Tuesday, April 24, 2012

My former Prof's research featured in The Economist

I wanted to share this by Ken Kraemer, my professor from graduate school at UCI, that was published in The Economist.
Researchers for the Personal Computing Industry Centre at the University of California, Irvine, took apart an iPad and worked out where all the various bits inside came from and what it had cost to make and assemble them (see chart 3). They found that a 16-gigabyte 2010 iPad priced at $499 contained $154-worth of materials and parts from American, Japanese, South Korean and European suppliers (Apple has more than 150 suppliers in all, many of which also make or finish their parts in China). The researchers estimated the total worldwide labour costs for the iPad at $33, of which China’s share was just $8. Apple is constantly tweaking its products so the figures shift all the time, but not by much.
The study shows why Apple is so profitable. It also shows how manufacturing in the personal computer industry is so globalized that it is hard to say a product is manufactured in a specific country. We can see, due to the work of the folk at the Personal Computing Industry Center what people in Amazon have known for some time: the corporation's profits can be maximized by developing innovative products that people will want and need, and then planning carefully to take advantage of the best places to manufacture parts and assemble devices wherever those places might be.

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