing. Instead of letting the main contractor , buy parts for them , they avoided the mark-ups and the bribes by buying directly from the suppliers and coordinating delivery to FoxxConn . Problem solved right? Sure, Apple is so smart it's going to unsurp 5000 years of culture.  Foxx conn is replacing many of its overpriced workers with Robots in the coming years. Apple again, will be a real innovator when it outsources manufacturing overseas to automated factories with over 100 billion in the bank. More than  enough to do it here. That, as they say, is going to cost them. A million robots is not cheap, even made in China. They have to be paid and not on the margins that Foxxcon works on .

There is a chance that Apple , under long term investments, will make strategic investments in Foxxconn if they haven't already, but if they think that will stop Foxxconn from becoming the largest Asus in the world, or the next Sony ( that makes money), they are sadly mistaken. Chinese Americans are Americans first yet many of them do retain many aspects of their culture. Mainland Chinese are as Racist towards people who aren't Chinese as the Japanese (Not Japanese Americans) still are to non-Japanese. They are patient. They are biding their time. As Their economy becomes more stagnated from underselling sweat , they will eventually need to go directly into competition with their former customers. It happens all the time. Never will it happen with a bigger bang, but happen it will and there isn't a thing that Apple has done to prepare for that eventuality. 

To quantitatively measure probability, simply  look at Foxxconn's top line VS Apple's bottom line;  17b which is 1/3 of this year's fiscal profits for Apple. That also  includes   most  other US company's electronic products while managing ( with suicide nets) a million employees.

Apple is incredibly arrogant. They use slave labor in China and they made slave laborers out of college graduates in their retail outlets. They don't pay them much more than Amazon pays it's warehouse workers. They believe their own bullshit about being an incredibly well managed and innovative company. The fact they have to use mass amounts of slave labor to make the money they do, is one of those "details details, details" things that they kick aside  when they say "we are the greatest". Yep. That was what IBM was saying in the 70s and 80s until a little shit company called Microsft knocked its block off. It's taken them 25 years to recover and it's a miracle they recovered at all. 

Apple has set themselves up for the ultimate fall. If The GOP gets into office, which I think they will despite the polling today, you can bet relations between China and the US will get more frosty. That will be about  the time when Apple Shareholders will get an overnight surprise that will cause a huge gap down just on a PR from Foxxconn. They don't have Steve Jobs to get them out of this one. The panic will be real and justified. 

C-Suites all over this country have enjoyed major gains in income, at the expense of the middle class,  as have shareholders from this outsourcing fiesta. The bill is coming due. The supply chain is shaky. They have no real contingency plans other than "we'll move production to Vietnam". It's all on very shaky ground. This Global Economy nonsense is just that: nonsense. Once they have killed off American consumption, all the economies that have geared themselves towards serving this one, will turn to each other with our products and our technology.  The CEOs, know this in the back of their little minds. But, their attitude is: I'll be long gone when it happens. Just as long as I get my billion dollar pay package, who gives a fuck?" 


Stay Tuned and Reggie, stop doing the fucking end-zone dance before it's time, ok? Hopefully the stock will be at 1000 so there will be something left after the huge dump to vulturate on. Just remember Microstratgy's fall from $350 a share down to $5.00. It fell from $350 to $70 in one day in 2000. The options market hadn't opened yet. How frustrating was that? I watched that fall. That stock could catch no bid until it bottomed at $70. It jumped back to $140.00, then fell back in fits and starts to a fraction of what it once was. Look at its chart in 2000. They did a reverse split. Things almost seem normal. Until you compare market caps. 




Sun, 09/23/2012 - 00:49 | 2821438 palmereldritch
palmereldritch's picture

Superb historical time slice.

You should publish a blog if you haven't already. Past as prologue from the ground level.

IMO, Apple's biggest mistake was not witholding the local manufacture of a critical physical component essential to the success of their design. Ad executives are a dime a dozen.

A hardware specific SIM card autonomous to the telephone provider version would have at least given them some Aces to hold.


But what does history...or anyone else know?...Not like you could see this coming..../sarc

Sun, 09/23/2012 - 02:06 | 2821521 e-recep
e-recep's picture

> The CEOs, know this in the back of their little minds. But, their attitude is: I'll be long gone when it happens. Just as long as I get my billion dollar pay package, who gives a fuck?"

what can an individual ceo do about it even if he/she gives a fuck about it?? beg the competitor not to outsource? you speak as if there was a way.

Sun, 09/23/2012 - 09:41 | 2821812 Non Passaran
Non Passaran's picture

Nicely put, but I think Foxconn is even more of a one-man show than Apple was. 

I don't think they'll threaten Apple anytime soon. HTC tried and look at them now (double trouble - Samsung and Apple).

To Apple, Samsung is a formidable competitor. Foxconn just puts shit together.  The rest of your post stands, IMHO.

Sun, 09/23/2012 - 19:50 | 2823026 Cathartes Aura
Cathartes Aura's picture

another great post with details of how things are being done in a place most amkrns have little understanding of.

Ask Microsoft what access means. They sell about a billion dollars of product in China and they gave the source code of their OS to the Chinese Govt? Why only a Billion? They are competing with th4e street vendors who sell DVDs with a $100,000 worth of software on it for $3.00.

now this made me smile, because if one has read the myriad versions of who/what "Bill Gates" is, then some of the words might include that he was "allowed" the MS OS by those who do these things, and in return for becoming fabulously wealthy, said OS would be buggy as hell & provide access to people's information when required by those who need this access, etc. etc.  oh, and BG's fabulous wealth is Foundation-all, and goes back to fund all kinds of wish lists for those that wish these things (on us). . . it's out there in the webs if anyone's even remotely curious at this stage.

so yeah, MS "gave the source code to the Chinese Gov't" - what if Steve Jobs also agreed to make bank & history with his i-stuffs, thus propping up the stock markets & giving him his breathless legacy, in return for helping pull China forward in the global "capital" stakes, thus "equalising" the nationstates just a wee bit more in advance of whatever happens next?

what if the same folks pulling the strings behind the scenes in amrka are working their magic in bringing "amrkn know-how" to China, thus "opening" the doors to another slave state to farm taxes, etc. from?

it's not so very far-fetched to ponder, hmm?

Wed, 09/26/2012 - 00:57 | 2830935 MeelionDollerBogus
MeelionDollerBogus's picture

And that's why I read ZH - it's the smart comment gems alongside the articles. It can take a while to find one but normally they're as informative as articles themselves.

Sat, 09/22/2012 - 19:14 | 2821055 q99x2
q99x2's picture

That should not affect the price of the stock becuase of the detachment of a stock's price to anything other than FED computers. But it might mean that I can go back to work in Silicon Valley and a mother fucking greedy rat faced globalist fucking pig is going to have to pay up or take his shit monopoly game home with him.

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