A Good (and Bad) Week For Apple

Friday, January 27, 2012

Transcript

For Apple, the last two weeks have been filled with praise and scrutiny. Steve Jobs was held-up as the best American business has to offer in Tuesday's State of the Union address while the New York Times reported worrying work conditions at Chinese factories that produce Apple products. Bob speaks with Wired's Steven Levy who says the bad news won't immediately change public opinion of Apple.

Comments [8]

fred from california

http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html?_r=2
That new york times piece details why its done in china.

The complaints about chinese workers treatment fall flat when 45 million americans are on food stamps.

Why apple anyways, everyone uses china now. Apple is just one of the few that can keep even engineering jobs in the US. What are your alternatives really? Samsung? HTC? They hire in korea or taiwan, not in the US.

In any case the responsibility is with china. China has unquestionable and unchecked power, they can steal from and kick google out, they can do anything they want, so the responsibility is theirs alone.

As for folks like john austin claiming western companies should "ethically" give 5% more money as charity..sorry, that is based on a patronizing view of others. The millionaires made in china are so numerous it is mind boggling, the amount of money these factories make is also mind boggling, so to ask for charity when these operations are big enough to hire hundreds of thousands is absurd..and almost racist.

Sorry, but chinese can be greedy too, the factory owners and the rest of the corrupt officials have the responsibility for their workers. To expect less from them is to set a lower standard based on prejudice.

Feb. 06 2012 06:35 PM
Chris Gray from New Haven, CT

I definitely like what Mr. Fields and Mr. Matson wrote (even the apt typo...what bright marketing to make an app for that Apple product)!

When Kriss Santala at Kinko's taught me how to make headlines for The Elder, it saved us thousands and endeared me toward Apple products. As soon as possible I conned one out of an up-grader, then replaced the monitor with one abandoned by a graduating Yalie. Had my hands on one with the newfangled modem when a national community organizing clearinghouse fronted by the Obamas offered one to the Coalition for People where I staffed.

None-the-less, it has never been a question in my mind that everything Apple, everything Jobs thought up for them, was inspired by someone in the Star Trek franchise. I can just feel his horror and delight at seeing some officer operating a touch screen control board. "How can we do that!" I hear someone else now has come up with something like a tricorder, though.

Jan. 31 2012 04:53 PM
Matt Matson from Oakland, California

Mr. Levy argues Apple is forced to treat employees poorly because consumers demand low cost products. While it is true consumers want cheap products and some producers have very thin margins, Apple's pricing is not determined by its costs: it sets prices to maximize profits.

Apple sells its products for substantially more than they cost to make. Consumers don't decide how much of the price goes to Chinese factory employees versus shareholders; Apple's Board of Directors does. The analysis might be different if Apple was a commodity producer and not making large per unit profits.

The Board can claim they have a duty to maximize profits for shareholders, and most corporate boards would agree. Nevertheless, Levy should recognize that, ultimately, the goal of profit maximization drives Apply to minimize labor costs.

Jan. 30 2012 01:32 PM
justjack from Clarendon Hills

I love Apple products and I think Apple does a good a job as anybody else. China and Foxconn are responsible for conditions at their facilities.

Jan. 30 2012 07:25 AM
Gary L. Field from Lansing, Michigan

On October 20, 2011, iSuppli reported that Apple's manufacturing cost for its 4s iphone was $8 per phone.
http://www.isuppli.com/Teardowns/News/Pages/iPhone-4S-Carries-BOM-of-$188,-IHS-iSuppli-Teardown-Analysis-Reveals.aspx

In its 10Q filing with SEC, Apple reported that in the quarter ending December 31, 2011, it sold 37,044,000 iphone units. Apple also reported that its sales revenue for "iphones and related products and services" was $24,417,000,000. Therefore, simple math reveals that Apple received revenue of $659 for every iphone it sold in last 3 months of 2011.

Apple also reported that its overall margin (profit)for the quarter on revenue received from the sale of all of its product and services was an incredible 44.68%. Assuming the same margin for its iphone sales, Apple made a profit of $294 per iphone sold.

See pages 2 and 25 of
http://files.shareholder.com/downloads/AAPL/1662408796x0x536523/381559d7-04a1-40d5-8e2a-236e3f867158/AAPL%20Q1FY12%2010Q%2001.25.12.pdf

Steven Levy blamed us, the consumers, for the tortuous working conditions that Apple imposes on its Chinese workers, asserting and rationalizing that Apple faces "terrific pressure" from consumers "to deliver their products at low prices."

However, given the fact makes a profit of $294 per phone (when related products and services are included), it doesn't seem that we consumers are putting "terrific pressure" on Apple to keep its prices low. Rather, it appears that the horrendous working conditions more likely stem from the need of Apple's executives and shareholders to make a profit
of $294 per phone rather than $286 dollars per phone.

If Apple would be satisfied with just a $8 drop in their profits, Apple could pay $16 of labor costs per phone instead of $8, which would in turn, double the pay of their workers receive or let them work 8 hours a day instead of 16.

Apple can't blame the American consumers for the torture to which Apple subjects its Chinese workers.

Jan. 30 2012 12:15 AM
Jon Austin

The coverage of late of Apple, Foxcomm, and others brings the opportunity to consider the old non-cyncial idea of ethical capitalism, perhaps even start re-marketing it within the culture. Apple phones and pads could be produced ethically were they to concede a mere 5-10% of their pornographically high profit margin.

Perhaps we harken back to some mottos and memes of the past. An edgy band could release their new album (at iTunes of course), 'Foxcomm is iMurder'. PETFE (People for the Ethical Treatment of Foxcomm Employees).

Jan. 29 2012 10:15 AM
JayTeaNH

Apple also keeps about $80 billion overseas to avoid American taxes. Does that make them a good corporate citizen, too?

Jan. 29 2012 10:08 AM
Jessie Henshaw

It's very valuable to have the obvious pointed out, that we pay Apple to have its phones made by the cheapest way possible, implying that consumers are really the source of demand for everything businesses ultimately do. Thanks.

If the thought stops there the value is lost, I think. It turns into sound bites and metaphors, that embarrass consumer's by exposing their symbolic control of business decisions.

The real insight that would empower consumers to see what to do is not that, though. It’s comes from the larger implication. If you “follow the money”, consumers are the ultimate source of demand for ALL economic impacts, and THE GREAT MAJORITY they’ll never know about. That’s a highly useful secret.

The message is NOT to feel remorse when we find out about them, though that's helpful and feels better than not to react. The real message is all our average hidden impacts are going to be “about average”, per dollar of spending. So for widely distributed impacts you can know the total without needing to trace the millions of things any purchase ultimately pays for!! It says that for average impacts, Impacts = $, and *Total $'s* is our best measure of and most direct source of impacts NOT our spending choices.

This becomes the only accurate way to measure the real scale of total environmental impacts of our purchases. The recently published systems physics paper showing why, and demonstrating how to use it, indicates that any dollar spent will have about the same total energy consumption impact on the earth, ~8000btu/$, and total CO2 footprint, ~.47kg/$.
http://synapse9.com/SEA

Jan. 28 2012 09:09 AM

Leave a Comment

Email addresses are required but never displayed.