While Foxconn's margins are thin, at least they are making money. That's something that many in the electronics industry can't say.
What is amazing, and everyone on this thread hasn't mentioned, is that Apple has been able to make extremely healthy profits on a large scale. Usually these kinds of profits are only possible in a tiny niche industry that is too small to attract wolves ready to make the same products for much smaller profits.
Apple protects their turf using a lot of tools, the patent suits being only one such. Rather then blast Apple for making healthy profits, one should laude them for doing what most other companies cannot figure out how to do: be innovative with their products, be innovative in setting up cost efficient production strategies, be innovative in marketing to their customers, and being innovative in hundreds (if not thousands) of unique ways.
Remember, Apple shouldn't have been successful with their stores, everyone predicted a huge failure. Remember how Steve Ballmer laughed at the idea Apple could be effective in the phone business. Remember how everyone's tablet up to the iPad flopped terribly. Apple is seeking to break ground in many areas where other's make very thin profits, including the TV industry.
It's almost like there's been a business tenet in place that if you are going to do large scale things in certain business sectors then you will only make razor thin profits. Apple is proving that idea wrong, and in doing so, may actually shock the business industry into rethinking some basic business tenets so that once again companies may start making money like it was the 50s or 60s again.
One more thing: do a search for an article in the New York Times titled Even a Giant Can Learn to Run.
It's about the turn-around at I.B.M. with the new C.E.O., Samuel J. Palmisano, in 2002. That's when the company shed the P.C. business along with other businesses that were not highly profitable. It's been so profitable that Warren E. Buffett, who typically shuns technology stocks, announced he had accumulated $10 billion of I.B.M. shares, a stake of more than 5 percent.
What I found most interesting about Mr. Palmisano is that he built the change at I.B.M. on four questions:
• “Why would someone spend their money with you — so what is unique about you?”
• “Why would somebody work for you?”
• “Why would society allow you to operate in their defined geography — their country?”
• “And why would somebody invest their money with you?”
It sounds obvious, but that's how change starts. Some companies break mental boundaries, and other can follow. There was a time no olympian could break the four-minute mile, however once one man did, it is now being done at high school meets.
