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5by5 | The Critical Path #26: Zeitgeist

Feb 22, ’12 8:53 PM
Author Categories Podcast
  • Act I: An analysis of the manufacturing cost structure for iPhones
  • Act II: The $10 billion App store economy and how to quantify value of apps per iPhone
  • Act III: Rather than seeing it as the exception, Apple, like GM and IBM may be the rule that defines an era.

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5by5 | The Critical Path #26: Zeitgeist.

  • http://twitter.com/HansReiter Songnam Hwang

    New episode in less than a week? Is it Christmas? Thanks and good work, Horace.

  • numble

    Horace, the robotic “okay” voice was for the diagnostic test cable the workers inserted into the devices for QA purposes.

    http://abcnews.go.com/m/story?id=15748745

  • http://profile.yahoo.com/YYYSQWUR733WOGZORWWGC5UT7A Anonymous

    http://abcnews.go.com/blogs/technology/2012/02/foxconn-apple-and-the-fair-labor-association-respond-to-abc-news-exclusive-report/

    Apple and Foxconn issued corrections to ABC report, providing more numbers to work with:

    From Apple, regarding Zhou Xiao Ying’s claim that she carves the aluminum shavings from 6000 iPad logos per day: 
    “In manufacturing parlance this is called deburring. Her line processes 3,000 units per shift, with two shifts per day for a total of 6,000. A single operator at Ms. Zhou’s station would deburr 3,000 iPads in a shift.”

    Apple clarified that Zhou Xiao Ying couldn’t have been working a second shift since it would be impossible if she worked 8AM to 8PM, then worked 8PM to 8AM, and then worked her next day’s shift. Ying likely misunderstood Weir’s question about “how many Apples do you carve each day?”

    From Foxconn, regarding starting pay being too low for a Chinese payroll tax withdrawal:

    “We have over 75 percent of the employees in the category of earning at least 2,200 RMB ($349/month) basic compensation standard. That means they are earning 13.75 RMB ($2.18) per hour. If they work overtime on the weekend, they will earn 27 RMB ($4.28) per hour. In order to reach 3500 to be taxable, they will have to work 47 OT hours to reach 3,500.”

    “If the overtime hours are in weekdays, they have to work around 63 hours per month to reach that level of salary to be taxable.”“Your statement is only true when applying to the entry-level workers while over 75 percent are already over the probation and earning more than 2,200 RMB basic salary.”

  • berult

    Feel uneasy about the competitive fallouts of down-the-throat transparency? I don’t. Zeitgeist, Apple for that matter, can only be assessed …accessed at full value through the richness and diversity of its intertwining processes. And through its contradictions…That’s how you lock up a long winding narrative once you’ve captured a significant sequence of DNA, a strand of innovations seeping in as consensual metaphors of a dawning era.

    Apple deals foremost in process innovation. Refinement clearly stands out in the quality of the end product, but not clearly enough in so far as it abstracts the intermingling of exquisitely fine tuned  processes. How could it not render full justice to Apple’s clear-sightedness and honest brinkmanship …to have full disclosure …full exposure of its genius-in-progress…?

    Apple has everything to gain to let its patrons partake in the unfolding of its creative process. After all, isn’t an iPhone so much more, and in some photogenic ways so much less than the some of its parts?

     Isn’t an iPhone also the squeaky clean weariness of a teenage girl on an assembly line?…shouldn’t she be instead lighting up from dirtying the frontal cortex of an iPad?

     Isn’t an iPhone also the all too weighty absence of the tiniest of branded manufacturing footprint on Home Office’s soil?…shouldn’t the brand espouse the enlightened profile of a ‘no-man’s-land’ instead of the Texan shadow of its ‘Dark Age’ subcontractor …and fiercest competitor?

    Apple has to let it be known of their quiet but deliberate transitioning from boredom for dummy to freedom of ‘assembly’. Pun intended as a wishful spill-over effect onto the ambient civic discourse; pun intended as a reminder that Apple can …through its core, chew competitors, walk the ethical talk, and preempt ‘manufactured’ controversies through full benefit of the doubts …all at once, …no sweat …and not even a hint of a sweatshop.

    • berult

      Obviously ‘sum’ in lieu of ‘some’ in the third paragraph… kinda breaks the momentum doesn’t it!?

    • Sharon Sharalike

      I didn’t realize this was random metaphor day. Was there an announcement?

  • Donald A Duncan

    Horace, you obviously have limited manufacturing experience.  Some of your assumptions are good, but:

    1. You are correct that on any given line, the steps will take roughly the same time. However, the process will be broken up so that modules are produced.  Then you can structure the number of parallel lines in modules to insure a steady flow through the entire factory.  In other words, if a series of steps take 2 minutes each, it will have 4 times as many lines in parallel as another sequence which has 30-second steps.

    2. There’s no way any line runs at 3 minutes per step, unless there are 5-15 phones in a batch. 15 is too many.  Even 5 is too many.  I don’t think there’s any actual assembly step which takes more than 30 seconds, and if many take that long, there’s poor setup.  A screen polisher can polish the screen in a few seconds – and that’s one of the steps.  Deburring 6 cases/minute is 10 seconds each; that’s plenty of time – 1 second each side, inside and out, is 8 seconds, and that’s a liberal allowance.  If she can’t do that, she doesn’t have the right tool.  I’d guess she does more like 8/minute, given that there’s also lunch and breaks.

    3. There’s no way it take hours of labor to build an iPhone, even by hand.  I would be surprised if it took as much as an hour, and that would require a fair amount of inefficiency on the line.  Remember, they’re putting out 4-500,000/day.  With 141 touches, the touches have to be minimal – seconds count.  And just take a look at the parts – there aren’t that many.  We don’t know which subassemblies are ordered and which are built, but even if we assume most are built at Foxconn, it has to be faster than you’re assuming.  I’ve built desktop computers, on a pilot line (from scratch, i.e. including prepping components, stuffing and soldering the boards) in less than 2 hours actual labor (not counting final testing).  And the iPhone is designed from scratch for high-volume assembly.

    4. Burn-in is not typically testing; it’s actual burn-in.  If you look at the profile of failures, there’s a high rate of initial failures which drops off steadily; burn-in is operation under load, the intent of which is to filter out the initial failures.  The conditions are typically adjusted to stress the components, and the burn-in length is carefully calculated to optimize the dwell time vs. the percentage of failures detected.  You also want to burn in at the earliest possible step – e.g. the components will be burned in at manufacture; the boards will be burned in separately.  The goal is to minimize the amount of labor thrown away with the failed assembly.  You may do a go/no-go test, then burn in the component assembly, then test.  That’s why they couldn’t give a single time; the “burn-in” is probably several different steps, done at different points during the assembly.

    I wouldn’t be surprised at $8 labor *loaded* – i.e. with overhead applied.  No idea what Foxconn uses, but when I was in manufacturing, a larger organization would typically use around 250%.  $8/3.5 arrives at $2.29 total labor; 1 hour with a mixed wage level; I’d believe that.