Open ... and Shut Last quarter Apple churned out extraordinary profits: $13.06bn of them. But according to a New York Times article, Apple achieved these amazing profits on the backs of Chinese workers, who are subjected to punishing work conditions to ensure high-quality iPhones and iPads at the lowest possible price.
While the company claims to care, the fruity tech titan's insistence on maximum speed and quality at the lowest price makes it perhaps the industry's toughest taskmaster.
But it's by no means the only one.
Any company that claims an advantage in manufacturing operations can claim some culpability. It's just too easy to move production offshore to keep up with the faster-cheaper-better mantra that Western consumers demand.
Not that one has to go offshore to find highly demanding buyers. Take Dell. While the company has yet to regain its top spot in the PC industry, for years it was infamous for pushing its suppliers to their limits, as Steven Holzner describes in his book How Dell Does It. Some of these partners include Chinese manufacturing outfits, and these companies have become adept at concealing conditions as Western vendors have sought to curb abuses.
They have to. If consumers continue to demand low-cost and high-quality products, their vendors will demand that component suppliers do more for less. And they will.
Not that tech is alone in this. Wal-Mart, for its part, is notorious for hammering its suppliers, both in the US and abroad. A few years back Salon highlighted the ecological problems Wal-Mart's demand for cheap salmon was causing. The retail giant's incessant demands for more for less can put serious strain on a supplier, making a deal with the chain a curse rather than a blessing. In fact, some vendors, like Snapper, have opted not to work with Wal-Mart at all, citing the need to maintain their reputations for quality, quality that is impossible to maintain at Wal-Mart's "everyday low prices".
But they're the minority.
Ultimately, as ZDNet's Larry Dignan opines, all of this may have more to do with consumers than vendors. Wal-Mart's strategy works because consumers flock to its stores to pay low-low prices without thinking about the supply chain that drove those prices so low. Dell, Apple, and other tech companies turn to low-cost Chinese suppliers because they provide good quality at rates domestic manufacturers have never been able to match.
Perhaps the real lesson from this is that we as consumers need more visibility into how what we eat, wear, and use is manufactured. Or maybe we already know, and simply don't want to hear more? My wife told me last week that child slave labour is a key ingredient in the harvesting of the cocoa beans used to make chocolate. It hasn't stopped me from eating chocolate, though it has made me more thoughtful about the consequences of my insatiable appetite for chocolate.
Still, vendors can't be completely pardoned, and particularly Apple. As Dan Lyons writes: "Apple has enough money and enough influence to change this. They could make things right. It might not be easy, or cheap. But they could do it." Apple, the company that urges us to "think different". Apple, the company with the unique ability to command high prices in commodity markets.
Yes, Apple could do it. It may be one of the worst offenders in the tech industry, if the New York Times article is to be believed, but it's also the company best positioned to make a real difference. It can afford to and its brand almost requires it. Unlike Dell or Wal-Mart, Apple isn't a low-price leader. We wouldn't even have to see Apple's monumental profit machine take much of a hit: I'm willing to bet you'd pay more to know that iPhone and iPad manufacturing was humane and safe. I know I would. ®
Matt Asay is vice president of corporate strategy at 10gen, the MongoDB company. Previously he was SVP of business development at Nodeable, which was acquired in October 2012. He was formerly SVP of biz dev at HTML5 start-up Strobe (now part of Facebook) and chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears three times a week on The Register. You can follow him on Twitter @mjasay.