Tag Archives: iPAd

Bragging Rights

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I want to call attention today to a great new contest for designers being run by Sunstone Circuits.

The contest works like this: From now until Dec. 16, design engineers can share their PCB-related design success stories online at Sunstone’s website.

Friends and others to the site can vote for the best project. All entrants and voters are entered into a sweepstakes to win a series of prizes, ranging from gift cards to an iPad.

It’s a great way for designers talk (and yes, perhaps, brag) a bit about what they do. And while Sunstone certainly benefits from the exposure, I’m glad to see a company taking steps to highlight the remarkable things designers can do.

Troubled Waters Ahead

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Disputes between China and Japan over ownership of several small islets, known as Senkaku in Japan and Diaoyu in China,  are increasing and threatening to draw the U.S. into a potential fire-fight and conflict between 2 of the world’s top 3 economies. Violent anti-Japan protests this past week are threatening the $300 billion annual economic ties between the two nations. A wide range of firms from electronics giants Sony and Panasonic to Japan’s big three carmakers — Toyota, Honda and Nissan — temporarily halted production at some or all of their China-based plants.

Japanese electronics (and other) manufacturers are reported to be making a beeline to the Philippines. These include Furukawa Electric, Murata Manufacturing, and Brother Industries. The Philippine’s Trade and Industry Undersecretary Cristino Panlilio stated that the government is also soliciting suppliers of these Japanese companies in order to nurture local supply chains.

Job creation. Foxconn’s newly announced venture near Sao Paulo, Brazil, is expected to create tens of thousands of jobs by 2016. One has to wonder whether Americans or Europeans will provide the basis of their necessary supply chain needed for the announced board, part, and device production. Or, will a new “home grown” series of material and specialty chemical suppliers be the end result? Will production assembly equipment come from Europe? America, China, or Asia? The numbers will be big!

Samsung toeing the mark? Following its recent loss IP suit loss to Apple, Samsung announced that it would audit working conditions at 249 Chinese subcontractors and suppliers, including 105 that produce goods solely for Samsung. This major decision, coupled with Apple’s main provider Hon Hai’s (Foxconn Technology Group) decision to tackle working condition violations among its 1.2 million workers assembling iPhones and iPads, are certain to change the way that Western and other “foreign” companies do business in China. Samsung stated that it would terminate contracts with suppliers that do not take corrective actions when found and notified of violations of Samsung’s labor and working condition policies.

The Tao of Steve

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What will Apple look like after Steve Jobs? And will it remain as successful as it has been over the past decade?

I’ll say it now: No.

Apple won’t sustain its success because its success is unsustainable.

This is a company that has achieved market share as high as 93% for some devices, and continues to dominate in the uber-competitive consumer electronics space. This is a company that has gone from being so close to the grave that none other than rival Microsoft ponied up $500 million just to keep them alive in order to fend off anti-trust regulators (think Bill Gates regrets that decision?) to being the world’s second-most valuable company.

There clearly is something associated with Apple that Sony, Samsung, Dell, HP and legions of other companies haven’t been able to identify, let alone bottle. But even if Steve Jobs were to live to 90 (he’s 56 now, and in failing health), Apple will slide because gravity has this funny way of bringing everything back to Earth.

It doesn’t matter who takes over for Jobs or what he or she does (or doesn’t do). Apple will always be Apple, but it won’t always be the reigning king of consumer electronics.

Taking Apart the Teardown

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I think the analysis is a little off in a recent posting by Dominique Numakura about the cost of a product like the iPad.

Numakura states: “Consumer electronics product manufacturing cost must be less than 33% of retail price. Total component cost must be less than 25% of product retail price.”

In a teardown analysis performed for Dartmouth by my colleague Jim Hall of ITM, Jim used cost metrics similar to Numakura’s, for a hairdryer. The hairdryer cost $20 at a CVS drugstore. The same model is manufactured overseas for CVS and other stores, like Walgreen’s, with perhaps a different label. After manufacture, the hairdryer is shipped to a distributor. From the distributor, it was then shipped to the drugstore. So assuming that the manufacturer has to make it for 33% of $20, or about $6.70, the distributor needs to get $3 dollars or so, shipping several times adds another few dollars and it gets to the drug store for $13-$16 or so. Many hands have touched it by now, all adding cost.

For something more expensive and complex like the iPad or a laptop, this analysis is considerably off. There is no distributor, the number of hands touching these devices is minimized by the parent company. Less shipping is involved. I’m sure folks that make these products wish the margins were like Numakura suggests.

Recent analysis performed by iSuppli, which I think Numakura takes issue with, is closer to the mark, I think. iSuppli suggests that the BoM (bill of material) for the entry level iPad ($499 retail) is about $250 or 50% of the sales price. I actually think iSupply’s estimate of the assembly cost ($9.00) is too low.

In the past, Prismark had suggested that assembly and test is in the 10 to 15% range of total price, indicating something like $50 for our iPad. From another assembly cost perspective, a rule-of-thumb is that it costs between $0.05-$0.10 per component to assemble and test an electronic device. It is hard to imagine that the iPad has only 200 total components (including passives!), that a $9 assembly cost would require. Hence, I think the assembly cost would be more than $25. If so, this suggests a total cost of about $275 for the $499 iPad, still leaving a quite healthy gross margin of 45%. Commodity type electronics in the multiple hundred dollar range (e.g., a “vanilla” laptop or a 32” flat panel TV) almost certainly don’t enjoy these levels of gross margins; probably more like 10 to 20%.

While preparing to write this post, I shopped at a BJs. I saw a 32″ flat panel TV for $379. It is hard to image that the BoM for this TV would be $95 as Numakura suggests.

Cheers,

Dr. Ron

Is the Time Right for Solderless Assembly?

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Folks,

Apex 2010 appeared to be a great success. Attendance was high and my “Lead-Free Assembly” workshop broke a personal record of about 60 attendees.

While at the show, I was invited to a meeting on solderless assembly, ably organized by Phil Marcoux. About 15 people were at the meeting. The intent was to crystallize what is needed to make solderless technology a reality. Many have suggested that solderless assembly’s time is now. The main reason being the challenges of lead-free solder-based assembly and its perceived lack of reliability. Some believe that solderless technology is a next logical step in assembly on the order of importance of the advent of SMT assembly.

I was well-behaved at the meeting (I am a something of a renowned skeptic of solderless assembly), but pointed out, early on, that any solderless assembly technique (the Occam process a likely contender), must be disassemble-able to meet the requirements of WEEE.

Much spirited but pleasant discussion transpired related to what is needed to make this technology a reality. Several folks mentioned that a “killer app” would be needed to kick-start solderless assembly, and supply the considerable monies needed.

Finally, near the end of the meeting, Phil, suggesting I had been too quiet, and asked me to chime in. I said that I agreed that a killer app was needed, and proceeded to tell a story. It went as such:

Let’s say it was several years ago and Steve Jobs heard about solderless technology. He was wondering if it might be right for Apple’s future killer app, the iPad. So we are invited to visit him on Infinity Drive. After confidentially agreements are signed, he starts speaking. He proceeds to tell us that the BOM for the entry level iPad is $250 and assembly adds $9. Reliability of lead-free products has been equal to, or better than, leaded products and lead-free enables finer PWB lead spacings than does leaded solder. So he is not unhappy with lead-free assembly, but would like to do solderless technology, if it makes sense. The assembled cost has to be less than the $259 and solderless reliability must be better. We would need to be ready for an April 2010 launch.

I think the cost metrics in this scenario would be difficult for a solderless technology to compete with. And, even if the price was a few dollars less, what is the compelling reason to change?

SMT arrived because through-hole technology could not meet the miniaturization requirements of modern electronics. We could not have modern electronics without SMT. What are the compelling reasons solderless technology should be used in an application like the one discussed above? The answer still escapes me.

Cheers,
Dr. Ron