Hacker News Reader

Comment by aresant | Hacker News Reader

Tough to compete with Apple after they began duplicating their success in UI design to hardware, manufacturing, elegant chip design with a pointed purpose, etc.

Apple's most underestimated strength is their continued march towards vertical integration - buying make the right processor company (PA Semi) and a team of 150 processor gurus to minimize power use, developing a proprietary manufacturing process to make seamless aluminum notebooks, etc, etc etc.

A good read from 2008 about Apple's strategy . . . http://www.forbes.com/2008/04/24/mitra-apple-pasemi-tech-ent...

View on HN

A fun flip side is that you have companies like Vizio who are making a killing in commoditized electronics who outsource virtually everything and still have less then 200 employees (About 1/3 are support).

http://www.vizio.com/about

Boy, you weren't kidding:

Stats from 2008:

* Recognized as the #1 Fastest Growing CE Company by Inc. Magazine * Total of 100 employees * Shipped a total of 3,500,000 HDTVs * Total revenue exceeds 2 Billion Dollars

Had not really noticed Vizio before, seems like an amazing story.

10million revenue per employee is a huge number (as a comparison Apple, Google had 1 million per employee in 2009, which is already considered on the high side)

Just doing some casual research: One of the founders had two other monitor startups (MAG and Princeton Digital) under his belt, so that sort of explains some of the success. Still, it seems like an amazing achievement to get into the big retail channels so quickly.

How do they manage to create so much value, while keeping track of all the outsourcing? Surely, there must be times when things go wrong, really wrong with the outsourcing.

Revenue per employee makes no sense. What makes sense is profit per employee. Vizio outsources stuff and pays loads to other companies, their profits have a lower ration that 10 million per employee

Edit: AmTran sometimes swallows shipping costs and pushes component suppliers to ensure Vizio's products are high quality and on time. AmTran now gets about 80% of its revenue from Vizio. In turn, Vizio sources as many as 85% of its TVs from AmTran, according to research firm DisplaySearch.

"besides the Playbook much of their plans remain a mystery"

Likely to RIM as well.

Mean. Probably true too.

I must sigh and agree.

As lost and flailing as RIM can seem right now, though, the company seems to have its path for the next 18 months cut out for it. In theory, they finally have everything they should need–a solid next-gen OS with a cadre of engineers who understand it inside and out, a hardware division with a wealth of experience, and now a surprisingly forward-thinking and experimental UI design acquisition that could work wonders if allowed to inform the entire product design process.

They just need to get them all working together. And that's the part I'm most worried about.

Yea I mean there are tons of examples in the tech world of a bunch of disconnected features that on their own are great but aren't properly integrated or carry some simple flaws that prevent them from shining.

When trying to predict the weather, asking what the weather was yesterday is always the best prediction model.

What will RIM do next year? Probably what they did last year.

Flail and lose market share :)

Mean. Probably true too.

> buying make the right processor company (PA Semi)

There still hasn't been any hint of PA Semi in Apple's work. Even the A4 is pretty basic stuff, the work of Intrinsity (very good at optimizing the power/consumption ratio of existing systems) rather than PA Semi (very good at actually creating innovative chips from scratch).

I have no idea what the PA Semi guys are working on at Apple, but I still hope we'll see something interesting for the "A5" (or whatever the chip in the iPad 2 / iPhone 5 is called)

I thought it was the PA Semi guys that all quit (because they didn't get much of a cut from the sale), formed their own company and then got bought by Google?

First story I found (not very high quality journalism, but you get the drift):

http://nation.towergaming.com/2010/04/google-how-to-acquirin...

They bought Intrinsity too :).

http://www.nytimes.com/2010/04/28/technology/28apple.html

Which is why I mentioned Intrinsity in my comment and indicated that the A4 looked like Intrinsity's work (optimization and improvements of existing designs) more than PA Semi's (new chip designs from ground up)

>Apple's most underestimated strength is their continued march towards vertical integration

... maybe ... Markets swing back and forth between integration and disintegration. Apple was very vertically integrated in 1995 and paid a heavy price for that when the PC market exploded into a million models with multiple operating systems at low prices. Integration is usually best when innovation is lowest since value chain segments are mature and cost reducing and you can integrate the value chain, squeeze out waste between segments, increase coordination between segments and capture a nice profit. Innovation all throughout the value chain is very high right now, so this does not seem like the time to vertically integrating.

An interesting aspect of the RIM versus Apple thing is that they are both pursuing integration strategies, but RIM seems to have focused on integrating the wrong things for 2008 and then had an deeply integrated ball-and-chain around their leg just at the moment they had to be nimble. Apple seems to be in a similar spot w.r.t. Android: using the iOS UI is terribly frustrating after using Android 2.2 for a while (no back button?!); Apple's terrifically integrated, dogmatic approach leaves them little room to respond to competitors.

They're integration is still pretty limited... they're just much more integrated than their competitors. They still outsource all manufacturing and fabrication, battery tech, display tech, and storage tech. They're just integrating enclosure design, chip design, OS design, media sales, and carrier sales. Of those 4, Google and MS only do OS design. RIM does OS, enclosure and carrier sales.

Importantly, Apple is very easily able to disintegrate when needed. They're doing their own chip design now, but if someone comes out with an off the shelf chip design that's better than the A4, there's nothing stopping them from building it.

Your point makes sense in theory, but I don't think it applies here.

Good article ... looks like the author predicted something like the IPad.

Reply on news.ycombinator.com