Sidebar Sidebar
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.

Apple Demanding Price Cuts From Suppliers Ahead of iPhone 7

Not news. EVERY manufacturer "looks" for price cuts EVERY buy-cycle. "Demanding" is just the tactic they're using to try and get the cuts. This goes on rampantly in the auto industry as well. The supplier will cut what they can and if it's not good enough for Apple, they'll go to an alternate supplier.

It is what it is and maybe it shouldn't be, but that's another argument.
 
  • Like
Reactions: philfry and doelcm82
smacrumon said:
This can only lead to poorer wages, poorer working conditions and poorer outcomes for all factory workers assembling Apple products. Disgraceful, Apple.

Has Apple's corporate social responsibilities been completely discarded? People, planet, and profit can exist together if the balance is correct, but this isn't balanced.

Apple, how about cut your retail pricing of iPhone, iPad, Macs, etc and absorb the cost of doing so via the incredible profit margins made on each item sold.
Click to expand...


yep. Get a price cut, still increase the already outrageous prices for a iphone. MOAR PROFITS !
 
  • Like
Reactions: Demo Kit
Benjamin Frost said:
And the poor get poorer.

Tim Cook, thy name is hypocrite. If you really cared about leaving the world a better place, you would take a salary of $1 like Steve Jobs did, and negotiate a fair wage for your suppliers rather than demanding that suppliers with profit margins far lower than yours are squeezed for every dime.
Click to expand...
He gets paid by making the shareholders happy so he will continue to push profit margin. Though I agree with your statements.
 
  • Like
Reactions: Benjamin Frost
smacrumon said:
The the first line of the article reads: "Apple is demanding price cuts on components for the new iPhone from its overseas suppliers to maintain its high profit margins, despite a global slowdown in smartphone sales, according to Taiwanese website Digitises."

Unfortunately this seems to have little to do with customer outcomes or the workers making the products.
Click to expand...


Simple math-- if you cut costs, in order to keep profit margins the same, you cut prices. Cutting costs and keeping prices constant would increase profit margins. Margin= Price - Cost.

Apple is under price pressure around the globe-- it would not be surprising if they cut prices to maintain share. You don't have to believe Apple is altruistic to think this is their likely strategy. You do, however, have to be able to do simple arithmetic and make non-emotional judgements.
 
  • Like
Reactions: Weaselboy, thisisnotmyname and 69Mustang
jmgregory1 said:
Hmm, so this makes headlines that Apple is running their business using standard business practices? Asking / demanding lower prices for any / every product is normal and expected. I would be more concerned about Apple if the news was they were out demanding to pay higher prices for components. That would signal that they've gone off their rocker, but likely would result in an increase in valuation for Apple shares...because Wall Street clearly likes it more when companies purposely lose money.
Click to expand...

jephrey said:
Not news. EVERY manufacturer "looks" for price cuts EVERY buy-cycle. "Demanding" is just the tactic they're using to try and get the cuts. This goes on rampantly in the auto industry as well. The supplier will cut what they can and if it's not good enough for Apple, they'll go to an alternate supplier.

It is what it is and maybe it shouldn't be, but that's another argument.
Click to expand...
These folks understand. I'm an attorney in a corporate sourcing group. Our job is to demand lower prices. We "demand" lower prices, better payment terms, better guarantees, fewer commitments. It's our job.
 
  • Like
Reactions: jephrey and thisisnotmyname
I'm wondering if this headline is misleading. Read this section:

strong competition in Greater China forcing the companies to "compete aggressively" over Apple's orders by cutting prices.
Click to expand...
And this from the DigiTimes report:

Currently, Largan is facing strong competition from Japan-based Kantatsu over camera module orders, while Foxconn and Pegatron are seeing Apple adding new ODM partners such as Wistron for the production of its new iPhone.
Click to expand...
It doesn't sound like Apple is "demanding" anything. It sounds like Apple is diversifying to a greater number of suppliers for its components, and so the current manufacturers are looking to give Apple discounts to retain their business.
 
  • Like
Reactions: thisisnotmyname, 69Mustang and Jax44
macfacts said:
I can imagine Tim saying g to his suppliers, "I am altering the deal, pray I don t alter it further"
Click to expand...

This iPhone cost is getting higher all the time!

maxresdefault.jpg
 
  • Like
Reactions: duffman9000
Gasu E. said:
Simple math-- if you cut costs, in order to keep profit margins the same, you cut prices. Cutting costs and keeping prices constant would increase profit margins. Margin= Price - Cost.

Apple is under price pressure around the globe-- it would not be surprising if they cut prices to maintain share. You don't have to believe Apple is altruistic to think this is their likely strategy. You do, however, have to be able to do simple arithmetic and make non-emotional judgements.
Click to expand...
It's simple maths: cut the retail sale price, increase payments to suppliers, absorb the difference easily without issue.

The formula:
Still Really Great Margins for Apple
=
Lower Retail Sale Price
+
Increase Payments to Suppliers​

There won't be anyone at Apple HQ on struggle street employing this formula.
 
  • Like
Reactions: Demo Kit and Benjamin Frost
Tim Cook needs to realize that the smartphone has become a "cash-cow" product and moved away as a "star" product. (read BCG matrix)

In a cash-cow environment you can NOT demand high-prices from customers with high margins! Market share is the most important factor for a cash-cow product and apple is losing market-share...

Apple go ahead and create a new Star product for which you can demand prices that generate high margins, the apple watch is certainly not the star product you hoped it to be!

Economics is simple, but if you ignore economic realities you will lose!
 
  • Like
Reactions: Demo Kit and satchmo
smacrumon said:
This can only lead to poorer wages, poorer working conditions and poorer outcomes for all factory workers assembling Apple products. Disgraceful, Apple.

Has Apple's corporate social responsibilities been completely discarded? People, planet, and profit can exist together if the balance is correct, but this isn't balanced.

Apple, how about cut your retail pricing of iPhone, iPad, Macs, etc and absorb the cost of doing so via the incredible profit margins made on each item sold.
Click to expand...

I like how you first list poorer wages and then social responsibility. But the only thing you ask for is a price cut. How about we stick with the industry standard pricing and just give more to the people that slave away to make these devices for us?
 
How to make 100$ and more profit on your products! A How-to:

  1. Demand price cuts from suppliers
  2. Don't change your product too drastically
  3. Just put a "Pro" behind your product name
  4. Demand 100$ more because it's now a "Pro" device
That's how you make 100$ and more profit on every product you sell.

Thank you.
 
  • Like
Reactions: Demo Kit, mi7chy, Larry-K and 6 others
If Apple wants the smartphone upgrade cycle to remain strong their only real option is to buy a carrier or to negotiate terms with carriers again and cut out the ones who don't agree. Lack of subsidies on the products is going to hurt Apple. Especially because the non-subsidized plans are the same price as the old subsidized plans and if you want a subsidy now you are forced to sign a new contract for a more expensive plan (at least here in Canada). My iPhone 6 will be lasting a long time so long as I have to pay almost $1000 for a new model. I usually buy used anyway for myself but that is getting riskier and riskier with all the security features in the phone its hard to make sure you dont get a stolen phone that gets blacklisted or remote locked
 
  • Like
Reactions: Demo Kit and Benjamin Frost
smacrumon said:
This can only lead to poorer wages, poorer working conditions and poorer outcomes for all factory workers assembling Apple products. Disgraceful, Apple.

Has Apple's corporate social responsibilities been completely discarded? People, planet, and profit can exist together if the balance is correct, but this isn't balanced.

Apple, how about cut your retail pricing of iPhone, iPad, Macs, etc and absorb the cost of doing so via the incredible profit margins made on each item sold.
Click to expand...


Totally agree. They have become the greediest most repulsive company. Greedy greedy geeks!
 
  • Like
Reactions: Demo Kit, Benjamin Frost and smacrumon
I think some of you haven't read the article entirely. The title is inaccurate per the content discussed. Apple isn't demanding price cuts but rather pressure from greater China is being placed on manufacturers to compete more aggressively for Apple's business due to the global demand for smart phones dropping off significantly. Since global demand is less many smaller players will not be buying hardware to make their smartphone offerings and Apple will be one of the few to make substantial part orders.

Japanese companies are jumping in on the opportunity to steal away Apple's business from Chinese manufacturers and as such they must lower prices to compete.

The way the title is phrased it's making it appear Apple has come out with demands when it's hardly the case. They're just shopping the market as they always would.
 
  • Like
Reactions: jephrey, thats all folks, Jax44 and 1 other person
shareef777 said:
I like how you first list poorer wages and then social responsibility. But the only thing you ask for is a price cut. How about we stick with the industry standard pricing and just give more to the people that slave away to make these devices for us?
Click to expand...
Clearly from my opening comments I'm asking for great wages, great working conditions and great outcomes for all factory workers. It's implied with my first paragraph.
[doublepost=1467730816][/doublepost]
chrizzz09 said:
How to make 100$ and more profit on your products! A How-to:

  1. Demand price cuts from suppliers
  2. Don't change your product too drastically
  3. Just put a "Pro" behind your product name
  4. Demand 100$ more because it's now a "Pro" device
That's how you make 100$ and more profit on every product you sell.

Thank you.
Click to expand...
And that's why I hang on to my devices and refuse to update until they break. And if they break too early, I execute my consumer rights and get Apple to refund or replace them. I put a "Pro" behind my name too.
 
Last edited:
  • Like
Reactions: Benjamin Frost
All China importers know there's been a 4.5% devaluation in the Chinese currency which translates directly to 4.5% increase in Chinese factory profits. If Apple is dealing in US$ then, like everyone else worth their weight in salt, is demanding it. Simple math.
 
jephrey said:
Not news. EVERY manufacturer "looks" for price cuts EVERY buy-cycle. "Demanding" is just the tactic they're using to try and get the cuts. This goes on rampantly in the auto industry as well. The supplier will cut what they can and if it's not good enough for Apple, they'll go to an alternate supplier.

It is what it is and maybe it shouldn't be, but that's another argument.
Click to expand...
I would argue that "demanding" is the word used by the media, or possibly the source, which is likely a disgruntled supplier upset at either getting lower than expected revenue from sales to Apple, or losing that revenue entirely to a competitor.
 
You must log in or register to reply here.
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.
Top Bottom
Back