Originally published at: https://tidbits.com/2020/01/31/tony-blevins-tim-cooks-cost-cutter/
As Apple watches its iPhone sales growth slow, the company has had to focus ever harder on keeping its parts costs low. In such situations, Tim Cook looks to one man: Vice President of Procurement Tony Blevins.
The inevitable result of success.
Once the market is saturated, there are only a few choices (and good companies should probably do all of them):
- Cut costs to maintain profits despite lowered sales. But this can’t be a long term solution, because competitors are going to end up matching your innovations and that last thing you want is a race to the bottom
- Develop some new “must have” feature that can convince existing customers to upgrade devices that are otherwise working great, and can convince users of competing products to switch
- Open new markets. But that is not going to be possible if you’re already selling in most of the world
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Once the market is saturated, there are only a few choices (and good companies should probably do all of them):
- Cut costs to maintain profits despite lowered sales. But this can’t be a long term solution, because competitors are going to end up matching your innovations and that last thing you want is a race to the bottom
One of the reasons why I like the article Josh linked to is that it proves why this is not necessarily true, especially when it comes to Apple. Blevins is clearly cutting costs without sacrificing quality, and most of the time, making major quality improvements while cutting costs and benefiting the bottom line. In addition to Qualcomm and other the excellent examples that are not discussed is the problems Apple was having with Intel’s chip development. Cook and Blevins solved it by rolling Apple’s own more advanced A chips.
- Develop some new “must have” feature that can convince existing customers to upgrade devices that are otherwise working great, and can convince users of competing products to switch
Though iPod was the ultimate coolest entertainment product when it was introduced, it wasn’t until iTunes and a PC version rolled out that it became what was then an unstoppable force of nature. Hasta la vista Walkman. But Steve Jobs was brilliant, creative and savvy enough to change the world with iPhone even though he knew it would result in a swift and painful death for iPod.
IIRC, Apple rolled its own face recognition technology from day one, causing Samsung, etc. to scramble to cobble licensed systems together that still don’t work as well as Apple’s.
- Open new markets. But that is not going to be possible if you’re already selling in most of the world
A company can expand within existing markets. Just one example is how Apple significantly grew their sales in the notoriously difficult Chinese market this past quarter by expanding their retail presence and services. But an even better example is Disney, who everyone thought was loosing his marbles when he began licensing Mickey Mouse watches, toys, dishes, books, etc. in the 1930s at the height of the Great Depression, and then developing theme parks and hotels and going into TV production after WWII. And in the late 1950s, Disney pioneered the first color TV series and specials, then expanding into live action movies and theater.
Like Disney, Steve Jobs, Tim Cook and Tony Blevins have been relentless cost cutters and supply side bargainers focused on technology, creativity and the bottom line.