🚀 go-pugleaf

In article <1356@sunny3.che.clarkson.edu> kweeder@sun.soe.clarkson.edu (Jim Kweeder) writes:
>While I can't disagree with the facts, I think Apple's thinking is strictly
>short sighted.  Apple is in the position of having made two mistakes:  
>(1) Going with an outside supplier for their memory  (2) Having
>underestimated the market demand for their product.  I won't say they
>should have avoided the first one (since Apple isn't alone in making
>this mistake), but they seem to have missed the mark on the second one
>pretty badly.

I must take exception to the first point.  A memory fab must constantly
be straining the power/speed/density envelope to remain competitive;
this can be ruinously expensive, as equipment (==entire fab lines)
must be junked every two to four years.  Add to this the cost of
sustained packaging, circuit design, and semiconductor research, and a
memory fab becomes a hundred million dollar and up annual operation.
The advantage to possessing this capability (buying at the production cost) 
is greatly outweighed by the constant outlay for capital equipment,
and the constant depreciation (in utility) of the equipment.

Underestimating market demand is bad, and Apple should have known better.
However, it is usually better to slightly underestimate demand (a healthy
backlog looks very good to stockholders and Wall Street) than to overestimate
and produce machines that must be dumped, or to idle production lines
(a la many automobile makers).

Steve Fenwick
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