xbox... WHY!

[Darkmage]

the latest Ipad for example would cost between $10 to $65 more if made in the U.S.A. depending on who you believe and frankly I was pleasantly surprised to hear that it would only be $65 more.

Cite?

[David]

the latest Ipad for example would cost between $10 to $65 more if made in the U.S.A. depending on who you believe and frankly I was pleasantly surprised to hear that it would only be $65 more.

Cite?

Closest I can find right now.

There is another article that I can't find right now that's more along the lines of what clone read. According to that article the real value of overseas labor is flexibility.

[Scrotos]

I hear ya loud and clear. I don't understand why a significant number of people in this thread decided to harp on you for that. It's not like your kid is "depraved" either. Like you said, you've got a Wii and PS3 in there and I haven't seen you write that your son was whining to play the 360 either.

It's because:

I don't let my son play the 4GB model he got as a gift.

Think of the children! All the other responses picking apart the entertainment setup are mainly just because of that. If he had left that line out of it, probably no one would have hassled him and most would sagely nod their heads at his wisdom and steadfastness to not compromise.

Hell, due to cost, heat, and reliability issues I waited until 45 nm revisions of both the PS3 and XBox before I took the plunge.

[clone]

Cite?

This American Life, rebuttal article to the Mike Daisy story.

There is another article that I can't find right now that's more along the lines of what clone read. According to that article the real value of overseas labor is flexibility.

I've read and heard that as well that it was China's willingness to be a part of the process, cheap labor had almost nothing to do with the decision to move overseas in Apples case, but what would have taken Apple 3 years on their own to do in the U.S. took 9 months because China was willing to become an active participant in finding the labor, building the city, constructing the roads, being loose on the environment just to get them to move to China.

when I think about the auto bailouts and how angry the U.S. population was with them I always feel saddened that a nation having drunken the cool aid so long can believe so firmly that they can win by living in a bubble as the rest of the world eagerly jumps in to take everything away from them by doing what they ideologically believe shouldn't be done.

you hear it on Fox constantly "government bad, taxes bad, let business do it on their own.".... and let the U.S. die is the part they don't mention in that litany.

[Darkmage]

This American Life, rebuttal article to the Mike Daisy story.

You mean this one? This American Life Pulls Mike Daisey's Story about Apple's Labor Abuses in China Because Daisey Played Fast and Loose With the Facts? If not, how about a link?

There is another article that I can't find right now that's more along the lines of what clone read. According to that article the real value of overseas labor is flexibility.

I've seen similar articles that essentially summarize to "No, we couldn't make the iPad even if we tried." Most of the reason cited is much like you describe: We no longer have the manufacturing capability for that specific segment of the market and we can't recreate that capability due to inflexibility. So you can understand why I question the figure of $65.

when I think about the auto bailouts and how angry the U.S. population was with them... [snip]

Dude. Stop now. Down that way lies the R&P forum and you don't want that.

Edited to add: I found the source of the $65. It's The New York Times who merely state

It is hard to estimate how much more it would cost to build iPhones in the United States. However, various academics and manufacturing analysts estimate that because labor is such a small part of technology manufacturing, paying American wages would add up to $65 to each iPhone’s expense. Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward.

So, two problems right off the bat: First, there's no link to this claim and "various academics" is about as solid as "that professor I know who works out at the gym I use." Second, that $65 is exclusively labor costs, and doesn't include permitting, infrastructure, environmental cleanup, regulation and the rest of the supply chain.

Third: According to Xbit labs, the iPad costs only $260 to manufacturer, so I highly doubt it's merely about $65 in cost.

[Glorious]

So you can understand why I question the figure of $65.

Heh. Well, since clone is openly claiming it was cheaper because the Chinese government subsidized it I think he undermined his own point.

After all, it'd only cost <handwave >, provided the government pays for the rest minus <handwave>.

[Captain Ned]

Really? A Gaming thread is running close to the R&P border?

Knock it off.

[kamikaziechameleon]

More anecdotes! I know eight people with 360s at least three years old, and the only one to break had a Jack and coke spilled on it.

I personally know dozens of people who have had the red ring... DOZENS, not one not two... so many I've lost count. Its like a right of passage at my lan parties everyone is on number 2 or 3. All my cousins, all my friends, all my parents friends kids, anyone in my classes back in school... it goes on and on. Yeah I guess that is anecdotal... When literally everyone in your life is on number 2 and you are pulling from over 30 people it does seem a bit anecdotal. And I'm a mobile person I'm talking my personal networks in several cities in different states.

[gerbilspy]

and the only one to break had a Jack and coke spilled on it.

That's how I want to go. Preferably with that Jack and coke spilling off a stripper's tits.

LMAO!

I had an almost identical thought when I read his post...

[Darkmage]

and the only one to break had a Jack and coke spilled on it.

That's how I want to go. Preferably with that Jack and coke spilling off a stripper's tits.

I had an almost identical thought when I read his post...

Really?

Personally, I want to die at the ripe age of 73... after being shot by a jealous husband.

[kamikaziechameleon]

I just sold mine - I had an Elite from when Forza 3 came out, they were 3 or 4 die shrinks in at that point.
I swear I do not lie when I say I only used that DVD tray 6 or 7 times and when I sold it the tray was stuck and I had to paperclip it.
Damn glad I tested it before giving it to the guy on ebay and glad it kept working after paperclipping

None the less, tray wouldn't open after being used 6 or 7 times,......................................... and the drive itself was barely used (I copied things to the HDD when MS allowed that)

ha ha ha, yeah I didn't even think about how my drive died in the first 6 months of ownership on my first 360, had to hit the open button and tap the front to get it budge then you pull it open all the way. Don't worry not covered in the extended warranty then there was my cousins power plug ripping out the back of his... don't know how that happened. My new box just crashes every hour or so... not red ring yet.

[kamikaziechameleon]

I don't like how my netflix account that I PAY FOR requires a payed live subscription to function on my xbox but is free on every other device ever created....

[gmskking]

I had my elite for 4 years. Very light use, took very good care of it. It still gave me the red lights eventually. All of you that have not have the red rings yet, just know that they are coming. Just because you have been lucky so far does not mean there is not an issue. You have been warned. I will not be buying the new Xbox either because of this issue. My PS2 still works great after all these years. Microsoft has no excuse.

[kamikaziechameleon]

It does seem I'm the black sheep of xbox gamers. Me and mine are cursed. This thread is just about the most bizzar experience I've ever had. Even on game forums people complain about the failure rates with many on #2 or 3. It seems the tech report community is blessed by either not playing theirs enough to burn them up or simply being gifted with lucky picks. I do have one proposal. most of my friends and the hardcore console gaming community at large are marathon gamers and the lot. The system will get 8 hrs of use at a time, heck one of our lan parties will go for 10 or more hours with kegs and the like keeping the energy going. I expect you guys might on average be... responsible adults that simply don't get as much use out of their systems. This is a PC forum after all I expect your PC's are your primary game systems as is mine. Only reason I game 360 is because of split screen lan parties but they are long hot marathons of blood sweat and tears.

[clone]

Third: According to Xbit labs, the iPad costs only $260 to manufacturer, so I highly doubt it's merely about $65 in cost.

an additional $10 to $65 on top of the $260 sounds more than reasonable.

Heh. Well, since clone is openly claiming it was cheaper because the Chinese government subsidized it I think he undermined his own point.

the problem is your claim of thought while your comment proves you're criticizing without any thought at all.... "heh".

http://www.nytimes.com/2012/01/22/busin ... wanted=all

The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

todays capitalism, when billions are in play ya gotta sweeten the pot.

First, there's no link to this claim and "various academics" is about as solid as

it's solid enough, did you listen to the episode or just noticed it's an episode? the ppl involved were analysts who do it for a living, like them or not they live eat and breathe it, manufacturing isn't voodoo to be assessed by old women over bones and chicken entrails and despite claims to the contrary the web while informative doesn't have links perfectly compiled awaiting every question.

consider the huge variance $10 - $65, I took the worst case scenario just to err on the side of caution because to claim a $10 difference would have had those who believe in voodoo economics wailing insanity and accusing of zealotry.

even your discovery that Ipad's total cost is $260 to build, now tack on another $10 to $65 in labor & environmental costs translating to a 25% cost increase per unit to build in NA which sounds about right vs the fabricated 500% which sounds ridiculous.

[Corrado]

What makes anyone think that the $65 added on to the cost to have Americans build the devices would have any higher quality than the ones built in China? Its not the manual labor thats bad. Its the actual components that fail.

The main boards aren't even hand assembled anyways. Theres never a problem with the actual assembly, its always in the automated PCB creation/etc. Arguing otherwise is just plain silly. So essentially, we'd be paying $65 MORE for the SAME THING. On top of that, theres no way that Americans would be as efficient and obedient as the Chinese line workers are.

[SPOOFE]

Even on game forums people complain about the failure rates with many on #2 or 3.

Maybe they exaggerate a skosh, hmmmm? Gamers Complain.

It seems the tech report community is blessed by either not playing theirs enough to burn them up or simply being gifted with lucky picks.

Or maybe, with a handful of exceptions, there's less wild pontification going on here, and more criticial thinking.

[clone]

What makes anyone think that the $65 added on to the cost to have Americans build the devices would have any higher quality than the ones built in China? Its not the manual labor thats bad. Its the actual components that fail.

sort of but "we the consumer" don't see how much product fails FTC let alone how much gets tossed right into the trash.

also Chinese workers earn $2.00 per hour according to a Nightline broadcast which makes manual labor viable but for the same job an American would require $14 - $20 per hour which would make automation viable for many aspects bringing with it a more consistent assembly process.... so one could argue that building NA would result in a higher quality product.

Even on game forums people complain about the failure rates with many on #2 or 3.

ppl go on the web to research problems, it's inevitable that ppl with the same problem would collect in one area, those who've had no issues aren't talking because they've no reason to do the research to find the source to compare problems they aren't having.

[Darkmage]

an additional $10 to $65 on top of the $260 sounds more than reasonable.

Agreed, which is why I'm saying that the reason they're not manufactured here is likely not a reduction in $65 of profit per device. Either the true cost difference isn't $65, or there are other factors.

todays capitalism, when billions are in play ya gotta sweeten the pot.

This kind of undermines your point, as Glorious points out. If the Chinese are subsidizing their industry to make it attractive to foreign companies, such as Apple, those massive expenditures are not represented in that $65 price difference. Imagine how much it would cost Apple to build that kind of capacity in the US. I would imagine it would work out to much more than $65 per iPad.

it's solid enough, did you listen to the episode or just noticed it's an episode?

Since you weren't in a linking mood, despite me asking you for one, I found the NYT article - not podcast - where the $65 figure surfaced. I even quoted the paragraph which only mentioned increased labor costs. The episode of TAL that I found doesn't mention the $65 in the text and forgive me if I express some doubt about how I'm supposed to listen to a podcast debunking a person who rails against Apple with the notion that somewhere in there is a nugget of where that $65 comes from. It's an episode already talking about liars and bad sources. Convince me. You can start by confirming that I had the right link.

If you've got a source that breaks out or at least summarizes all the factors that go into this $65 price difference, then by all means link to it and I'll go check it out. But I note that you have provided jack and squat in terms of sources for your claims so far. Dave, at least, provided a link. More on that later.

even your discovery that Ipad's total cost is $260 to build, now tack on another $10 to $65 in labor & environmental costs translating to a 25% cost increase per unit to build in NA which sounds about right vs the fabricated 500% which sounds ridiculous.

Hmm. Two points: First, I really doubt that $65 includes environmental costs and even if it did, that still leaves out permitting, taxes, unions, warehousing and the rest of the logistics chain. Second, I agree with you that the "500%" increase is unlikely. I bust your hump for no sources, but the 500% is even thinner.

Closest I can find right now.There is another article that I can't find right now that's more along the lines of what clone read.

I went into your link and followed the trail to the paper submitted by the ADB Institute. From the working paper:

An interesting hypothetical scenario is one where Apple had all iPhones assembled in the US. Assuming that the wages of US workers are ten times as high as those of their PRC counterparts and their productivity would be equal in 2009, if iPhones were assembled in the US the total assembly cost would rise to US$65 and total manufacturing cost would be pushed to approximately US$240. Selling iPhones assembled by US workers at US$500 per unit would still leave a 50% profit margin for Apple.

Thanks for the link, but nothing I've seen touches on the difficulties and costs in running a major manufacturing operation in the USA specifically as it relates to the iPad. I'm not too surprised, actually. I would expect such analysis to be done at the corporate level, expensive to research and probably an industrial secret. Nobody would know how much it costs better than Apple would.

In conclusion, it probably would cost much more per iPad to manufacture it domestically. How much more, I cannot say.

[clone]

Agreed, which is why I'm saying that the reason they're not manufactured here is likely not a reduction in $65 of profit per device. Either the true cost difference isn't $65, or there are other factors.

the factors have been stated, the NYT article covered the reasons.

This kind of undermines your point, as Glorious points out. If the Chinese are subsidizing their industry to make it attractive to foreign companies, such as Apple, those massive expenditures are not represented in that $65 price difference. Imagine how much it would cost Apple to build that kind of capacity in the US. I would imagine it would work out to much more than $65 per iPad.

this doesn't undermine my point at all.

1st off in NA the existing infrastructure was partially established for Apple to exploit prior to them moving to China.... they had the factory and the employees to get the ball rolling.

2ndly building the factory and establishing the infrastructure while requiring significant up front capital gets amortized, Apple has sold 55 million Ipads so far, they sold 17 million last quarter alone, now spread the cost of the factory into that and how long and how large a chunk will it represent.

for a sake of Barney and Friends math if the cost of the facility and infrastructure to produce Ipads was $2,000,000,000 spread across 55,000,000 Ipads already sold the cost would be $36 per unit and if Apple sells another 15,000,000 in the next 3 months which is likely a conservative number it'll drop to $28 and if another 15,000,000 which again is a conservative number given the dramatic rise in sales and marketshare it'll drop to $23 just over the course of 6 months.

3rdly I've made numerous points which is why it's annoying when 1 point is taken out of context to debunk another when the opposite is true when considered in context, I stated reasons why companies were so eager to move to China which was because China offered them everything up front to make the transition as hassle free as possible along with a cheap labor pool.... this is the essence of the NYT article which has little to do with the difference in manufacturing costs once the operation is up and running.

Convince me.

if your wife asks you a question to which you give an answer, how then is she qualified to dismiss your answer given she's readily admitted she hasn't a clue by asking you for the information in the first place?

Second, I agree with you that the "500%" increase is unlikely. I bust your hump for no sources, but the 500% is even thinner.

reasonable.

In conclusion, it probably would cost much more per iPad to manufacture it domestically. How much more, I cannot say.

I'm not sure many of the costs you mentioned apply, it's been shown that corporations in the U.S. are paying almost no taxes whether it be via income, facility or logistical.

additionally their was mention of union costs which to my knowledge their is no union at Apple.... it wouldn't matter anyway unions don't increase costs significantly although they can cause transitional and accountability issues.

you also mentioned logistical costs of producing in the U.S. while ignoring the benefits and the scale of the operation, some of fixed costs being the very same that get dramatically reduced by producing near your market.

p.s. also I mentioned it in a previous comment that if produced in the U.S. the manual labor cost would make automation more viable which would reduce the directly translated labor gap even further which is why a $65 difference at the very worst seems more than reasonable.

[Darkmage]

the factors have been stated, the NYT article covered the reasons.

Oh do tell. Show me where they list the factors.

1st off in NA the existing infrastructure was partially established for Apple to exploit prior to them moving to China.... they had the factory and the employees to get the ball rolling.

Can you expand on this? What was Apple's manufacturing capability before the introduction of the iPhone and when did they shut down their US manufacturing presence? The closest thing I can find is a factory they built in the 80s for $20 million that they shut down soon after.

for a sake of Barney and Friends math if the cost of the facility and infrastructure to produce Ipads was $2,000,000,000 spread across 55,000,000 Ipads already sold the cost would be $36 per unit and if Apple sells another 15,000,000 in the next 3 months which is likely a conservative number it'll drop to $28 and if another 15,000,000 which again is a conservative number given the dramatic rise in sales and marketshare it'll drop to $23 just over the course of 6 months.

You make a good point. I had forgotten just how many iPads have hit the market.

3rdly I've made numerous points which is why it's annoying when 1 point is taken out of context to debunk another when the opposite is true when considered in context, I stated reasons why companies were so eager to move to China which was because China offered them everything up front to make the transition as hassle free as possible along with a cheap labor pool.... this is the essence of the NYT article which has little to do with the difference in manufacturing costs once the operation is up and running.

Ah. So if I understand your argument correctly, the Chinese government's willingness to subsidize these transition costs are mostly for convenience's sake and at most add up to $65/iPad in manufacturing costs?

I'm not sure many of the costs you mentioned apply, it's been shown that corporations in the U.S. are paying almost no taxes whether it be via income, facility or logistical.

Oh, FFS. From an article in MacWorld, June 3rd, 2011:

In its fiscal year 2010, ending in September, Apple reported income of $18.5 billion and paid $2.7 billion in income taxes, or about 15 percent.

As I was surfing around, looking for these US Apple factories, I came across this article in Forbes entitled Why Apple Doesn't Build Products in the US. Alas, it's not as detailed as I would like. But it does mention a 20-30% loss of profitability from taxes alone, which translates into $48-81 per iPad. That doesn't include labor costs, so assuming that claim (I won't deign to call it an analysis) is roughly accurate, that puts us at $113 markup from taxes & labor combined. That's before we tackle the overhead of factory space, legal compliance, logistics, etc.

additionally their was mention of union costs which to my knowledge their is no union at Apple....

There's also no manufacturing at Apple. Let us not forget, the design engineers and middle management at GM aren't unionized either, yet nobody would claim that unions don't play a large part in GM's operation, or their operational expenses.

you also mentioned logistical costs of producing in the U.S. while ignoring the benefits and the scale of the operation, some of fixed costs being the very same that get dramatically reduced by producing near your market.

Most of the components in the iPad are produced in Taiwan, Korea and China. Some pieces are from the USA and I think one piece is from Germany. But the majority is local to Taiwan. It would appear there is more of a reduction in costs to be had by locating your manufacturing close to your suppliers than there is locating close to your consumers.

[killadark]

i guess i have been slightly luckier than the others here my launch 360 still works
the only problems being the tray getting stuck while opening and closing a light punch on the top fixes that i also get the occasional red ring but it goes away
quite surprised it still works after i dropped it 3 meters from the table (tripped over the wire ) while it was running my gta 4 game cd got scratched up but that was it.

[clone]

ughhh..... I had 80% of my post made then clicked on your MacWorld link and when I closed the tab away went my response with it, I'm doing a condensed version out of lack of interest.

Can you expand on this? What was Apple's manufacturing capability

it's not the lone facility that matters, it's the network that is in place that caters to that facility that matters but understand this is an offtopic footnote that gets amortized anyway and has little to do with manufacturing costs.

Ah. So if I understand your argument correctly, the Chinese government's willingness to subsidize these transition costs are mostly for convenience's sake and at most add up to $65/iPad in manufacturing costs?

no, the two aren't related for the reason mentioned above.

Oh, FFS. From an article in

the article is vapor, although it does superficially help my position a little because it highlights import taxes Apple has to pay for producing in China and then bringing the product to the U.S. vs manufacturing in the U.S.

But it does mention a 20-30% loss of profitability from taxes alone

negative, only if they repatriate the profit which Apple does not do, additionally as an example General Electric which does manufacture in the U.S. pays no taxes at all and got a $3,200,000,000 subsidy from the U.S. government.

http://www.dailymail.co.uk/news/article ... tives.html

That's before we tackle the overhead of factory space, legal compliance, logistics, etc.

factory space is typically an investment leveraged into profitability, the space is also usually tax free as regions compete for investment, legal compliance is vapor and logistics to deliver from a factory in the U.S. to the U.S. is far cheaper than starting in China and bringing it to the U.S.

yet nobody would claim that unions don't play a large part in GM's operation, or their operational expenses.

it was a police chief who once said when you hear someone screaming you should ask why they are screaming and not focus only on what they are saying.

since you mentioned GM I'll run with GM.

1st off I'm not going to waste time mentioning that the difference in price between all car makers brands in the U.S. of similar make, model and trim is less than $500 or that in many cases it's the domestics that are lower priced.

I'm also not going to bother mentioning that it costs $1100 per vehicle to load up on a boat to sail across the ocean to reach NA where it gets sold vs costing less than $1000 per vehicle in manual labor to build it in North America.

what I'll focus on is the labor costs, in right to work states it's $15+ benefits per hour not accounting for overtime, with fixed two tiered union wages it's $17 to $27+ benefits per hour not accounting for overtime with a 25% - 75% "voting" ratio while the labor ratio is fluctuating and allows for the lower tier to grow to any size making the average hourly wage around $22+ benefits not accounting for overtime for the sake of discussion.... but!!!!!

it takes around 16 man hours to build a car of any kind and that "hours number" factors in every single employee from the executives down to the janitor with less than half that being actual production hours because the execs cost more than the union membership so now you have $20 X 16 ='s $320 or you have $352 for union but wait!!!.... it gets much better because take for example the Chevy Cruze which can't meet demand, the plant is at it's capacity running 6 days a week with the line speed at it's maximum which knocks down manufacturing time and offsets all fixed costs, one of which being labor.

http://www.forbes.com/sites/frederickal ... e-as-much/

this is what happens, companies hate fixed costs of any kind like labor, unionized labor, taxes & material costs and strive to reduce them everyway possible.... they complain and lobby about taxes they don't pay and the exorbitant union wages they don't pay in an effort to minimize them as much as possible just like GE, GM and Apple do....... and any other multinational for that matter that is in a position to exploit the U.S. tax system that allows them to not pay taxes while complaining that they are paying way too much so that they can be subsidized whether it be the labor, the material or the taxes.

unfortunately the Harbour report is no longer being used to enthuse investors and the results aren't being published openly anymore so I can only provide old outdated 2008 results that don't reflect bankruptcy concessions that are in place today that have reduced the union CTB by 40%.
http://www.reuters.com/article/2008/06/ ... RN20080605

Most of the components in the iPad are produced in Taiwan, Korea and China. Some pieces are from the USA and I think one piece is from Germany. But the majority is local to Taiwan. It would appear there is more of a reduction in costs to be had by locating your manufacturing close to your suppliers than there is locating close to your consumers.

you are looking at the end result of a migration without seeing why it happened...... that said indeed I agree, the total difference is between $10 and $65 more if it was all to be moved and produced in the U.S.

given economy of scale and the negligible labor cost I suspect the more realistic number would be notably less than $65 but the U.S. isn't ready politically or culturally to allow their government to make large decisions like those that China did, they can't even approve an oil pipeline while paying $4.00+ per gallon for gas.

[Darkmage]

Dude, if you're just going to handwave away everything except labor, then sure I can see the difference in local vs overseas manufacturing being only $65. And next time, read the article more carefully before you close it and decide to flatly contradict what it says.

[clone]

I didn't "handwave" anything, if you want to see something that isn't there that is your choice, no offense but it's clear your assumptions are based on faith and not knowledge.

regardless too much time and energy wasted, cheers and good luck in future endeavors.

[kamikaziechameleon]

I want to thank the mac fans and haters for jacking this thread. Well done