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Apple iPad: See, I Told You So

dhardenbrook — Wed, 17 Feb 2010 02:38:46 +0000

If you’ve been getting my newsletter for a while now, you may remember a blog I posted on PDMA in June of 2008. I had pondered why Apple would go and buy a company called PA Semi that made low power chips. While not entirely correct, I did feel the thrill of coming pretty close to nailing Apple’s strategy once the iPad was announced on January 27. Apple has created its own processor chip for the iPad (terrible name…what were those brilliant marketing geniuses at Apple thinking?) and thereby created a walled garden around its newest product. But is it unassailable?

In Apple’s quest to create a compelling product that no one else could duplicate, it has taken on new headaches related to chip design and manufacturing. While PA Semi appears to have given Apple a jump start on chip design, it remains to be seen if Apple can provide enough R&D resources to keep the performance up to snuff. Even more concerning is whether Apple has the competency to handle the complexities of chip manufacturing. Dealing with contract manufacturers to qualify and ramp manufacturing can cause nightmares and many sleepless nights. These are things it didn’t have to worry about when Intel took care of all the design and manufacturing.

The pundits are taking sides as to whether the iPad will be a market winner. Apple has had much success recently with its new products, and I’m sure it will with the iPad. But what I really want to see is if Apple can successfully manage its new foray into chip design and manufacturing. Right now your guess would be as good as mine.

CSR is The Next Quality Movement

dhardenbrook — Wed, 02 Jul 2008 21:06:22 +0000

Corporate social responsibility (CSR) is the next phase in the quality movement driven by globally aware consumers who will choose companies and products that “do no evil.”

The evolution from Quality Control to Total Quality Management to Six Sigma and Lean will now transform into Sustainable Quality Management. Companies must consider the ethical, social, and environmental impact in everything they do – but especially in the products and services they provide. Does the product deliver on the promises of the brand and company? Does it deliver the right consumer experience and fit their lifestyle? Because of regulatory and NGO awareness, consumers are viewing companies more skeptically. Backlash from CEO pay, child labor, lead paint in toys, and green washing reflect growing consumer discontent.

As Stephen Covey often says, “You can’t do right in one area of your life and wrong in another. It’s total and indivisible.” Can they really trust companies that seem to only focus on profits and costs? They want to know that the companies behind the products they buy really are socially responsible contenders versus pretenders. After all quality is meeting or exceeding customer expectations and the bar has been raised considerably

Do you agree or disagree? Tell me why.

A Falling Out Between Apple and Intel?

dhardenbrook — Fri, 02 May 2008 19:48:21 +0000

I remember a few years ago when Apple announced that they would transition from the IBM PowerPC to Intel Core 2 processors. This was a major strategic shift for Apple and based on the quarterly earnings reports since the decision it has proven to be brilliant. However, during the same week that Apple announced great fiscal second quarter 2008 earnings (51% increase in Mac sales year to year in the last quarter) they also announced that they were acquiring PA Semi. PA Semi was founded by Dan Dobberpuhl, the lead designer of the DEC Alpha series of processors. P.A. Semi is a privately held company that designs power-efficient processors.

I wonder what this $278 million investment means for Intel. Was Intel caught off guard by Apple’s decision? Does this threaten Intel’s chances to win an iPhone design with their new Centrino Atom processor? Does this mean Apple is going to create it’s own microprocessors for Mac and iPhone?

This Apple-Intel relationship makes them one of the the Silicon Valley’s oddest couple. Intel, innovator of the x86 family of microprocessors, helped horizontalize the PC industry by embracing open architecture, open standards, and teamed up with Microsoft to create the 800 pound gorilla called Wintel. Meanwhile Apple, creator of the Apple II, Macintosh, iPod, and iPhone has always remained closed architecture, proprietary standards, and listened to the beat of a different drum. But markets and business conditions have changed. Both realized the need for each other. Apple Macs were ingeniously designed but were performance challenged because of IBM’s lack of investment in the PowerPC. IBM was in the midst of changing to a services business model. Apple needed a supplier who had a compelling technology road map. Intel needed Apple because they needed new growth outside of the Wintel box. Apple gained a capable supplier and Intel was now associated with an iconic brand. This relationship has been a win-win for both. So why does Apple want to undermine this relationship?

I, like many others, can only guess why Apple bought PA Semi but I doubt it’s because they want to push Intel away. PA Semi doesn’t currently make a competitive product to what Intel currently offers. Apple needs Intel’s technology and manufacturing excellence if they want to produce leading edge products in high volume. It would be very costly to design and develop their own proprietary chips and would move them away from their core competencies in product design and ease of use. More importantly, it would alienate a great supplier relationship with Intel. My guess is that PA Semi was acquired to create some unique intellectual property for Apple that can be used to differentiate their products, not replace existing supplier. I might speculate further that the IP created by PA Semi will work with the new Intel Atom microprocessor in such a way that it will be very difficult for an Apple competitor to copycat. Whatever the real strategic intent, Apple is thinking of something brilliant and the acquisition of PA Semi is only one of many tactical moves in a larger strategic plan. I can hardly wait to see what unfolds.

Do you disagree with me? Why do you think Apple bought PA Semi? Do you think Intel has a shot at winning an iPhone design?