GigaOM » production

Apple’s reported supply chain cuts ‘overblown’

Erica Ogg — Tue, 27 Sep 2011 15:36:25 +0000

A day after an analyst spooked some Apple investors with a report that the company had cut back on its iPad production, several different analysts are saying that everything is fine. They also have their own theories as to why Apple may have lowered orders for some iPad 2 parts by as much as 25 percent: Apple either over-ordered, or is seeing quality problems with some parts from its third-party vendors.

On Monday, a JP Morgan analyst wrote that Apple had cut its order of some parts for the iPad 2 from Hon Hai Precision Industry in China and other vendors. This led some investors and pundits to wonder if demand had dropped for the iPad 2, or if the economy was to blame. Either way, Apple’s stock was punished and it dropped a little over 3 percent during trading Monday.

Then late Monday, a different JP Morgan analyst stepped in to say that Apple and its iPad production are “fine,” according to Bloomberg. Tuesday morning, UBS analyst Maynard Um weighed in, calling the concerns over Apple’s supply chain “overblown” and the changes in supply chain orders “very normal” in a research note to clients. Barclays Capital wrote that it “disagrees with any talk of a shipment slowdown” and the cuts reported Monday could just be related to components themselves, and not to shipments of the finished iPad 2 being cut.

Um of UBS wrote Tuesday, ”Our extensive checks among the global tech team suggest this is limited to components that could have yield and production issues.”

He also noted that “relying solely on supply chain data could be misleading, and supply chain cuts are not atypical whether due to surplus ordering, manufacturing share shifts, timing of new product/regional launches, etc. There are also inherent differences between component orders and device production.”

Um says UBS still expects Apple to produce between 12 million and 13 million iPads during the third and fourth quarters of this year.

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Report: iPhone 5 production hits 150K per day as launch nears

Darrell Etherington — Thu, 08 Sep 2011 12:26:11 +0000

Apple’s suppliers are gearing up for the iPhone 5′s launch, according to supply-side sources speaking to DigiTimes on Thursday. Foxconn, Apple’s final assembler of iPhone devices, is currently putting together 150,000 handsets per day, with a goal of shipping 5-6 million iPhone 5s in September.

The initial September shipments pave the way for a total target of 22 million shipped iPhone 5 units by the end of the fourth quarter, according to the supplier sources. That’s pretty close to an earlier report by the Wall Street Journal, which claimed a sales target of 25 million iPhone 5s by the end of the year. Other component manufacturers like TPK Holding, which makes the iPhone’s touch panels, and Largan Precision, which produces the smartphone’s camera lenses, are also reportedly “operating at full swing,” DigiTimes notes.

Earlier, DigiTimes reported that Pegatron would be contracted for at least some of the iPhone 5 assembly. DigiTimes notes that this is likely still true, but Foxconn will take the lead, with Pegatron following with its orders in 2012.

If we’re headed for an early October release of the iPhone 5, ramping up production now is a logical next step. Rumors seem to be agreeing on the October release timeframe lately, and rumors of carrier and retailer staff training back that up. Also, it’s worth noting that a similar report from DigiTimes arrived shortly before the release of the Verizon iPhone, and turned out to be more or less accurate.

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How One Reinvented Radio Firm Is Leading the Brit Pack

Bobbie Johnson — Thu, 12 May 2011 13:14:51 +0000

You could hardly call London-based Somethin’ Else a startup … after all, it’s been around for almost 20 years. But the British company, which started life in radio production, has spent the last few years reinventing itself as a “content design” outfit — and it’s now gathering the sort of reputation for innovation and creativity that tends to mark out young, entrepreneurial businesses.

What it does can be hard to pin down, not least because the business takes a very modern approach to making money. It works across a wide range of different, constantly-evolving projects rather than putting its eggs in one basket, which means the company’s 70 or so staff do everything from making radio shows (it is one of the largest independent radio producers in the U.K.) to talent management to operating as a web design agency.

But it’s in the digital sphere — and particularly games — that the company is really getting noticed these days. In particular, there was last year’s iOS hit Papa Sangre, an award-winning video game that (peculiarly) had no video. Based around a purpose-built 3-D sound engine, the game effectively blindfolds you and then guides you through only by sound. It’s an astounding audio experience, and rightly gathered plenty of praise.

(The trailer below gives you a flavor of the game, but it’s one of those titles that you have to play to really understand)

Entering the Palace of Bones from Papa Sangre on Vimeo.

For most interactive agencies, that would be the end of the story. But Paul Bennun, the company’s director of digital, explains that Papa Sangre’s success has been a great example of what is propelling Somethin’ Else forwards.

“We go back a long way in games — we produced [the British version of] You Don’t Know Jack back in 1998,” he says. “But we have to start thinking of ourselves as a software company… we have to be flexible.”

By that, he means the company is rapidly developing the technology it’s built into something bigger. It’s just released The Nightjar, another audio-driven game starring actor Benedict Cumberbatch (recently seen in the BBC’s Sherlock reboot) and says Papa Sangre 2 is also on the cards. It’s also looking into the possibility of licensing the audio engine to other games studios as middleware.

It’s an approach that strikes at the core of one of the biggest problems British creative technology businesses face. One of the criticisms of London is that it’s really an agency town: There’s a huge amount of creative work that takes place, but while a lot of it is really pushing the boundaries, it’s also conservative when it comes to taking business risks. Ultimately, the people who do the making are hired in by huge brands and big companies and very few of them are prepared to branch out on their own or make products.

But Bennun, who admires the reinvention of Apple and the reputation of consulting firms like IDEO, has been canny. Papa Sangre was produced under the auspices of Channel 4’s now-defunct 4iP innovation investment fund, which means Somethin’ Else owns the technology. Somethin’ Else is now able to act as a partner rather than simply as a producer, which means it can determine its own future.

So does Bennun think Britain can produce a new generation ambitious businesses that want to transform themselves from well-regarded agencies into something bigger and better? Is it possible?

“Absolutely. Damn right,” he says. “It’s kind of our time at the moment.”

Photo of Paul Bennun used with permission of Matt Locke, test.org.uk

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iPad 2 Said to Now Be In Production; Here’s Why I Believe It

Darrell Etherington — Tue, 08 Feb 2011 23:09:02 +0000

The Wall Street Journal is reporting Apple has begun production on the iPad 2, according to “people familiar with the matter.” The next-generation tablet from Apple will be thinner and lighter, with a faster processor, more memory and a better graphics processor, according to the source.

Keeping track of iPad rumors is tough, but there are a few sources that are almost always worth paying attention to. One of those is the Journal, where Apple has been known to intentionally leak advance product information in the past. In fact, immediately preceding the announcement of the first iPad, the WSJ ran an article confirming the device’s existence and promising a January announcement and March release (this ended up falling in early April, but late March could’ve been the original target). Following that announcement, former Apple marketing manager John Martellaro wrote that such articles were often examples of “controlled leaks” employed by Apple to intentionally bolster interest in its upcoming products. Martellaro said that Apple will contact “trusted friend[s]” at major news outlets. The WSJ article announcing the original iPad’s existence was co-written by Yukari Iwatani Kane, as was the one published today discussing the iPad 2.

This definitely feels like an intentional leak, since it’s light on details, busts some of the loftier expectations floating around (no high-res display or Sprint/T-Mobile compatibility) and mainly re-treads established anticipated features (front-facing camera for FaceTime). It also doesn’t mention any specific dates or timeline for release, but if Apple is beginning production now, a March or April release is most likely, which is in keeping with a one-year update cycle and existing rumors.

One thing that’s conspicuously absent from the WSJ’s description of the iPad 2 is a rear-facing camera. Maybe Apple is of the opinion that it isn’t much use on a 10-inch tablet. What do you think? Would a single, front-facing camera on the iPad 2 disappoint?

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White iPhone 4 Spotted, Reason for Delay Explained

Darrell Etherington — Fri, 15 Oct 2010 12:57:52 +0000

If you’re waiting for a white iPhone 4, you’ve been waiting a long time now. It might infuriate you to know that Apple apparently has hoards of them piled up at Apple HQ. Are they preparing for a launch? No, not according to a man who owns one.

Blog Pocket-lint spotted the as-yet unreleased white iPhone 4 at a press event yesterday in New York City, being used by a person who wished to remain nameless. Probably a wise move after everything that happened with the Gizmodo iPhone fiasco. Pocket-lint managed to snap some photos of the device being used, and even approached the man to find out how he got his hands on one.

Turns out the guy had contacts inside One Infinite Loop, and that friend was able to get him a white iPhone 4 because they’re literally stacked in boxes around the place. Initial shipments of the device came through prior to the intended launch, but there was a problem: The white of the home button doesn’t quite match the white of the front face plate.

Those who’ve experienced antenna problems with their iPhone 4 or heard this story about Steve Jobs’ preference for form over function that came to light as a result of that debacle won’t be surprised that a shade of color difference would prevent an Apple product going to market.

Apple’s suppliers can’t remedy the problem, at least not to Jobs’ satisfaction, so the white iPhone 4 stays off of store shelves. It’s already been delayed many times, with the latest reports putting a release date sometime around Christmas. Apple hasn’t made mention of it at all in a long time, though.

We’ve got a major Apple event coming up next week. What better time to announce a white Christmas for customers? Even though it’s a Mac-focused event, if the phone is ready for mass consumption, we’ll see it unveiled there. If it isn’t, chances grow slimmer still that we’ll see a white iPhone 4 at all.

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Cost to Make the Apple TV? Just $64

Darrell Etherington — Tue, 05 Oct 2010 21:00:50 +0000

iSuppli (via BusinessWeek) has gotten around to tearing down the new Apple TV and assessing its manufacturing cost. The final tally? Only $64, a considerably smaller sum than the $237 the previous generation Apple TV, introduced in 2007, cost to make. So why the big difference?

Well, much of the cost of the original came from the Pentium chip from Intel and its chipset, which accounted for $68 alone according to 9 to 5 Mac. That means today’s Apple TV costs less to make in its entirety than just the brains behind the previous generation. The new version’s case is also cheaper, and even its most expensive parts — the A4 chip and the 8GB of RAM — are only $16.55 and $14 respectively. It’s definitely one of the benefits of going in-house with your processor.

Plus, Apple is actually making more money, percentage-wise, per unit sold. It was making 20 percent margins on the old Apple TV (minus any non-production costs) and now it’s making 35 percent. The cost to manufacture also means that even if things don’t go all that well for the new Apple TV, the company won’t be taking that much of a bath.

Because Apple TV keeps its cost down using its own chips, we might see much higher prices on Google TV, which will be based on Intel-produced processors. It’s yet another example of Apple starting to turn the tide in terms of its reputation as the high-cost electronics company, beginning with the iPad’s price vs. that of competing devices.

As is the case with other tablets, it’s likely we’ll see manufacturers try to offset the cost of their own competitors by bundling devices with subscription packages. Google TV will be incorporated into actual televisions, which could help hide the actual cost, and we might see cable providers shipping units as part of bundles for new subscribers. Price discussions will likely be on the agenda next month at NewTeeVee Live, when Google TV’s product lead Rishi Chandra takes the hot seat. Whether defraying costs through partnerships proves more or less effective than Apple’s decent-price-without-strings-attached method remains to be seen.

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Apple Doubles iPad Production, May Triple Soon

Darrell Etherington — Fri, 03 Sep 2010 18:01:33 +0000

The Apple iPad recently became available to ship within 24 hours for the first time since it began production in April of this year. It looks like that might be due to a significant ramp up in production on the part of Apple’s manufacturing partners, not a dwindling of interest.

According to Morgan Stanley analyst Katy Huberty, the number of iPads being built every month recently went from 1 million to 2 million units per month. Not only that, but Apple has reportedly indicated to its suppliers that it would like to see that number increase further still, to 3 million per month. That additional million is targeted for Q4 2010, and is probably planned in anticipation of strong holiday sales.

Early sales for the iPad have exceeded everyone’s estimates, including Apple’s own. Tim Cook said in July during the company’s Q3 conference call that increasing production capability to deal with the atypically strong early adopted numbers was a top priority for Cupertino.

Clearly Apple is also bullish about its chances against emerging competitors, like the recently introduced Samsung Galaxy Tab, which recent rumors suggest may even exceed the iPad in terms of price. If true, its not a promising sign for the Android crop, admittedly.

The numbers are good news for another group besides Apple itself: iOS developers. More devices on the market means more potential App Store customers. It also means we’ll hopefully see some of the fence-sitters who’ve yet to release true iPad or universal versions of their popular apps (looking at you, Facebook) finally do so.

Apple may also be gearing up for the release of the iPad in other markets where it isn’t yet available, including the lucrative mainland Chinese one. This is the most likely scenario, since it’s hard to believe the holidays alone would account for a threefold increase in demand for a product that’s been on the market for half a year.

Related GigaOM Pro Research: Can Anyone Compete With the iPad?

Rumor Has It: New Parts and Supplier Details Emerge for Apple Tablet

Darrell Etherington — Mon, 11 Jan 2010 15:19:56 +0000

Everything’s beginning to come together for the launch of Apple’s tablet — quite literally, in fact, as Apple’s suppliers for the device begin to ship component parts or are ramping up for production in the near future. That’s according to a report issued by news service Reuter’s Friday afternoon.

Two Taiwanese companies are cited in the report as having received the contracts for the aluminum casings and the touchscreen panels that the upcoming Apple slate will use in its construction. If true, this means that the tablet will indeed sport an aluminum enclosure, and I’d expect something akin to the unibody construction process used in the MacBook Pro casing to be applied here. Imagine the build quality of that machine, without a hinge as a point of weakness. It’ll be quite hardy.

AVY Precision Technology is said to be the supplier for the cases. The company manufactures covers for various electronic devices. The cases haven’t yet begun production, though they will very soon, according to Reuters’ sources:

“Production of the cases will begin in February, so everything points to a second-quarter launch right now,” said one of the sources. “It doesn’t take that long for the company to assemble the PC together, but a second-quarter shipment date is what we’re looking at now.”

As for the touchscreen panels, the sources cite TPK Solutions as yet another supplier for that component of the devices. It joins Wintek, which is reportedly already producing panels for the tablet, too. Apple seems to be preparing for a fairly ambitious initial production run. The panels have reportedly already begun shipping.

The timing of the orders and shipments implies a second-quarter 2010 launch for the device.

I’m of the opinion that this new rumor is fairly reliable, for a few reasons. First, at CES last week, many manufacturers took the opportunity to try to steal some of Apple’s tablet thunder by unveiling slate-type computers and media devices themselves, Microsoft and HP being the most notable among them. Second, in the wake of the Mac Observer piece by a former Apple marketing manager revealing the internal workings of and purposes behind Apple’s intentional leaks, this latest rumor seems to fit the bill pretty well.

Stoking the rumor fires with relatively inconsequential information about parts suppliers manages to draw some of the attention back to Apple and away from competitors, while not really revealing any major new details about the upcoming device — except for the aluminum casing thing, which could actually be pretty cool.

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Rumor Has It: Foxconn Receives Order for Next-Gen iPhone

Darrell Etherington — Thu, 10 Dec 2009 15:37:41 +0000

The inevitable iPhone update is looming ever closer in the distance, and accordingly, the iPhone rumor mill is heating up. Today, news came that frequent Apple manufacturing partner Foxconn, a Taiwanese hardware company, received an order to build the new iPhone, which still won’t arrive in consumer hands until mid-2010.

News of the iPhone order comes via Mobile Review’s editor in chief, Eldar Murtazin, who tweeted simply, “Foxconn received order for next generation iphone” early Thursday morning. Murtazin is known to have good connections in the mobile phone industry, so there’s a good chance that there’s something solid behind the report. Engadget went so far as to call him “the ultimate insider when it come to all things mobile,” which is no small praise.

It also makes sense time-wise, since Apple basically now has about six months to ramp up production enough to deal with the massive demand that usually accompanies the launch of its iPhone products. It’s also worth noting that this time around, many people who got the iPhone 3G on contract through AT&T will be at the end of their 2-year agreement, and thus fully eligible for a new hardware deal, which should help boost sales even further.

Thus far, details regarding what the next iPhone will have that the current generation doesn’t have been scarce. But that hasn’t stopped the rumor mill from working overtime. Some suggest we could see a CDMA or dual-mode CDMA/GSM model, or one that supports RFID technologies. If it’s true that production on parts of the iPhone is going to begin soon, we likely won’t have to wait long to see these rumors multiply and resolve into a more definite picture of what’s to come.

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Rumor Has It: Apple Tablet Due in March or April, Says Analyst

Darrell Etherington — Wed, 09 Dec 2009 15:29:56 +0000

Source: Piper Jaffray

Apple is all set to begin production of a 10.1-inch LCD tablet starting in February 2010, according to a recent analyst note by Oppenheimer’s Yair Reiner. Following that, the device should then go on sale in March or April, Reiner says, with an initial production run of around 1 million units.

Reiner isn’t working off of leaked or inside information, but his predictions are based on industry supply checks, which means he’s making an educated guest based upon Apple’s activity with its overseas suppliers of late. That’s not the only source of rumor fodder, either.

As reported by AppleInsider, Reiner notes that additional support for the upcoming tablet comes from contacts involved in the U.S. publishing industry:

Contacts in the U.S. tell us Apple is approaching book publishers with a very attractive proposal for distributing their content. Apple will split revenue 30/70 (Apple/publisher); give the same deal to all comers; and not request exclusivity. We believe the typical Kindle split is 50/50, rising to 30/70 if Kindle is given e-book exclusivity.

The deal would then be more attractive than Amazon’s, if the estimates about Kindle revenue-splitting are correct, and Apple wouldn’t insist on release exclusivity in order to provide the 30/70 split. If Apple curries the favor of the publishing industry, and offers a more versatile reading platform, the e-book market could be in for the fight of its life come March or April.

Note that Reiner doesn’t see an OLED panel going into the production tablet, as has been predicted elsewhere. Instead, he says the device will use the same kind of LTPS LCD multi-touch display found on the iPhone, only this one will be 10.1 inches. Estimated retail price for the Apple tablet is around $1,000, according to Reiner.

Compare that with the recently unveiled JooJoo tablet (neé CrunchPad). Fusion Garage is offering its device for $500, and you get a good quality 12.1-inch touchscreen display capable of handling HD video. It would seem to undercut Apple significantly, except when you consider that the Apple tablet will likely be much more than just a web-browsing device.

If the Apple tablet resembles a computer more than a glorified, oversized media player, I think a price tag around $1,000 is fully justified. If I got decent on-device storage, a great on-screen keyboard, and lots of productivity apps, as well as wireless connectivity and e-reader type features, I’d be happy to pay more than I would for a bare-bones net tablet. I think OS choice will be key to this device’s success, but Reiner makes no mention of whether it’ll be designed to run iPhone OS or full-blown OS X.

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