Nov 14 2013, 7:23am CST | by Bijon Kumar Pramanik
Spending a record $10.5 billion on the technology no customers will ever see is painful but necessary in order to keep up with the competition such as Samsung. Machines such as assembly robots, lasers and milling machines will be working behind the scenes to produce future iPhones, iPads and other gadgets. Apple is making more and more exclusive deals for specialized machinery, outspending its competitors on the tools that often go to the Apple’s suppliers somewhere in Asia. Apple’s capital expenditures for 2014, excluding spending on retail, increased by 61 percent from last year and almost ten times since 2008. Just for comparison, Samsung will be spending $22 billion, Sony $3.9 billion and Hewlett-Packard $3.7 billion.
Muthuraman Ramasamy, an analyst with Frost & Sullivan, explains high capital expenditures on machinery by the Apple’s unique designs, as well as by the availability of large amounts of readily available cash for the top class machinery normally used by defense or aerospace industries.
Where this money goes is well illustrated by the example of producing iPhone 4 in 2010, when Apple’s development team had to make a machine which would ensure that gyroscope technology for video games and similar applications was working as it should on the smartphone. For the iMac 2012 redesign, Apple needed a new technique for laminating a display to a cover glass.
The goal of all this spending is to lay the foundation for Apple’s new products. As Cook said recently, Apple is planning to venture into the areas where it currently doesn’t compete. Wearable-computing device and new television products are just some of them. The bottom line is that Apple is using capital to build a competitive advantage.
Source: Business Week
Bijon Kumar Pramanik
Bijon Kumar Pramanik is an experienced technology writer working since years in the consumer electronics field.
blog comments powered by Disqus