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Behind Apple's Sapphire Screen Debacle

Posted by timothy on from the creative-managment dept.

Frankie70 (803801) writes Apple invested more than $1 billion in an effort to make sapphire one of iPhone 6's selling point. But the iPhone 6 was released without the sapphire screen. GT Advanced Technologies, the small company chosen to supply Apple with enormous quantities of cheap sapphire, declared bankruptcy a month later. Recent documents from GT's bankruptcy proceedings, and conversations with people familiar with operations at Apple and GT, provide several clues as to what went wrong. GT said that to save costs, Apple decided not to install backup power supplies, and multiple outages ruined whole batches of sapphire. The terms Apple negotiated committed GT to supplying a huge amount of sapphire, but put Apple under no obligation to buy it. In its bankruptcy documents, GT would later accuse Apple of using "bait-and-switch" tactics, and said the terms of the deal were "onerous and massively one-sided."

9 of 189 comments (clear)

  1. Than don't sign the contract by ssufficool · · Score: 5, Insightful

    In other news: A company so desperate to get into bed with Apple signs away their soul for rainbows and promises.

    1. Re:Than don't sign the contract by Cesare+Ferrari · · Score: 5, Insightful

      Indeed, sounds like a very one sided description of what went wrong. On the one hand, they say they are experts in doing something that other people couldn't, but then say it's apple's fault that their technology didn't work. Hmm, something wrong with this explanation.

    2. Re:Than don't sign the contract by Anonymous Coward · · Score: 4, Insightful

      Happens all the time. IBM, then Microsoft, became famous for it. Message to small companies: you are always better off going without the business rather than taking a bad piece of business.

    3. Re:Than don't sign the contract by Anonymous Coward · · Score: 5, Insightful

      it's a classic case of "customer knows better" and they have all the money so you have to do what they say.

      GT is too excited to get into business with Apple. Apple is so excited about their super secret sapphire plant they won't let the people they PAID do the job they're PAID to do.

      I've seen this at smaller companies all the time. Automakers are also famous for it. They sign up mom-n-pop shops and basically take them over till they run out of business... in the auto industry it's practically a revolving door of these type of deals.

  2. Its just Apple being Apple by melting_clock · · Score: 4, Insightful

    Maybe suppliers will now reconsider getting involved with Apple. Large companies with extreme market power will often bully their suppliers. It is common for large customers to make demands for price reductions below the contract price, with threats to dump the supplier if they refuse. Having a single customer that makes up most of your sales is a significant risk to any business and something that has to be carefully managed.

  3. Re: haven't been following... by Anonymous Coward · · Score: 4, Insightful

    It's aluminum oxide. Basically impossible to accidently scratch. Can be made very Crack resistant if made correctly.

  4. Yes, go ahead...Blame Apple by bogaboga · · Score: 4, Insightful

    In its bankruptcy documents, GT would later accuse Apple of using "bait-and-switch" tactics, and said the terms of the deal were "onerous and massively one-sided." (Emphasis mine...)

    And Apple gets blamed for this shortcoming? Why did GT sign on the god damned dotted line?

  5. Can see how this happened by russotto · · Score: 5, Insightful

    The salespeople saw money. The business people, who would normally assess risk, got blinded by the prospect of making huge amounts of money. The engineers who could see disaster coming were not consulted or ignored.

  6. Hardball negotiations not an effective strategy by IcyHando'Death · · Score: 4, Insightful

    Not much sympathy for either party from me, as I'm sure both companies understood the nature of the contract. I wonder, though, how much it has cost Apple in sales and good will to be putting out a product without the top-of-the-line screen. Probably a lot more than they were trying to squeeze out of this deal with their ruthless negotiating tactics. This is the sort of thing Stephen Covey (7 Habits of Highly Effective People) was going on about when he advocated seeking out the win-win deal. If your partners don't prosper, it will always come back to hurt you.