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Vertical Integration Works

February 19, 2011 2:47:27.169

Apple has managed to keep the iPad available at a lower price than any (current) rival, and also has high profit margins. How? Vertical Integration:

Apple is the most vertically integrated company in the world. In addition to operating its own retail chains, all Apple hardware and software are designed in-house, and Apple also runs its own digital content store, iTunes.

Given all that, I wonder just how much higher their costs would be if they set up highly automated assembly plants in the lower cost parts of the US? Sure, labor is cheaper in China, but the shipping costs are much higher. It would be interesting to know, especially if fuel costs rise.

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posted by James Robertson


Re: Vertical Integration Works

[HKN] February 21, 2011 5:19:40.703

for me the interesting part of the story is this: we've always been told that reducing the depth of manufacturing and outsourcing as much as you can would lower the costs

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