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How Apple Created Its Own Business Rivals through Outsourcing

by Jeremy Coward

CIO has reported that Apple was responsible for supercharging two of its fiercest rivals – Samsung and Foxconn – and that it did so by outsourcing manufacturing responsibilities to these companies.

The article suggests that Apple was determined to outsource manufacturing and assembly operations from the outset. The lion’s share of manufacturing including screens, Flash, DRAM memory and logic processors were all outsourcing to Samsung Electronics, while the responsibility for assembling the iPod, iPhone and iPad was outsourced to Foxconn.

Unsatisfied with making margins of 12.02 per cent and 1.7 per cent from the sale of each product respectively, Samsung and Foxconn opted for rebellion. In 2011 Samsung invested billions and formed a relationship with Google Android, ultimately leading to the creating of the Samsung Galaxy S3, S4 and Galaxy note, devices that now directly compete with Apple’s own products.

In 2013, Foxconn created a venture capital-backed hardware accelerator programme – shortly after the release of the Apple Watch, unsurprisingly Foxconn’s first product release was also a smartwatch.

After a drop in value from $700 to £566 per share, 2013 saw Apple’s share price stall for over a year at $550, with over $150 billion in shareholder value lost.

Read the full article on the CIO website.

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