Comment by raganwald | Hacker News Reader

Comment by raganwald | Hacker News Reader

What I find interesting about Apple designing their own chips is the notion that the whole is greater than the sum of the parts. Apple's value proposition with Macintosh is that by owning the entire experience--hardware, OS, even distribution to the store--Apple can deliver an optimized product that is superior to products where company H makes the hardware, M makes the OS, and CC distributes the resulting PCs.

Designing chips is the logical extension to this model. The chips are designed with the end product in mind, and everything works together to deliver the product's value proposition.

Other manufacturers end up hostage to whatever chips Intel and AMD feel like selling to everyone. They are hostage to whatever OS features Google feels like adding to Android, whether I integrates with the chips or not.

It's not a given that Apple will necessarily succeed with this strategy, it requires an ability to juggle multiple balls at once, a very rare trait. There's a reason most businesses try to do just one thing well and commoditize everything else.

But it is certainly beautiful to watch them try to sail the opposite tack.

Many car manufacturers build and design the entire car themselves, internal and external parts included and sell them at one car brand dealerships and service them at dealerships. They might contract things like tires, audio speakers and stereo systems out, and occasional a part here and there, but by default they build everything else themselves.

Most car manufacturers do not. For instance, how many of them do their own ECUs? And large swaths of the American car industry have long been defined by outsourcing relationships. Remember Delphi?

I immediately thought of Delphi as well, but there are also numerous other counter-examples to the grandparent post. For example, I had a Plymouth in the 90's with an engine built in collaboration with Mitsubishi.

Of course that kind of thing happens. Honda had a V6 engine with mitsubishi in their accord too, but the typical behavior is to do most things in house, not all things all the time.

True. Being around Detroit you can see the entire industry that supports the "Big Three". There are companies that either supply or assist in the build of nearly every component of a car.

Indeed. Ever owned a European car? Heard of Bosch?

Ever owned a Japanese car? Heard of (Nippon-)Denso?

You would be astonished how many bits of a car is subcontracted. What the auto manufacturer typically focuses on is engine design (at the mechanical level), chassis design and suspension topology. Most things that "bolt on" are made by somebody else.

I just want to frame the discussion a bit by differentiating “purchasing” from “subcontracting.” If a company uses a part from a supplier, there’s a continuum from “We picked this part form the supplier’s existing catalog” through “We designed this part in partnership with the supplier, but they sell it to anyone” to “We designed this part and our supplier makes it exclusively for us and no-one else.”

Apple obviously subcontracts a lot of its manufacturing, and that is very similar to what most automobile companies do with parts: The parts are manufactured for them, but they are specific to that car and not sold to other manufacturers. OTOH, a tyre is a tyre is a trye in most cases, just as most of Intel’s chips are sold to anybody who is prepared to place an order.

I’m not making any specific point, just suggesting we be clear about what we mean when drawing comparisons between designing CPUs and outsourcing part or all of the manufacture of an automobile.

Apple used to have some parts that were standard, but with the direction they've taken the Macbook Air, I don't think it's got a single one left. Both the 2.5" hard drive and the optical drive are gone.

It's still made of standard components like the webcam and processor, but beyond some electronics it's all designed in-house. And the electronics may not stay standard on the low end, though I don't see them competing with Intel's chips in the Pro lineup.

And the RAM is soldered onto the motherboard now, without replaceable standard modules

They also contract out things like brakes, engines, spark plugs, and the whole electronic shebang (which is now the majority of the engineering effort). And basically all car companies now are conglomerates of several different brands, precisely so that Cadillac and Chevy don't have to build and design most of the car — and, more to the point, the production lines for it — themselves.

Actually they build their cars much like we developers build web sites around a web framework. There's very few base models of cars (most shared by several manufacturers) that get customized to look like a Saab, BMW or whatnot. The difference is mainly in looks and some parts, but the total solution is calculated once by joint projects between manufacturers, it not economical to build a car from scratch for just one manufacturer.

This was true at one point in time, in particular, with the Rogue River Ford plant, which was pretty amazing. Iron ore, raw material for making glass, and the like--all done there.

For good or bad, this is no longer how it works. Entire subassemblys are outsourced.

Hyundai are advertising that they have an ultra-modern (relatively) environmentally friendly steel plant in order to lower GHG emissions and control quality. An interesting play.

You mean River Rouge. It was an amazing plant.

You are correct: http://en.wikipedia.org/wiki/Ford_River_Rouge_Complex. It is on the Rouge River, which is what was in my memory.

I had a chance to visit it before they stopped the tours. The most impressive part was the plant where they took in a huge chunk of steel and heated it red hot, then repeatedly rolled it until it was thin, then rolled it up.

Ever heard of Bosch?... I bet they have tons of products in almost any car around, especially european. There's alot of subcontracting going on in the car industry also.

Tata still owns their own steel and aluminum plants.

This is interesting because when Jobs left the computer industry, a large part of his life there enjoyed little specialisation. I remember reading folklore.org where Steve was hanging around when Hertzfeld, Burrell Smith and the like wirewrapped their Mac prototypes.

Now, Jobs has brought even more technical capability in-house, figuring that he had never needed to have the technical knowhow himself, but what he needs is ability to manage people, and recruit the best and then give them the opportunity to do something beyond what they would have been capable of on their own.

The Sony strategy.

Reply on news.ycombinator.com