This is anecdotal evidence that the Japanese used against the US to prove our cars were crap.
It was just BS then, but it's nice to see how many Americans bought it, hook line and sinker
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Foxconn Raising Prices on Apple?
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This is anecdotal evidence that the Japanese used against the US to prove our cars were crap.
It was just BS then, but it's nice to see how many Americans bought it, hook line and sinker
Unsubsidized Iphone already costs nearly $1000, and FED continuing to engage in policy of weak dollar, it's not unfeasible at all that the unsubsidized price will go to $2000 anyway. The subsidized price can continue to be set artificially low and the charge for the plan goes up $10 / month or so.
Apple makes about $200 profit / iphone. If the manufacturing costs went up $200, it'd kill Apples' iphone profits. $50 increase would cut quarter of the profits. Mere $10 increase will have 5% effect on the phone profits.
The Future
The future. I thought this was obvious.
That is one funny picture. What are they all smiling at?
The future. I thought this was obvious.
They produce already high quality goods. If something fails, then it is most likely a design error (such as the NVIDIA cooling in some MBs and MBPs). And if glass breaks on your iDevice, i think we know, who is responsible for it. It is not the manufacturer.
Foxconn was already discussing moving some of its manufacturing back to Taiwan and making use of robotics. Final assembly, which is what is actually done in China, is only one part of the total cost. You have R&D, component manufacturing, shipping, advertising, retail space, etc. The real problem for US manufacturing, aside from unions and labor costs, is that our infrastructure is often woefully outdated compared to China, which has obviously been investing heavily in this sector for a while now.
These are low-tech, low value-added jobs with razor-thin profit margins. Do you know how many factories have closed in the Pearl River Delta since the "recession" began? The US needs to focus on maintaining its lead in innovative, high-tech industries where real value is created, and stay several steps ahead of the copycats.
This is where you're wrong. While it may seem like everything is made in Asia, the US is in fact the world's largest manufacturer, with manufacturing output greater than that of China, India, and Brazil combined. You are correct that manufacturing is a smaller part of the US economy vis a vis other countries.
A NIMBY response would prevent a lot of the nastier, polluting industries from coming back to the States, but so what? These are awful jobs anyway. The US should focus on its strengths - innovation, high-tech, start-ups, etc. I don't think most people want to return to a Gilded Age economy of widespread poverty, corruption and horrendous pollution.
I live in China and have for some time. Facile comparisons to Japan and Korea don't really count. They don't have the massive population, 2/3 still living in poverty, etc. Don't forget the Japanese stock market crashed in 1989 and they've been in a recession since. Inflation is already a problem and housing costs are heading for the stratosphere in cities like Shanghai. It's not quite HK yet, but it will be if things stay their course. The rich/poor gap is growing, China is facing a demographic time bomb with their rapidly aging population, and as their competitiveness wanes in cheap labor (lest we forget Vietnam and Indonesia eager to absorb these jobs) real questions arise as to what China's economy will transition to considering the A. lack of innovation and B. lackluster educational system.
And the majority of these people are poor farmers, and will remain so. I've traveled quite a bit in India also, and spent a fair amount of time there. While they seem a lot more innovative than the Chinese, and have a lot of untapped talent, the fundamental issue is that a huge population at some point becomes more of a burden than an asset. Social stability, food, and employment for over a billion becomes a high-wire act with dire consequences in the case of a misstep. China's often horrific past is a testament to this fact. Chinese themselves are painfully aware of this and say "中国人太多!" Of course they're progressing fast compared to the West - the gap was so vast that under Mao virtually all of Chinese were living in extreme poverty... nowhere to go but up!
Yeah I read that article too - it's rubbish. Linear extrapolations of past trends projected into the future are always wrong. Without exception. I can find verbatim projections made about Japan in the mid-80s, how they would be the world's biggest economy within 20 years, etc. It's mindless hype. Rapidly industrializing countries always enjoy a huge economic surge, but once it tapers off then inflation and rising living costs set in and the economy slows. More realistically China is developing a huge Latin American style economy, with a wealthy elite of industrialists and politically-connected families, a modest middle class making a few thousand RMB a month living in crowded urban dwellings, and the great masses of peasants who, while not necessarily starving or fomenting revolt, have been mostly left behind.
I agree we will need to cooperate far more than we have in the past. Yeah the US is facing a host of problems and we could probably do with a cold dose of realism - its a new, multipolar world and our sense of entitlement and standard of living won't be propped up by the rest of the world for much longer. But it's really not so black-and-white like you make it seem. If we do a sort of fundamental analysis, the US still hosts a lot of unique advantages. We're the world's biggest manufacturer and a leader in high-tech industries and innovation: microprocessors, airplanes and aerospace, telecommunications, chemicals, food processing, etc. We're by far the world's biggest agricultural exporter (hint: we can feed ourselves, China can't). We enjoy cultural diversity and a society and legal framework based on rule of law and basic rights that has proved quite resilient and adaptable. Geographically we're protected on both sides by vast oceans, and just in case we have by far the world's most absurdly overpowered military. Because of immigration, our age demographic is closer to a developing country, giving us a much more favorable worker/retiree ratio than most countries.
That is exactly the way, how Foxconn works. So there is not an advantage at all, if you move the work in the states. And how should Apple sell the then very expensive hardware in other parts of the world?
Nonsense! Your country is one of the richest world wide. However, the living standards in the USA might be experienced as very low, because the USA has a bad health care and social security system. Your neighbor Canada is much better in this regard.
What do you smoke?
apple is charging the user way too much anyway. other notebooks cost 499 us$, apple charges 999 us$. other mp3 player 49, apple charges 149 us$. the shareholders are more important to apple than to make a good price to their clients. they squeeze them out, and people "eat it". and it's even worse in europe, where they charge more than the us$ price, even though the dollar is worth less than the euro!
Suffering a bit from megalomania, aren't we? Even with 45+ billion USD in the bank, Apple hasn't nearly enough money to buy a giant like Foxconn. And even if the company was for sale and somebody would have the financial power to buy them, it wouldn't change the simple fact that the Chinese also want to eat and enjoy some wealth.
Outsourcing always has been a stupid idea, because it's not a sustainable business model.
The question is what are you smoking. Recent living standard studies show that those in poverty in America own or rent a house, have cable tv, own a cell phone, have at least one car, and are overweight. Compare that to those in poverty around the world. Our poor are richer than the wealthy in many nations around the world. Our survival rates for every health condition is better than any other nation and there are those that travel to America for care. As far as our social security system, I'm not sure if you mean that it's insolvent. If so, look at other nations in the world with the same model. It's design was supposed to be a supplemental retirement benefit. Never sole retirement plan. And then factor in all of the benefits that have been paid out of that system for which it was not designed like addicted drug abuser benefits. Not too shabby for a country with such low living standards.
We're you there? I was and it had nothing to do with a lack of benefits but a fact the Optical Drive alone cost NeXT customers several thousand dollars with a system that entered the market at > $10,000.
The automation system is what made those prices shave off several thousand dollars, per machine.
Sorry, but 20 years ago we were discussing 60840 at 25Mhz.
this thread is a little silly. Apple will not pass along any sort of price increase to consumers and Foxconn's "price increase" will be more on the minimal side (i.e. 1-4% at most), most of which probably can be passed through via changes in quantity of product made and other manufacturing changes, so even then its not a direct 1%-4%.
Heck, even if they raised the cost to manufacture an iphone by a dollar they would get $95,000 extra a day. I hear that are cranking out 95K iPhones per day over there right now. Let alone iPads.
Let apple eat the cost though - they have some pretty nice margins on that hardware. I have appreciated how the cost of hardware has dropped over the years though. When I bought a MBP in 2006 it was $2999. Now I can get the new high end one for $2200.
Let apple eat the cost though - they have some pretty nice margins on that hardware. I have appreciated how the cost of hardware has dropped over the years though. When I bought a MBP in 2006 it was $2999. Now I can get the new high end one for $2200.
sobering points FoW
I really wish we could get back to manufacturing here. You make very valid points Full of Win, but since Apple are building certain Mac Pros in the U.S. why not bring the rest back?
Hasn't all the quality control and other issues of the last 2 years meant anything to Apple as far as their rep? (Silly question as the profits speak loudly)...in any case, until Apple redesigns the current iPhone I'll stick with my 3Gs.
I really hope this doesn't change prices of the iPhone but we'll see.
I really wish we could get back to manufacturing here. You make very valid points Full of Win, but since Apple are building certain Mac Pros in the U.S. why not bring the rest back?
Hasn't all the quality control and other issues of the last 2 years meant anything to Apple as far as their rep? (Silly question as the profits speak loudly)...in any case, until Apple redesigns the current iPhone I'll stick with my 3Gs.
I really hope this doesn't change prices of the iPhone but we'll see.
Whenever iSuppli publishes numbers for cost of parts, there are plenty of idiots who think seriously that Apple profits = What the customer pays minus cost of parts. What we are talking about here is one of those items that the idiots don't take into account, the cost of turning a bag full of parts into a built product. It costs money, but not that much money. The article never even says how much the increase is. Anything above 10 percent and Foxconn is in serious trouble with its customers (Apple isn't the only one, and not the biggest one. There is also Nokia mentioned and many others). But 10 percent would be 10 percent of the cost to build the goods, that is ten percent of the cost to turn a bag full of parts into a build product. We are not talking about couple of dollars here, we are talking about maybe a dollar or two, and that is a very generous estimate.
Of course if iSuppli makes one dollar more from every iPad, that is 15 million this year, and 30 million next year, in added profits.
So Apple will simply switch manufacturers?
Or if they do raise the prices and Apple sticks with them hopefully they increase the worker's wages, and manufacture higher quality goods.
And what's with the excess amount of non-Chinese people in their image.
who will they switch to? it will take a few years
Apple used to make computers in the US, Ireland, and other places. Only the high end models (e.g. Mac IIfx) were the price of a car.
Sorry to say this but you clearly know nothing about economics at all. It isn't a zero sum gain. Both the US and all the countries you mentioned benefitted from the exchange. This is a very common but serious misconception.
Very astute comments. You have it about spot on.