Apple Accused of Manipulating Flash Memory Prices

[tbrinkma]

The computer may be friendlier, the company is as nasty as they come though. This accusation is actually worse than a lot of the stuff MS has been accused of.

Seems like a lot of people don't get the original post, this is not about supply and demand due to apple buying a lot.

The analogy is more like:

Call a pizza place and order 30 pizzas.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas, you know they will have to get rid of it now so you offer them a buck each. Something being better than nothing you accept. Repeat next week.

You pay the pizza place $50 up front for the guarantee that when you order your next 30 pizzas, they deliver them with a higher priority. (prepaid production guarantees)
You order 5 pizzas today. (Apple's order)
The pizza place complains that you didn't order all 30 pizzas at once.

 

[mdriftmeyer]

Simplified analogy which is useful here. Do note the lines before the one you quote specifically say this is what they are accused of doing. The analogy is for what they are accused of doing. Are they doing it ? I don't know, I don't think they are above doing it, that is the nature of a corporate beast.

If its clearly illegal a company may not do it, unless penalties are insignificant. On the other hand if something is immoral but legal a company is very likely to do it.

In the long run this will work it self out, either it goes nowhere or it goes into courts and makes some lawyers happy until they settle. Unless the governments get involved, than it becomes like the MS anti trust trials in the US and Europe.

***As a disclaimer my stance on apple is that I generally like and use their products, thing that they are far from perfect and I am allergic to blind fanboyism for either platform.

This is a press statement hoping to sway Apple because as it stands they are speculating and accusing Apple of price manipulation based upon being popular through it's iPhone product:

"Apple has asked Korean semiconductor makers to produce a certain amount of chips for its digital products, only to actually purchase a smaller volume eventually. The company doesn't make immediate purchases, but waits until chip prices to fall to the level the company has internally targeted."

This may cause Apple to file a lawsuit against the group to find out whether they can back up their claims and not just use the press to slander it's reputation in a baseless manner.

 

[lilo777]

Add Nokia to this list

Just Microsoft. The rest in that list are alienated potential partners.

He forgot to mention Adobe, too.

How could I forget Nokia obviously should be added to this list too.

 

[applesupergeek]

Seems like a very legit and accurate point to me, why did you get so defensive? Think about all the Microsoft bashing that would have gone on had this story been about Microsoft. I'm sure the truth of something so meaningless hurts, but it shouldn't.

it's accurate but it's obvious. Firstly microsoft have a lot to be bashed for by any objective observer. And secondly this is an apple fans forum.

To over elaborate on the obvious is, as a saying goes, one of the clearest signs of idiocy.

 

[lilo777]

This is a press statement hoping to sway Apple because as it stands they are speculating and accusing Apple of price manipulation based upon being popular through it's iPhone product:



This may cause Apple to file a lawsuit against the group to find out whether they can back up their claims and not just use the press to slander it's reputation in a baseless manner.

They can't. All lawyers are busy suing somebody else (psystar, Nokia, the Australian retailer that put apple in their logo, power adapter knockoff maker, Canadian school (http://www.tomshardware.com/news/apple-logo-legal-college,6459.html) etc.

 

[Rodimus Prime]

Stuff like this makes me think apple is behaving more and more like Walmart.

many of walmarts pratices I would considered pretty low. Walmart abuses it marketing power by forcing its suppliers to sell at a lower cost, and force them to take back any unsold stock. Apple more than likely is using it market power to do something like it to flash memory prices.

 

[Rodimus Prime]

This may cause Apple to file a lawsuit against the group to find out whether they can back up their claims and not just use the press to slander it's reputation in a baseless manner.

Or it could be apple will not do that because Apple knows it is true. Apple would have to prove that it is slander. The company does not have to do a damn thing to prove there side. Apple has to prove it does not do that and it could easily be apple is doing it.

 

[jimmyjoemccrow]

it's accurate but it's obvious. Firstly microsoft have a lot to be bashed for by any objective observer. And secondly this is an apple fans forum.

To over elaborate on the obvious is, as a saying goes, one of the clearest signs of idiocy.

Well you just made yourself guilty of it.

 

[Gasu E.]

The computer may be friendlier, the company is as nasty as they come though. This accusation is actually worse than a lot of the stuff MS has been accused of.
.

You mean worse than using your monopoly profits to fund the development of a counter to your competitor's main product, which you then give away for free?

 

[BJMRamage]

so, Apple (is accused) of asking for more, and buying less than asked for, "causing" a drop in prices?

why not have the manufacturer keep prices the same, if they are the top 3, they can have so many that the other manufacturers cannot have enough supply for the numbers to drop.

i don't really see anything wrong. they ask for a certain amount and then buy the amount they really forecast they need.

and for anyone to "sue over 30 pizzas" is a complete idiot. sorry i know no bashing of people but really? mindless shmuck.

 

[AwakenedLands]

Long-term business relationships are what makes the world go round. Screwing the people you do business with is just lame.

I think the appropriate analogy here is this...

The Pizza Store has the capacity to make 30 pizzas each week.
Supermarket A decides to order 30 pepperoni pizzas.
Supermarket B decides to order 6 pepperoni and 4 supreme pizzas.
Supermarket C decides to order 4 pepperoni, 2 supreme, and 2 cheese pizzas.

The Pizza Store gets the order from A and decides that's what they need to make, and makes them. Supermarket A decides they only need 20, so they pay for those and that's it. That leaves the other two Supermarkets with pepperoni pizzas, but no supreme or cheese pizzas. The price for supreme and cheese skyrockets, while the pepperoni's stays the same since the supplier knows they will sell all of them.

If Apple locks up production with the memory they want, that doesn't leave much time to make the other chips. It seems the longer Apple decides they want X memory in their phones/ipods, that's what the world is stuck with for other devices... unless consumers want to pay a premium.

In any event, Apple is controlling what is being produced because they order so much. The suppliers are basically forcing themselves to rely on Apple by not increasing production. Not a good environment in the long-term, and better memory chips with more capacity will not be at a decent price until Apple decides to use them.

 

[k1121j]

Two months ago they said APPLE was buying all they could make HMMMM FISHY

How can this be when only a few months ago the same companies were complaining that apple was buying up all the supply and were going to have demand surpass supply by years end.......

Here The Link

According to the Taiwanese publication DigiTimes, both Hynix and Samsung (Apple's largest supplier) began stockpiling memory for Apple earlier this month, sharply reducing the amount available to the rest of the industry. Apple is said to be gathering the flash chips so it can meet a forthcoming seasonal upturn; but even major module houses such as A-Data, Kingston and Transcend are claiming insufficient NAND to meet their demands. A number of so-called "second-tier" houses are receiving no stock at all.

 

[Speedy2]

Seems like a very legit and accurate point to me, why did you get so defensive? Think about all the Microsoft bashing that would have gone on had this story been about Microsoft. I'm sure the truth of something so meaningless hurts, but it shouldn't.

What exactly WAS the point? That you'll find people defending Apple on a website dedicated to Apple products? Seriously ...

You'll inevitably find forum members going overboard with their fandom/hate for or against Apple. But most people here are not that blind. Don't pretend that everyone is a silly fanboy, just because a majority didn't take that report about alleged bad business practices seriously.

My guess is: most people here would simply ignore a similar report about Microsoft.

 

[k1121j]

Apple is not ordering more and buying less

so, Apple (is accused) of asking for more, and buying less than asked for, "causing" a drop in prices?

why not have the manufacturer keep prices the same, if they are the top 3, they can have so many that the other manufacturers cannot have enough supply for the numbers to drop.

i don't really see anything wrong. they ask for a certain amount and then buy the amount they really forecast they need.

and for anyone to "sue over 30 pizzas" is a complete idiot. sorry i know no bashing of people but really? mindless shmuck.

Apple is paying for what they order like any buisness you need to be sure your suplyer can make what you need thats what apple did.......The memory supplyers made extra on their own that no one had comitted to buy maby theey will think agian before making memory ahead of the order...

 

[jimmyjoemccrow]

Can you imagine an OS today without a browser? Should Microsoft not have made a browser and bundled Netscape? Would you approve if Apple were forced to bundle Firefox with OSX?

All the anti-competitive cases were made against Microsoft after they achieved dominant position. They defeated DR DoS by making Windows only compatible with MS DOS. Sound similar to anything Apple does? They defeated Novell Wordperfect and Netscape by restricting APIs. Ring a bell with the iPhone?

Microsoft are a shower of ***** there is no doubt and they have the dominant OS, but what are Apple doing about it? Apple tie their OS to specific hardware and sell it as a designer computer to the consumer market. They are dodging the issue, and their practices are far from squeaky clean.

 

[realeric]

Call a pizza place and order 30 pizzas.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas, you know they will have to get rid of it now so you offer them a buck each. Something being better than nothing you accept. Repeat next week.

+1, Call a pizza place and order 30 pizzas.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas, you know they will have to get rid of it now so you offer them a buck each. Something being better than nothing you accept. Repeat next week.

Next week;
Call a pizza place and order 30 pizzas again.
The pizza place makes 30 pizzas since you are a very important person for them.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas.

Next week;
Call a pizza place and order 30 pizzas again.
The pizza place makes 30 pizzas since you are still a very important person for them.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas.

Now the pizza maker is accusing of you on a newspaper, but never suing you because you are still a very important person for them.

 

[AwakenedLands]

+1, Call a pizza place and order 30 pizzas.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas, you know they will have to get rid of it now so you offer them a buck each. Something being better than nothing you accept. Repeat next week.

Next week;
Call a pizza place and order 30 pizzas again.
The pizza place makes 30 pizzas since you are a very important person for them.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas.

Next week;
Call a pizza place and order 30 pizzas again.
The pizza place makes 30 pizzas since you are still a very important person for them.
Go pick them up but say you actually only want 5.
Now the pizza maker is stuck with 25 pizzas.

Now the pizza maker is accusing of you on a newspaper, but never suing you because you are still a very important person for them.

You forget to mention that the pizza place can only make 35 pizzas a day. They don't have unlimited capacity!

 

[Speedy2]

You forget to mention that the pizza place can only make 35 pizzas a day. They don't have unlimited capacity!

Come on guys. Enough already.
You make me hungry!

 

[iZac]

Perhaps Apple over estimated supply from before the "recession" kicked in. Changing production forecasts to be more modest stops product from piling high on shelves, I would have thought that for at least the last 4 quarters Apple have slightly scaled back the "growth" that they have previously worked to.

...also, these flash suppliers must be making money hand over fist with the amounts that Apple buy anyway!

 

[twoodcc]

i don't know. this sounds dirty. hopefully apple isn't really doing this, but if so, hopefully they wont continue to do it

 

[paradox00]

Hope you remember that when the iPhone and iPod Touch gets OLED screens and Microsoft's using up their fair share for the Zune HD.

That doesn't even make sense. Apples needs would be astronomically greater than Microsoft's. The Zune HD would have little to do with Apple facing supply shortages.

For example, say 5 Zunes are sold for every 90 iPods (optimistic) and the Zune somehow gets priority on OLED screens. The manufacturer has 60 screens. Microsoft would get 5 and Apple would get 55 (35 short). If Apple had priority they would still be 30 short, while there would be no Zunes. Zune sales have little impact on the supply chain for iPods.

Edit: I guess the numbers would be a little closer because the iPod touch isn't the only iPod out there.

 

[Bubba Satori]

And we are passing the savings on to you, the customer.

Oh doG, that's funny. Side splitting, really.

 

[macshill]

Oh, like "Saint" Apple would never try to manipulate the market.

Now if you'll excuse me... I got to get back to reading the timeline for Apple Apps Store rejecting the Google Voice app for the iPhone.

 

[JeffDM]

That doesn't even make sense. Apples needs would be astronomically greater than Microsoft's. The Zune HD would have little to do with Apple facing supply shortages.

For example, say 5 Zunes are sold for every 90 iPods (optimistic) and the Zune somehow gets priority on OLED screens. The manufacturer has 60 screens. Microsoft would get 5 and Apple would get 55 (35 short). If Apple had priority they would still be 30 short, while there would be no Zunes. Zune sales have little impact on the supply chain for iPods.

Edit: I guess the numbers would be a little closer because the iPod touch isn't the only iPod out there.

In all fairness, I don't think Zune HD sales figures are available yet. Not that I expect them to have a breakout hit. Now that we're well past the preorder / new release "bump", it doesn't look like it. If Amazon's sales ranks are any indicator (usually take with a grain of salt), the top selling Zune is ranked at #24 in the MP3 player category, above it are 18 models of iPods that sell better.

 

[TalonFlyer]

Always something to complain about!

In the high-tech supply chain you must cover all bases. Sure, Apple placed orders based on projections and future demand. These contracts have elbow room built in and Apple simply exercised their contractual option to take more or less product. The factories may have over-run production a little to hedge their own projections.

Was there not a recent report talking about the NAND shortages created by Apple? Why all of a sudden is there a surplus.

Apparently, Apple is on top because that's when you become a target.

Good job Apple.