In early May, Supply Chain Matters posted what readers might describe as a “parody-type” commentary related to Apple. This commentary was titled The Complex Orange and the Shiny Apple, Which Should Shine in the Limelight. Our fruit parody was directed at the traditional and social media coverage that surrounds both Apple and consumer electronics competitor Samsung. We pointed to the shiny apple, which distinctively sits in the fruit basket and can easily be identified in its familiar image and taste. This apple is very delicious, somewhat tart, but consistently delivers on taste. Some content of the apple is used to make other delicious products such as pies, cakes or juices. Because the apple is so shiny, and because the apple is loved by millions and millions of consumers, sometimes the apple gets attention that it does not necessarily desire. Sometimes the apple can develop blemishes. The apple also competes with other fruit for consumer tastes. The orange has a rather complex structure, there are actually embedded layers within the orange, each providing a piece of juicy, and yes, sometimes tart , but enjoyable citrus taste. The orange does not garner all the attention of the shiny apple, but the reality is that it is slightly bigger, and can serve multiple purposes. You can eat the orange itself, either at breakfast or as a daytime snack. The orange peel is utilized in baking recipes and sometimes the pulp is used in other products or snacks. The orange can be converted into delicious juice, a huge market seller. You see, the orange also serves as a multi-purpose fruit, but perhaps more behind the scenes. Because its peel is pebble-like, its blemishes are more easily ignored.
The company Apple, often, and deservedly, lands on every supply chain industry analyst’s top ranking including ours. In the post Steve Jobs era of Apple , much of its supply chain capabilities have come to light, both positive and not so positive.
For the past two weeks, the Internet has been abuzz with all sorts of stories related to Apple. Our previous posting addressed the widespread speculation of Apple’s pending release of a far lower-cost alternative to the iPad. Also this week, multiple commentaries and articles speculate on the upcoming new version of the iconic iPhone, based on numerous information leaks surrounding Apple’s supply chain. A Wall Street Journal article (paid subscription or free metered view) cites supplier sources as indicating that the next generation iPhone is already in volume production and speculated to have a fall launch date. The new phone includes a larger and thinner LCD display that combines both the screen touch and LCD panel in one integrated device, thus eliminating the need for two separate parts. The WSJ also names the three LCD supply vendors, and missing from that list is to no surprise, Samsung, Apple’s previous supplier of displays. The article also notes that people familiar with the manufacturing process indicate that the LCD makers are finding the manufacturing process rather challenging and time-consuming as they attempt to meet high-yield rate. A separate commentary posted in Information Week also indicates volume production has begun to support an expected fall release and references images posted of actual skin components. It reports the existence of a different proprietary interface port in favor of a smaller design.
The drumbeat of Apple related articles and speculation will thus continue, no doubt encouraged by Apple itself.
Then we have the Orange. If you were not totally up to speed with reporting, you might have missed the fact that Samsung has already released its next generation smartphone, the Galaxy S III, its answer to the next generation iPhone. Multiple financial media outlets reported that Samsung has benefitted from rather strong demand for this new model, which is estimated to be 10 million units sold by the end of July, just two months after market launch. The new model Galaxy is also expected to be introduced in 147 countries by the end of July, providing a healthy jump start presence before Apple’s new generation iPhone unveiling expected in the fall.
The company’s April-June guidance estimates that operating profit increase can be as high as 79 percent, primarily fueled by high Galaxy sales. Also reported is that Samsung is struggling to keep up with demand because of component shortages. Our readers will recall the significance of the reported shortages since the Samsung supply chain is highly vertically integrated, supplying many parts from its own divisions.
The orange is indeed complex. If one were to just focus on the smartphone segment, it would appear that Samsung has managed to pull-off a distinct advantage in time-to-market for its new smartphone. But, there are other parts of Samsung, including flat screen televisions, appliances, electronic components and semiconductors. These sectors are feeling the effects of an ongoing global economic slowdown as both end consumers and other supply chains have become jittery on what the future will bring. The Financial Times notes that Samsung’s stock has dropped 15 percent over the past two months because investors are concerned about these trends. We would add that Samsung does not garner the social media hype that Apple can generate.
Thus remains the contrast. Two supply chains, both extraordinary in capability, but operating under different supply structures and technological parameters. Both have become highly visible and competitive rivals. But alas, the Apple tends to always stand out in the basket.
For our part, Supply Chain Matters will strive to provide balanced coverage for both the apple and the orange since they both represent a significant force in global supply management and fulfillment capability.