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Apple Accused of Manipulating Flash Memory Prices
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That's abusive how? If Walmart's price isn't profitable for you, you shouldn't be selling to them. If you do, you're an idiot. Same goes for taking back unsold stock. If that's unacceptable, don't do business with Walmart.
Cornering the flash supply is actually a good strategy to make sure that Apple gets priority for all its flash needs. I'm sure some of the chip manufacturers are unhappy about it. But that's really their problem so they'll just have to find ways to deal with it. Business is business, after all.
Congrats ! You're today's winner !
This is the best thing I've seen all day... or worst. I can't decide which.
I'm sorry, but OLED is a no go. Sure it has its advantages and whatnot, but the disadvantages are not worth it. OLED's have a very short life, and different colors die at different times, and more. Just no. OLED isn't the answer for now. It had to be improved or we'll need something else to come along.
Didn't Apple just switch all their computers over to LED screens?
What people don't seem to understand is that Apple is playing dirty. KaneBaker put it perfectly.
Sooner or later, these suppliers are going to call Apple's bluff, and then we get a shortage of iPhones and Touches because they didn't produce near as much as Apple requested. Requesting and Ordering are two different things. Requesting is supposed to be asking the suppliers to produce a certain amount in advance because you're going to need it soon. Apple does this, then doesn't order what they requested. Its a B$%#hmove from the chipmaker's perspective.
the reason why this isn't as easy as a one week ordeal is the FAB throughput for this ram can vary from 30 to 45 days. the companies need to make millions a and millions of wafers, then assembl them. So now they are into 60 to 90 days in product delivery. Building enough to compensate for factory issues and so on the manufactures will produce need to produce amply inventory to meet their customers demand. Assuming all the chips are sold that isn't a problem. But when the customer says well take a million chips then half way thru the contract says says nah we are all set for now, the manufacturer has to do something with the inventory.
Apple can then buy the chips from a third party for pennies on the dollar screwing the manufacturers.
the only thing this will do in the future is cash in advance, less ability price negotiations, and higher costs for Apple.
FAB time is expensive and once its gone there is no making up for it.
The problem with Walmart isn't so simple, the deal might start out good, but I've heard they keep squeezing their suppliers. For the first year, the company takes out a loan to make production investments for Walmart's demands, then the next year Walmart says they're going to switch suppliers unless you take a certain % cut in your price. You still have the loan, so you take the cut or else default on the loan, and the same happens again next year until there's nothing to cut and the company can't make ends meet no matter what.
So Apple is the Walmart of computing.... So much for the "Gucci" image that their ads try to portray.
The NAND manufacturers are just pissed because they can't fix the prices sky high like they used to a few years back
Ding Ding Ding. We have a winner. Apple buying ********s of flash memory is the reason you can get a 32gb flash drive for under 50$ today. Apple demanded the lowest price possible, not for the sake of the consumer, but for the sake of the bottom line. Just like Walmart is the reason that you can buy a 50" tv for under a grand from a reputable manufacturer.
I was responding to a specific statement about Walmart, I wasn't drawing comparisons to Apple's alleged practices. In Apple's case, I don't know if it's so clear cut as that.
And some one else already pointed out why you do not know what you are talking about.
Walmart is able to get away with that crap because they have so much marketing power. Walmart has killed off some great brandsnames due to there insane forcing them to reduce the price and cut corners. Walmart single handedly has killed off some great brand by the crap they pulled. Take for example Schiwinn bikes. They used to make great bikes and were one of the great bike brands out there. Well walmarts gets them to start sellling at Walmart and boom the brand has degraded to a pile of crap and just another POS department store bike brand.
Apple is doing the same crap walmart is but pushing companies to up their production to meet there request and then deciding that htey do not want it and forcing prices to drop.
As a supplier, you might have been given a choice between that average margin guarantee, and those half billion dollar deposits not walking off to other more flexible suppliers.
Make your bet.
Your pizza shop can only make 20 pizzas at a time. I'll give you enough money for a nice down payment on some new pizza ovens, enough to make 15 additional pizzas, in exchange for the option to buy between 5 and 30. Will you take the money and be ready to expand your business to selling up to 35 pizzas? Or just keep selling only 20 or less pizzas while I take my business, that's potentially bigger than you can handle, elsewhere?
Walmart's price is profitable for you, the first year. If you invest enough to meet their requirements, your financials for the year look good, your stock goes up, and the shareholders vote you a big bonus. Maybe even the next year or so. By the time this investment turns bad, you're retired to your private island (who's the idiot?), and whoever took over running the company gets to declare bankruptcy, or sell out cheap.
It's not even original. Walmart learned this trick from Sears and the auto manufacturing industry. All it takes is finding a small company willing to take a bigger gamble in order to grow. And big companies are usually the one who happened to have won some gamble instead of losing (e.g. the small company turned out to have a patent, and somehow quickly sued the competition out of existence, so that *mart ended up with no choice but to continue buying from them at a nice high price, etc.)
Hardly. The given example was one of signing a contract whose terms won't allow you to amortize the investment required to fulfill it. That's not "market power", that's sheer idiocy on the part of the supplier. I have no sympathy for idiots.
And I'm really getting tired of people complaining about Apple acting like a company that's trying to make a profit.
Do you consider yourself greedy when you expect to make more money? Highly unlikely.
As others have said, the NAND manufacturers are just annoyed that they don't get to hike the prices up sky high every couple of years.
Apple has made a clever business move of securing a fixed price for 3-4 years so that the cost of making their devices isn't so sensitive to the economy.
What's so difficult to understand. It has nothing to do with greed. The primary goal is securing a key component at the best possible prices.
Oh really?
What you don't seem to understand is that we have no reliable information WHATSOEVER. The pizza analogy was incomplete and pointed out quite well that things could not be that easy. Well, easy enough for you I guess ...
I'm not in the computer industry, but I don't understand why they don't have some sort of contract or purchase order from Apple. If someone wants to buy, say $100 million worth of NAND memory, why don't these memory manufacturers get a contract so they can hold them to it? Someone made a pizza analogy, which was a good one, except they ain't selling pizzas. This is big business, and any other industry would have some sort of a contract for an order that big. I guess if this is really true, the reverse could be true too - they could make much less than Apple wants, driving the price of the memory up.
Yet some one explain how walmart does it. They start you off on a good term and agree to it.
Then they force the person to cut there price every 6 months to a year or they will go to a new supplier.
Problem is the company is screwed because they invested money to increase production to meet Walmart's demands for said product. Cut off walmart you get screwed because you can not afford your investment in new production, keep taking walmart demand and you get run into the ground. It is a catch 22. Walmarts shear market power ans size is how they get away with and are able to force companies into doing that crap.