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Apple Buying Up Touch Screens with Over 60% of Global Supply in 2011
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So is it a monopoly when a person buys food in quantity or any other item for that matter to save money or to insure an adequate supply? I say it's smart business! Man some here need to get a clue 'cause this is the way the real world works and not some utopian fantasy!
Great to see all the brilliant legal minds who's understanding of the concept of "monopoly" extends only to their experience with the board game or one line sentence in the dictionary.
If people are appalled that Apple is buying up enough screens to match their sales projections (note they are not buying screens just to take them out of the marketplace) then you might be interested to know that big food packagers do this with crops, airlines do it with fuel, utilities do it with coal and natural gas. Cold climate cities do it with road salt. It's a common business practice called hedging. In layman's terms its called planning ahead.
If people are appalled that Apple is buying up enough screens to match their sales projections (note they are not buying screens just to take them out of the marketplace) then you might be interested to know that big food packagers do this with crops, airlines do it with fuel, utilities do it with coal and natural gas. Cold climate cities do it with road salt. It's a common business practice called hedging. In layman's terms its called planning ahead.
LOL
First of all 60% is not a monopoly on a commodity.
Secondly, it is probably not clearly worded here, but it is not 60% of all touch screens of all sizes and shapes. It is 60% of the touch screens needed for tablets like the ipad. Maybe if the competition hadn't so blatantly copied Apple, they wouldn't need the same components.
Oh and here comes some reference to a model of a tablet somewhere prior to the ipad. Who cares. Apple brought the product to market in a manner that people appreciated and created a demand for the device. That is why they are ahead in the tablet business.
I'm sure that with the other 40% of the touch screens, another company can come up with something new and original that Apple hasn't done yet and create a new demand right? And I mean something more than a buzz about it running flash or "good, an alternate to Apple because I hate them". Because that really isn't very original and not likely to be a true selling point.
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I said this on engadget , if Apple were to make a 7inch iPad it would almost completely take out the all of the other com. I'll stick with the 9.4 because it's perfect for me
I said this on engadget , if Apple were to make a 7inch iPad it would almost completely take out the all of the other com. I'll stick with the 9.4 because it's perfect for me
This just in:
Due to the tight availability of screens, Apple has decided that it's just not fair and they will share the production they already paid for with their competitors.
Since they are already paid for the competitors will get them for free!
That will hopefully give all the copy cat competitors enough time to catch up.
Asked about this "magical move" Tim Cook explained:
Apple wants to do the right thing for everybody and hopefully all the other
tablet manufacturers will send us a lot of Thank You notes.
And, if we ever need them they will remember how generous we are!
Apple bashers get REAL!!
Due to the tight availability of screens, Apple has decided that it's just not fair and they will share the production they already paid for with their competitors.
Since they are already paid for the competitors will get them for free!
That will hopefully give all the copy cat competitors enough time to catch up.
Asked about this "magical move" Tim Cook explained:
Apple wants to do the right thing for everybody and hopefully all the other
tablet manufacturers will send us a lot of Thank You notes.
And, if we ever need them they will remember how generous we are!
Apple bashers get REAL!!
Apple decided several years ago to use their cash hoard to prepay for Flash to assure supplies as they ramped the iPod the highest unit selling device ever for Apple by a wide margin. Apple then did similar contracts for displays for MacBooks and iMacs. They were a tiny fraction of product use when they started then pactice. Now that they have exceeded all sales goals and have continued to ramp those PREPAID contract for memory, displays, and other things to support iPhone and now iPad, both of which were raging successes, they have become a large fraction of the market in terms of buying.
Apple and other 1st Tier buyers who can issue firm prepaid or LOC guaranteed contracts are in a position to buy scheduled production. The remainder of buyers who essentially pay cash on the day they need it have to buy remaining supplies at market prices which can be high given constrained supplies.
Apple for one is actually doing something about that. They have entered into recent agreements whereby they fund the capital cost of NEW FACTORIES that never existed before to add capacity and address new technologies required by their leading edge product. I use leading edge here in context of several considerations, as anybody who knows anything, knows the screen on the iPad was more crippleware than hi tech, but it was custom and required in truly massive quantities.
So as Apple adds new fab capacity in association with partners it will lean into the supply shortage or relegate 2nd tier suppliers to last years technology available from existing fabs that are not maxed out.
Rocketman
Apple and other 1st Tier buyers who can issue firm prepaid or LOC guaranteed contracts are in a position to buy scheduled production. The remainder of buyers who essentially pay cash on the day they need it have to buy remaining supplies at market prices which can be high given constrained supplies.
Apple for one is actually doing something about that. They have entered into recent agreements whereby they fund the capital cost of NEW FACTORIES that never existed before to add capacity and address new technologies required by their leading edge product. I use leading edge here in context of several considerations, as anybody who knows anything, knows the screen on the iPad was more crippleware than hi tech, but it was custom and required in truly massive quantities.
So as Apple adds new fab capacity in association with partners it will lean into the supply shortage or relegate 2nd tier suppliers to last years technology available from existing fabs that are not maxed out.
Rocketman
Just the fact they could generate $60B in cash during one of the worst recessions ever is proof of my point. Apple is good at business.
As a shareholder... I enjoy my $350 price and looking forward to more.
+1
When I think of due diligence I think of Apple. That is why Windows and Android cannot compare to OSX and iOS. Its funny to hear all my friends that have Android complain of their phone dialing the wrong number and just not working. LOL
Anti-Competition Move
Planning ahead and trying to lock up key supply doesn't seem like an anti-competitive move to me. And it seems like a nice use of 10% of that excess cash Apple has lying around earning 2% siting in U.S. treasuries or whatever other super safe (but ultimately a waste of time) investment Apple does with it.
How about this for an anti-competitive move and should Apple do it: Apple sells iPad 2 for $200 less than iPad 1. Yes, this kills margins on the initial sale. But assuming Apple has huge production savings due to scale and prepay compared to an Android Tablet manufacturer who doesn't know if they are even going to sell 1 million of their model, that price point wouldn't hurt Apple as much as it would hurt competitors. Also, Apple has billions in cash. It could easily survive several years of non-profitable sales out of one division. Also, Apple gets ongoing revenue from App sales in a way that I don't think Samsung or HP will get. So Apple makes some of it back by getting more iPads out there. Does a lower price just crush the competition so that it is basically all still born and can never really get off the ground? If Apple announced a $300 iPad2 next week, how many competitors just give up and cancel their plans?
Or do we think Apple keeps its prices at the high end to be the luxury product? And if Apple thinks it will basically sell every iPad 2 it can make keeping the $500 price, then this strategy doesn't help increases units sold (though it creates a huge iPad 2 shortage and probably keeps people from buying Android Tablets that will seem overpriced in comparison).
Planning ahead and trying to lock up key supply doesn't seem like an anti-competitive move to me. And it seems like a nice use of 10% of that excess cash Apple has lying around earning 2% siting in U.S. treasuries or whatever other super safe (but ultimately a waste of time) investment Apple does with it.
How about this for an anti-competitive move and should Apple do it: Apple sells iPad 2 for $200 less than iPad 1. Yes, this kills margins on the initial sale. But assuming Apple has huge production savings due to scale and prepay compared to an Android Tablet manufacturer who doesn't know if they are even going to sell 1 million of their model, that price point wouldn't hurt Apple as much as it would hurt competitors. Also, Apple has billions in cash. It could easily survive several years of non-profitable sales out of one division. Also, Apple gets ongoing revenue from App sales in a way that I don't think Samsung or HP will get. So Apple makes some of it back by getting more iPads out there. Does a lower price just crush the competition so that it is basically all still born and can never really get off the ground? If Apple announced a $300 iPad2 next week, how many competitors just give up and cancel their plans?
Or do we think Apple keeps its prices at the high end to be the luxury product? And if Apple thinks it will basically sell every iPad 2 it can make keeping the $500 price, then this strategy doesn't help increases units sold (though it creates a huge iPad 2 shortage and probably keeps people from buying Android Tablets that will seem overpriced in comparison).
Cheating
that big companies are moving forward and using their size to leverage future stock, no that's business. And it will weed out the ones that where not serious about bringing a good product to market with just gimmicks.
I personally don't give a rats behind if Apple buys up the stock of screens. Thats good. Maybe they can start delivering product to customers. This will help them put more resources into development vs procurement.
Get real !!! Windows is still way ahead of OSX and android has topped iOS some time ago. Lets not forget about your face ending a call because the proximity sensor isn't working properly or dropped calls because you didn't hold the phone the way Steve told you too.
Come up for air please you drown in Apple sauce.Good luck pitching this to shareholders.
"OK listen up. We just give away $8 Billion in revenue to stall the development of opposing tablets that we don't consider a threat to our iPad sales in the first place. This can't fail!"
Get real !!! Windows is still way ahead of OSX and android has topped iOS some time ago. Lets not forget about your face ending a call because the proximity sensor isn't working properly or dropped calls because you didn't hold the phone the way Steve told you too.
i am not agreeing or disagreeing with your comment but could you explain how windows is still way ahead of osx?
Would you rather get a buck and a quarter a share dividend or have each share increase $100 a year? Not that they are mutually exclusive, just that they way they're running the company is giving you great ROI.
Well it wouldn't be the first time a company sold a product at a loss in order to get future revenue streams from a customer (see the cell phones and their subsidy of handsets). It can work.
What I wonder is how valuable it is to pull people into the Apple ecosystem. The iPod pulled some people into Apple's world and they never left. The iPhone pulled more. Now we have the iPad. Maybe this new category of tablets has a small window of two to four years in which all of the industrial world gets their first tablet. Maybe it works out that you basically stick with the tablet that you first buy and keep upgrading. So if you win the tablet wars during the next four years, then Apple gets to be the Microsoft of tablets and they end up with 90% of the market for decades to come.
And don't discount how big the tablet market is. It might be bigger than the P.C. market in 10 years. That may sound crazy, but I really think it has that kind of potential. If tablets get that big, then spending $8 billion now to increase your eventual position from 50% to 80% would be totally worth it.
Besides, in what way does Apple ever run anything by its shareholders? If it did, we (I'm a shareholder) would probably say pay us a fraking dividend.
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Originally posted by: Mr. Bigs
Get real !!! Windows is still way ahead of OSX and android has topped iOS some time ago. Lets not forget about your face ending a call because the proximity sensor isn't working properly or dropped calls because you didn't hold the phone the way Steve told you too. Come up for air please you drown in Apple sauce.
Sure windows is a head in markershare. But not technology wise. And you cannot deny that iOS and OSX have far less user problems and glitches than android and windows. But occluded windows and android are at a huge disadvantage that they need to make there software run on endless combinations of hardware. Where as iOS and OSX only have to run on apples computers. This why apples products always make it easiest on the consumer.
Originally posted by: Mr. Bigs
Get real !!! Windows is still way ahead of OSX and android has topped iOS some time ago. Lets not forget about your face ending a call because the proximity sensor isn't working properly or dropped calls because you didn't hold the phone the way Steve told you too. Come up for air please you drown in Apple sauce.
Sure windows is a head in markershare. But not technology wise. And you cannot deny that iOS and OSX have far less user problems and glitches than android and windows. But occluded windows and android are at a huge disadvantage that they need to make there software run on endless combinations of hardware. Where as iOS and OSX only have to run on apples computers. This why apples products always make it easiest on the consumer.
You tell'em wovel!
I hate when these off center commenters,foolishly, throw out the word monopoly every time Apple makes it it rain on the competition.
last year at this time the haters were saying that iPad was garbage and "NOT A COMPUTER". I'm still trying to get over that BS. Anyway iPad came out and Apple sold over 15 million of them. Now, like always, the competition has hopped on board the latest "HIT" to cash in.
Just look at that Jon Rubinstein being Bud Foxed by HP. LOL! How sick and shameless is it to see a former top Apple exec pimp Apple-esque swag for the competition. OMFG! Touchpad will be ran threw, pounded on and left sitting on
the side of the dirt road when all those cheap, honeycomb tabs hit the market.
Can we say Coby tablet for $49.99 next to the Big Gulp cups at 7-11.
Apple is planning for a big year with those panel purchases. Period. It is business. m
Monopoly? Not a chance.
Love the way they are running the company, love how much my stock has skyrocketed. But . . . 2011 looks like another huge cash flow year. I don't love the 3% return Apple gets on its $60 billion in cash and securities it is holding. Yes, I can sell my stock and leave with a nice profit, but I don't so I'm tacitly agreeing with the strategy. But if this year is another +$10 billion in profit and it very well might be, then that begs the question when and how does the cash stock piling end? If it ends with Apple's board writing a check for $50 billion to Steve Jobs as a bonus, then no, as a shareholder I'm not going to be happy. If it ends with Apple writing a $50 billion check to Mark Z. to buy Facebook, then no, as a a shareholder I'm not going to be happy.
The cash sitting there getting invested in U.S. treasuries is not what is helping Apple's stock rise. In fact it is keeping Apple's stock down.