GT Advanced COO: Apple Told Us 'Put On Your Big Boy Pants and Accept the Agreement'

[kdarling]

My recollection is that Jobs went to Corning and then created the market for Corning screens with his demanding ways, so I'm very doubtful the the Corning CEO regrets the "lecture".

Corning was already deep into its Gorilla Glass project at the time. That's why Apple went to them.

Motorola had switched to glass on the RAZR, and it was clear that more and more handset makers would do the same. So Corning already saw the hardened glass screen market coming and was preparing to be part of it. However, they had not opened a factory for it yet.

What Jobs did, was talk Corning into accelerating GG production to meet the iPhone sales debut.

 

[mercuryjones]

Corning was already deep into its Gorilla Glass project at the time. That's why Apple went to them.

Motorola had switched to glass on the RAZR, and it was clear that more and more handset makers would do the same. So Corning already saw the hardened glass screen market coming and was preparing to be part of it. However, they had not opened a factory for it yet.

Jobs talked Corning into accelerating GG production to meet the iPhone sales debut.

And look where Corning is now. Imagine if they had said "no, we are going to take our time" to Steve Jobs back then?

 

[Rossatron]

if this is true, it certainly sheds an unfavourable light on Apple practices. GT, however, are also at fault - going on with a contract that is bad for your company simply because negotiations were tiresome is a very poor excuse to why your company went down. even if Apple are in the wrong here, it doesn't exempt GT from responsibility; at best their practice was childish, hard-headed and in no way suitable for a business.
seems like they tried putting on big-boys'-pants, but they were just too big for them.

 

[kdarling]

And look where Corning is now. Imagine if they had said "no, we are going to take our time" to Steve Jobs back then?

Not sure what you mean. Gorilla Glass is just one of many Corning products, and Apple just one of many customers. Apple's GG purchases are ~2% of Corning's revenue.

Heck, people didn't even realize the iPhone used GG for years. Apple didn't mention it, and Corning was not allowed to.

 

[StyxMaker]

One - once you use the term "fanboys" you pretty much lose any respectability in the argument.

Two - Again, to what end would it benefit Apple to tell another company that they cannot use the appropriate equipment to do their job, when their job is producing supplies for Apple? I've yet to see anyone answer this question.



The only reason that Apple would do this, is because they wanted GTAT to fail, which is ridiculous. Apple, as far as i know, had no dealings with GTAT before hand, so there's no "bad blood". No company goes into a deal hoping the other company fails and goes bankrupt.

GTAT took on a deal that they thought was going to elevate them to the majors, and they didn't seem to think it through. Now, they are claiming that Apple "forced" them into a bad deal. No, your greed and ambition forced you into the deal. You could have said no at any point, and based on the documents, they should have said no. But, they didn't and now they paid for it.

If GTAT was already on the brink of bankruptcy, and I have no idea wether they were or not, then taking this deal from Apple might have made since in a 'we have nothing to loose' way.

 

[z chamber]

And look where Corning is now. Imagine if they had said "no, we are going to take our time" to Steve Jobs back then?

If they had said no, then the iphone would have gone to market with an inferior glass screen or would have been delayed. It seems that Corning actually did Apple a favor.

Gorilla glass is on every smartphone of note. Not to mention tablets, ultrabooks and even a tv.

http://en.wikipedia.org/wiki/List_of_devices_with_Gorilla_Glass

Considering how Apple couldn't put sapphire screens on their phones and just how ubiquitous Gorilla glass is. There's no question Apple needs Corning much more than Corning needs Apple.

 

[AdonisSMU]

I can always tell when people do not have a business acumen and I do not mean this in a disrespectful way, and I apply this to all similar comments.

It is not that simple. Start ups require cash. When a company begins exclusivity agreements, other companies won't come near you because often there are agreements in place that could bite them.

This is also a new product platform. Other companies are not looking at Saphire right now, which makes other prospective clients small. It's also a premium item, and few companies are going that route in todays market.

Without landing a contract with a major player like Apple, the odds of the company surviving are slim. 8 out of 10 new businesses fail in the first year!

How many other companies are making Saphire right now? How many companies are using this in their products? How much money does it take to keep a very EXPENSIVE new venture running when you don't have contracts and sales, and how likely are you to raise capital without these things?

GT had very few options.... and Apple knew this and exploited it. Why do you think Apple struck one deal, and then demanded another? Because they had time to realize that they were GT's obi-wan and their only hope.

Apple screwed them. Had Apple not screwed them, who knows....

This is Wal-Mart economics. Do you know how many start ups have been put to ruin by these same business dealings? "Well, u contactually can't sell to anyone else now, and now we want it at a price that will bankrupt you, but we don't care because we can replace you with someone else tomorrow."

Sure Apple generously let GT out of their agreement, when it was clear that they were under, couldn't produce anything, and in such ruin that no other company was going to deal with them and get an edge over Apple.

This is sadly just business. Was Apple scummy? Sure! But Apple is known for doing business this way. Just as Wal-mart is known for it. If the devil gives you a contract, you do have a choice not to sign it. GT was dead if they didn't because the initial rounds with Apple black listed them.

So in the end... they really had no choice, because not signing was a guaranteed death sentence to the company, and signing potentially could have made the company huge.

But to make these blanket statements everyone is making without having any educated idea of how these things works is foolish.

If you knew you were going to die in under 30 days, and the only chance you had was an experimental transplant to give you a monkey heart, what option do you pick? You're pretty much already dead.... might as well sign on the dotted line...

Don't make judgements about my business acumen. I've worked in start up world on more than one occasion. I've already have my degree from a reputable business school. You're pretending to be knowledgable about business when in fact you aren't. I'm fully aware many businesses don't last. So what.

Apple probably knew there was significant risk in doing business with GTA and therefore the contract terms reflect this fact. I wouldn't call this Walmart economics. The more accurate term is start up economics.

How many startups do you know that get a half billion dollar loan from a third party to create a start up? I would say GTA got a favorable deal given the circumstances that you yourself acknowledge that GTA was under.

When has Walmart ever paid a third party a half a billion dollars to create a product from scratch they could use in a product Walmart was selling?

I would say you have no idea of how business works in particular as it relates to finance. Higher risk means you will have less favorable loan terms.

 

[moderately]

Exactly. It's the same people in every article that pile in like flies on a turd. Always having to point out the ways that Apple screwed up "x" or is evil because of "y". And you never see them casually discussing Apple products- they only participate in threads that allow them to spin things against Apple.

I mean, I'm not going to go into a Surface forum or an Android forum and complain about the people that love Microsoft or Google. And yet we have people here complaining... on an Apple forum... about people loving Apple.

Good grief.

These threads (along with the MCX/Applepay threads) have been a real boon for my ignore list.

 

[Breaking Good]

Hadn't they ever heard "don't put all your eggs in one basket?" I'm about as far from the corporate world as you can get, so forgive me if this sounds simplistic: but isn't it unwise to limit yourself to one customer, no matter what they're offering you, unless they purchase your company?

BINGO. Apple may have inadvertently purchased this company.

This does not look like an arms length transaction. It looks more like Apple assumed controlling interest in the company.

If I was an attorney for shareholders or a creditor, I would be arguing that Apple was attempting to hide the fact that it was acquiring a Sapphire production company.

 

[harpott]

no just no

Don't make judgements about my business acumen. I've worked in start up world on more than one occasion. I've already have my degree from a reputable business school. You're pretending to be knowledgable about business when in fact you aren't. I'm fully aware many businesses don't last. So what.

Apple probably knew there was significant risk in doing business with GTA and therefore the contract terms reflect this fact. I wouldn't call this Walmart economics. The more accurate term is start up economics.

How many startups do you know that get a half billion dollar loan from a third party to create a start up? I would say GTA got a favorable deal given the circumstances that you yourself acknowledge that GTA was under.

When has Walmart ever paid a third party a half a billion dollars to create a product from scratch they could use in a product Walmart was selling?

I would say you have no idea of how business works in particular as it relates to finance. Higher risk means you will have less favorable loan terms.

Startup economics for a company that is listed and able to raise 71M debt through convertible bonds at a whim? How many startup companies do you know that can raise half a billion in debt? Not many, and you know why? Real startups don't/can't. GT is not a startup. Just because Apple treated this as an R&D project doesn't make GT an experimental venture.

 

[dec.]

There are already plenty of people calling them or in proportion. It'd be like joining a lynch mob. Also, can't come up with a good hypothetical for the other side. I'm still trying to think of one that doesn't sound silly.

Ok I congratulate you to your elaborate scheme of picking certain sides based on percentages of opinions...

wow.

 

[WardC]

<comment removed>

 

[H2SO4]

Do you even have a point?

Yes. You commented, “Do you realize how incoherently you write?”. Then you proceed to write an equally incoherent reply. Pottle, kettle?

 

[25ghosts]

The issue is that there was no room for negotiating. Apple doenst work like that. THey agreed to write a check but only for X terms. the decision was take it or leave it. GT took it. They say becuse they had no other options but they choose not to talk to anyone else while they were talking to Apple and haven't proven that Apple blocked them from looking for other deals

For THAT exact reason, you just say NO. Loud and Clear.

NO ONE - Forced GT to make that deal. No One. They wanted to but weren't strong enough to get their point across.

 

[Keirasplace]

Yes. You commented, “Do you realize how incoherently you write?”. Then you proceed to write an equally incoherent reply. Pottle, kettle?

The errors were unrelated to the structure of the sentence. Please revisit the definition of incoherence since you seem to think misspellings render a sentence illegible.

 

[powers74]

Cheap shot

Aaand shanked.

 

[TMay]

Corning was already deep into its Gorilla Glass project at the time. That's why Apple went to them.

Motorola had switched to glass on the RAZR, and it was clear that more and more handset makers would do the same. So Corning already saw the hardened glass screen market coming and was preparing to be part of it. However, they had not opened a factory for it yet.

What Jobs did, was talk Corning into accelerating GG production to meet the iPhone sales debut.

The Wired article implies that Corning was still in development when Steve came to them WRT the iPhone, but otherwise I agree with you.

Contrasting that, the statement of work that Apple provided GTA was for seven years of production, certainly a nice incentive. Unlike Corning, which used its own funds to develop and produce Gorilla Glass, GTA would require funding to accomplish the same.

I'm not really all that interested in he said/she said, but I would be interested in how close the partnership came to actually producing at large volumes and what the cost would actually work out to. I suspect that GTA got close on the production and specs, based on meeting 3 of the 4 payments milestones, but there is note that they were taking a beating on cost of production; how much might never be known.

 

[roadbloc]

If anybody ever spoke to me like that, telling me to 'put some big boy pants on' I'd refuse them immediately. I don't appreciate belittlement or rudeness.

 

[mercuryjones]

If they had said no, then the iphone would have gone to market with an inferior glass screen or would have been delayed. It seems that Corning actually did Apple a favor.

Gorilla glass is on every smartphone of note. Not to mention tablets, ultrabooks and even a tv.

http://en.wikipedia.org/wiki/List_of_devices_with_Gorilla_Glass

Considering how Apple couldn't put sapphire screens on their phones and just how ubiquitous Gorilla glass is. There's no question Apple needs Corning much more than Corning needs Apple.

I'm well aware of it being used on just about every other device out there. What I meant is, if Apple had not used it on the iPhone, WOULD it have been so prevalent on every other device? By Apple pushing for it to be ready for the launch of the iPhone, it gave Corning a huge PR win and pushed for everyone to use it at that time.

 

[kdarling]

I'm well aware of it being used on just about every other device out there. What I meant is, if Apple had not used it on the iPhone, WOULD it have been so prevalent on every other device? By Apple pushing for it to be ready for the launch of the iPhone, it gave Corning a huge PR win and pushed for everyone to use it at that time.

Nope, it was a secret. Nobody knew about it publicly for almost a half decade.

In fact, when the iPhone came out in 2007, Apple only said they were using "optical quality glass".

Moreover, Apple did not list Corning Glass as a supplier, nor was Corning allowed to list Apple as a customer.

--

So no sir, nobody really knew that Apple was using Gorilla Glass until October 2011, when the Corning story appeared in Jobs' biography.

Even after that, Apple themselves still did not acknowledge using Gorilla Glass until March 2012, when they published that famous list of "US jobs they had created", which included a note about iPhone glass being made by Corning employees in Kentucky and New York.

(Ironically, by then Corning had actually moved the majority of its - by then, Gorilla Glass 2 - production to China, because that's where they said the majority of its customers' factories were... Taiwan, Korea, Japan and China... and it was cheaper than shipping all that glass overseas.)

 

[mercuryjones]

Nope. Nobody knew about it for almost a half decade.

In fact, when the iPhone came out in 2007, Apple only said they were using "optical quality glass".

Moreover, Apple did not list Corning Glass as a supplier, nor did Corning list Apple as a customer.

--

So no sir, nobody knew that Apple was using Gorilla Glass until October 2011, when the Corning story appeared in Jobs' biography.

Apple themselves still did not acknowledge using Gorilla Glass until March 2012, when they published that pumped up list of "jobs they had created", which included a note about iPhone glass being made by Corning employees in Kentucky and New York.

(Ironically, by then Corning had actually moved the majority of its - by then, Gorilla Glass 2 - production to China, because that's where they said the majority of its customers' factories were... Taiwan, Korea, Japan and China... and it was cheaper than shipping all that glass overseas.)

So, Corning, when talking to other customers, such as Samsung, LG, HTC, etc, just never mentioned that Apple was using them for the iPhone? Even if they didn't say it by name, I'm pretty sure that it was heavily hinted that a major phone manufacturer in Cupertino was using them on their flagship devices.
But, I guess Corning could just not say a word about it and just sell on the overall durability of the product. I mean, why talk about customers that you already have when trying to make a sale, right? That would never come up as a question. /s

 

[AdonisSMU]

Startup economics for a company that is listed and able to raise 71M debt through convertible bonds at a whim? How many startup companies do you know that can raise half a billion in debt? Not many, and you know why? Real startups don't/can't. GT is not a startup. Just because Apple treated this as an R&D project doesn't make GT an experimental venture.

Read the post I was responding to. He was wrongly assuming that GTA was a start up company.

Secondly, clearly GTA couldn't raise 71 million dollars on a whim otherwise they would've without Apple's terrible contract that they were somehow forced to sign....because the 500 million dollar transaction was taking too long to secure and they couldn't tell anybody yet so the upper mgmt could make a profit from it. You want to do business with Apple you have to play by their rules if you are a smaller company. If you are larger more reputable company you may have more leverage to negotiate a more favorable contract.

 

[j800r]

A company goes bankrupt, it's their own error and nobody else's fault. They knew the terms, they didn't have to sign the contract. Businesses are brutal and selfish. That's how they make money.

If anyone used this as an excuse to hate on Apple then they need to educate themselves on how these big corps make their money.

 

[kdarling]

So, Corning, when talking to other customers, such as Samsung, LG, HTC, etc, just never mentioned that Apple was using them for the iPhone? Even if they didn't say it by name, I'm pretty sure that it was heavily hinted that a major phone manufacturer in Cupertino was using them on their flagship devices.

Anything is possible, but in this case, even hinting would be rather doubtful, considering how strict Apple's NDA terms are. The last thing Corning would want is for word of such antics to get back to Apple, and then get fined or even removed as a supplier.

Besides, why would any manufacturer care what Apple was using. Apple wasn't saying they used GG, thus it was not a necessary selling point for iPhone competition.

Plus Corning is not the only supplier of hardened glass. Other popular devices have used competing products like Dragontrail or Xensation instead, which claim to be even harder than GG.

Not only was this iPhone secret not a huge immediate PR win for Corning, apparently it was not a private win for a long time, either. Indeed, I believe it was at least two years later before anyone else used Gorilla Glass in a smartphone. I think the Fall 2009 Motorola Droid was the first... and Motorola was the reason Corning started working on GG to begin with. Were there phones any before that?

 

[mercuryjones]

Anything is possible, but in this case, even hinting would be rather doubtful, considering how strict Apple's NDA terms are. The last thing Corning would want is for word of such antics to get back to Apple, and then get fined or even removed as a supplier.

Besides, why would any manufacturer care what Apple was using. Apple wasn't saying they used GG, thus it was not a necessary selling point for iPhone competition.

Plus Corning is not the only supplier of hardened glass. Other popular devices have used competing products like Dragontrail or Xensation instead, which claim to be even harder than GG.

Not only was this iPhone secret not a huge immediate PR win for Corning, apparently it was not a private win for a long time, either. Indeed, I believe it was at least two years later before anyone else used Gorilla Glass in a smartphone. I think the Fall 2009 Motorola Droid was the first. Were there any before that?

HTC Dream is listed as using Gorilla Glass. 2008.