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iPhones Produced in China Smuggled Right Back in
Ponca City, We Love You writes "Factories in China produce iPhones that are exported to the United States and Europe and then smuggled right back in helping explain why Apple says it sold about 3.7 million iPhones last year while only 2.3 million are actually registered in the United States and Europe. For Apple, the booming overseas market for iPhones is a sign of its marketing prowess but also a blow to Apple's business model, costing the company as much as $1 billion over the next three years, according to some analysts. Since negotiations between Apple and China Mobile, the world's biggest mobile-phone service operator with more than 350 million subscribers, broke down last month, the official release of the iPhone in China has been stalled producing a thriving gray market. Copycat models are another possible threat to Apple in China. Not long after the iPhone was released, research and development teams in China were taking it apart, trying to copy or steal the design and software for use in iPhone knockoffs, or iClones and some people who have used the clones say they are sophisticated and have many functions that mimic the iPhone. "A lot of people here want to get an iPhone," says Shanghai lawyer Conlyn Chan."
People in China are going to satisfy their demand for iphones one way or another. Not to bother with the ethics of the situation, but much like any other type of piracy, this is just a market at work. We truly live in a global economy now. Regional releases and other such nonsense just don't make sense any more. If you release a product with global demand, make sure you can supply it globally or it will be pirated, smuggled, etc. If Apple cares at all about the Chinese market, then they need to ink a deal fast, because someone will supply iphones in their stead if they don't get something done.
I got a catholic block.
Can't say I'm all that surprised about the phones being used in China or the copycats. I guess with one of the world's largest markets, there's going to be a healthy "grey" market too.
-mrxak
Onions Will Kill You
Basically this "funny math" is saying: "We get $X from phone sale, plus $Y from the carrier deal. We expect to sell 1M phones, which means (X+Y)*1M $. We noticed that we actually sold 2M phones! Yay! But then we noticed that only half of those phones actually signed up for plans."
So they now claim that they have lost Y*1M $ because people didn't sign up.... umm... no. You made an additional X*1M $. That is not a loss. That is a profit.
"Costing" indeed.
Doesn't really matter where you build it, people can get something and reverse engineer it no matter what. It's really more of an issue of market forces meeting demand where there is no legal supply.
-mrxak
Onions Will Kill You
Sure, and with China's well documented tendencies towards theft of intellectual property, no one should be surprised.
What we should be doing here in the US, though, is everything we can to discourage use of Chinese products. There's no need to give China all our wealth and in the process create a powerful competitor. Problem is, we're already there...now it's time for damage control. The one good thing about a weak dollar policy is it will help.
Good thing we have a big crop of American scientists and engineers to compete into the future! Oh, wait...
Galileo: "The Earth revolves around the Sun!"
Score: -1 100% Flamebait
Sure, and with China's well documented tendencies towards theft of intellectual property, no one should be surprised.
Going with the Slashdot meme here, it's not theft because they haven't taken it away from you - you *still* have your IP.
But then I guess that it's only when $BIGFACELESSCORPORATION is complaining about you downloading their products in violation of US copyright law that such semantics come into play.
When another country is getting competitive against the US they *must* be *stealing* your ideas!
Gah, I hate that terminology. Making a business model around a certain fee structure, and then failing to get people to play along with your business model, is not a cost. It's just like those piracy reports where they say they LOST a billion dollars because people who were never going to buy the product ended up not buying the product. Apple may fail to meet projections. Apple may wish more people would fork money over to their exclusive business partners. Apple may have had their heart set on a shiney new building or parking lot or bonus for Steve, but not being able to meet those expectations isn't a loss or a cost. It's a failure.
[
Vide the Apple I, ][, ///, ...
It's post-Mac that Apple culture became locked-down.
It's better to be the foot on the boot than the face on the pavement. ~~ tkx Kadin2048
Perhaps, but you don't hear people whining about cheap westrn-European knockoffs, or mid-western-American knockoffs much.
That is the name we give here to fraudulently making the consumer think the product is cheaper (or has a greater value) than it's being paid. One example is making a package that has 180g of cookies (and sell it for, say, $1.90) at the same size of the package that has 200g ($2.00). The consumer is tricked to buy the "cheaper" package because (s)he evaluates only the general size of the packages and the price, without seeing that the other one is actually 5% cheaper.
That is what Apple is doing with the iPhone: dummies buy the iPhone, activate it with AT&T and spend $800 in a product that Apple advertises as costing $400.
It's better to be the foot on the boot than the face on the pavement. ~~ tkx Kadin2048
An easy way to summarize that:
Apple (might) have $1b unrealized gains.
Apple didn't have $1b in losses.
(If I buy a lotto ticket for a $1M pot, I don't suddenly have $1M in losses when I don't win, I have $1M in unrealized gains.)
If I have nothing to hide, don't search me
The Chinese make cheap goods:
1) People like to buy cheap goods
There, fixed that for you.
Capitalism/The Market is to blame. People want to buy commodity goods (virtually everything these days) as cheaply as possible.
The problem is they are commited to a minimum product velocity with or without subscriptions. Stocks will tank even more if they sit on a bunch of old hardware. Owners of Frys Electronics used to say "Treat everything like tomatoes, when its fresh and new everyone wants it, few days later you have to mark down to move it, later still you can sell it for pennies on the dollar for ketchup, after that it has no value". In manufacturing and in retail - the Inventory has to move. Ideally Apple would want it sold with subscriptions, but realistically they will settle for moving units which will still maintain their BRANDING. Apple would rather have their units out there even without ATT kickback. As far as their stock goes, I remember it being in the ten buck range, I think they are doing alright these days... Its called cost averaging.
China has, in the past, reverse engineered entire automobilies, built them cheaply, then sold those as OEM. This is a huge problem because we all know most knock-offs don't have the same quality standard as the origional. But at the same time they make true OEM auto makers jump through hoops in order to just get their server parts into the country (I've been dealing with this for the past two years).
China's trade practices are unfair and their government encourages deceit. It is IP theft.
And I don't even work for a US based company... so it's not US vs China.. it's China vs the Industrialized world.
"Action without philosophy is a lethal weapon; philosophy without action is worthless."
Your whole post is simple minded but this takes the cake. You think a country with a population of over 1 billion people that is joining the ranks of developed nations can be forced by an embargo to change their ways? You do realize just how many American dollars they own right?
In your ideal view of the world the only things we get from China is the cheap crap we don't need, and if we could just stop being addicted to cheap crap things would go right back to being pleasantville. Keep thinking that while sitting on a chair made out of chinese parts, wearing clothes made by chinese companies, typing on a computer manufactured in china. Do you really want the job of making these things? Wouldn't you much rather get an education and sit around and post on slashdot all day?
It looks like there will be more and more China bashing coming up, and it makes sense. It is easier to see the world as black and white, us vs. them. It is easy to disregard how complex a 1 billion person social system must be that has underwent revolution after revolution in the last hundred years. It is easy to proclaim that American's are the only ones that can properly carry out capitalism, when the Chinese have only been at it for 20 years.
and trust me, I don't like Clinton or her ol' boys network, but you don't know anything about business if you think cutting off one of the largest growing markets is a good idea.
"how can they call it a MINE if everything here is THEIRS?!?!" -Straight Jacket
The only difference between Steve Jobs and another other CEO is that Steve wears black turtlenecks. That's the *ONLY* difference.
I bought my wife an iphone for Valentines day. While I was checking out, 2 Chinese guys were in there trying to buy 10 each and not give ID's.
It was fairly hilarious as this was the new york store, and the particular clerk that was helping them was a first
rate asshole that was seconds away from saying "no phone for you!" to them. They finally ended up buying 5 each
after a long dressing down by the clerk.
I tried to activate the phone with my dubious credit and AT&T wanted a $500 deposit plus $136 just to get in the door.
Instead of choosing the deposit or "pay-through-the-neck-as-you-go" plan, I laughed at them and said I was unlocking it.
1 Hour later, I was unlocked, jailbroken, and all hooked up with T-Mobile, who gave me some very generous loyalty incentives to stay with them.
My wife is very happy with the phone, and I am contract free still muahahahahaha......
I'm not mad at AT&T but they really suck. Why require a deposit for something you can just turn off if a bill is not paid?
music lover since 1969
Okay, while I think your post is an outright troll I'll respond because I occasionally think you have something insightful to say. I would ask for some references for your statement that iPhones have reduced quality when calling any other phone, or that they can be hacked with just whistled tones.
As for your assertion that the software isn't as good as Ubuntu, I'll say when Ubuntu works out of the box with my hardware I'll agree with you. Until then, I'll keep considering OS X a better solution. No it's not a fair comparison, since Ubuntu can't control all the hardware, but fact is OS X simply works and is generally more simple and intuitive.
Does that mean the iPhone is a good solution? I don't happen to think so, but I have no reason to think an open source solution will be any better. Despite your beliefs there are definitely reasons for closing your source just as there are reasons to open it.
"Growing old is inevitable; growing up is optional."
Perhaps, but you don't hear people whining about cheap westrn-European knockoffs, or mid-western-American knockoffs much.
Mainly because not much in those regions is cheap, and trademark & copyright laws are enforced against commercial entities that would try to make those knockoffs. China, Taiwan and such may have laws but the enforcement is quite lax.
Once again, no one on /. understands what opportunity cost is. The parent is absolutely right and the grand parent has no accounting background.
Opportunity cost, in short, is the cost of NOT doing business. This means that Apple could be making $X IF every iPhone is registered by AT&T or any other cooperating carrier outside the US. This is not just fake number. This number is important for many reasons. Mainly, if we do X instead of Y, what revenue would Y have brought in, and is that more or less than if we do X. Or in more real world terms, should we use our extra profit on employee bonuses, or should we expand the company? If we were to expand the company, what is our potential revenue? If we instead go the bonuses route, then the potential revenue from expansion, is the opportunity cost. This helps you decide which route to take.
It is also important in industrial insurance policies. If a hurricane hits a factory in Puerto Rico, there is the physical loss (property damage, lost inventory, rebuilding) and then there is the opportunity cost of not being able to produce more of the product while rebuilding taking place. Instead of making X widgets, we can only make X-Y widgets, which means less revenue. This is factored into the insurance payout in the event of a such an occurance.
Similarly, Apple has produced 1.4 million iPhones that will not be registered(thus preventing the registration revenue). It was Apples intent to have these phones registered, yet smugglers and un-lockers have stopped this from happening. The expected revenue may even have already been earmarked for something else (i.e. paying off a loan, extra R&D money, etc.) This is a loss and this loss is costing Apple money
"It's not whether you win or lose, it's how drunk you get." -- H. J. Simpson
You seem to be arguing that intellectual property 'isn't, as in 'isn't property'. That would so cleverly explain why this thing, which 'isn't property', is so coveted as to be copied and produced.
Non sequitor.
Many thinks which aren't property are coveted; thy neighbours wife and thy neighbours ass, among others.
I'm not a great believer in property even in physical things, but so-called 'intellectual property' isn't even property in legal theory. It's a disparate set of short term grants of monopoly given by the power of big government, and given because they have in the past been believed to have overall economic benefit for the community. Whether they do or not, the people who defend 'intellectual property' are usually the same people as the people who decry big government, and government intervention in markets, and that sort of thing.
Shocking lack of intellectual rigour.
I'm old enough to remember when discussions on Slashdot were well informed.