Tuesday, August 02, 2011

I, Cringely » Blog Archive » Apple’s Money - Cringely on technology

An excerpt from some insightful analysis about what Apple is doing with its profits

And so Apple today uses its cash to buy parts in huge quantities.  Lately this has mainly meant buying flash RAM and iPhone displays in amounts that move whole markets and guarantee Apple the lowest prices anywhere.  This is important: in an era where interest rates on idling cash are averaging one percent, Apple is using its cash to get 15-20 percent discounts on parts. That’s exactly like earning a 15-20 percent interest rate.

Apple not only gets the lowest prices, they also get the most reliable supply. I won’t call it anti-trust, but I think it is fair to say Apple has an effective consumption-side monopoly for certain mobile components.

I, Cringely » Blog Archive » Apple’s Money - Cringely on technology

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