Companies in Apple’s repair program say they can’t compete with tech giant
theguardian.com
theguardian.com
Heck, these companies could even simply use Amazon for handling the logistics of it.
Some companies like Bosch Home Appliances actually sell spare parts in their own online store at very reasonable prices - so it is doable.
Why stop there? Maybe force tech companies to sell their products and services at cost + 20% markup. /sarcasm
1. What happens if the company has too many spare parts and wants to sell at 0% markup? Can they do that?
2. What happens if the spare parts factory burns down in an accident? Is the company legally obligated to rebuild the factory? What are the terms for how fast must the company rebuild the factory? Does the company need a backup factory to produce spare parts?
3. How long should the company be obligated to provide spare parts? Should this duration be applied to all electronics?
Same with cars and other devices... with a car, you can get in a minor crash and even without labour, you can get up to a new car price in parts very fast.
it implies no such thing
Free market it does not even imply that the concept of intellectual property exists at all.
This means a company like Apple does not have to provide access to its proprietary M2 SoC to anyone who asks. That makes no business sense. What's the point of investing billions to design and mass manufacture SoCs if "free market" says you must give it away?
This also means that a disgrunted employee that knows how to build M2 SOC can leave and starts their own production. But currently goverment would send armed goons with guns, at taxpayer expense.
And US government seizes my private property, if I post to myself earbuds from China that look too much luke airpods under the pretence of 'Counterfeit goods'.
You are advocating hypocracy, free market for me but not for thee.
I am all onboard for the real free market, where government does not interfere to protect Apple at my expense.
Unbundling is a heavily pro-consumer move and enlightened governments are pushing towards forcing companies to do it (and penalising companies for bundling, though there's far less of that in the last 20 years than there ought to be).
Unless they wanted to enter the B2B market they would have no incentives to develop their own chips whatsoever and would just use whatever ARM/Qualcomm/Samsung/Intel have to offer.
> forcing companies to do it (and penalising companies for bundling
As long as they understand that this might have negative effects on innovation. Why invest significant resources into developing something new if there is a cap on how much you can benefit from that?
Why would GNU C exist if Stallman was forced to share it with everyone?
Yes, it's not the same, but regardless it shows the invalidity of your question.
Sometimes companies do stuff for the greater good of advancing technology. See all the AI stuff that Google is giving away.
I'm sorry but I really don't see how...
> See all the AI stuff that Google is giving away
I assume they were doing that because they could not monetize it directly yet and believed that by making their research publicly available they would accelerate overall development and benefit more long-term from that than if they kept it secret. Additionally that also increases their public standing, allows them to attract high level talent and deprives funding from any of your potential competitors since they have not yet monopolized any highly profitable markers and simply can't afford to compete with you. Which is great, when it can work like that's how it should work when it can.
Apple (and similar companies have) no such incentives. Apple developed their own processors to differentiate their products and to increase their sales while maintaining high margins. If they had to share their designs with everyone else why would they do that? Makes no sense. You just take whatever is available off the shelf (Intel or ARM etc.) and focus on differentiating your product some other way.
Other companies with very different business model might be able to design just as good chips or better chips, who knows if all chip designs were completely free.. It certainly would not make much sense for a company like Apple to invest into that as much as they did.
I think overall it's pretty simple, even if we assume that most companies/people want to 'do stuff for the greater good of advancing technology' (which is really not that case for every Stallman you have dozens of Larry Ellison's..). How would you fund that? It works great for certain types of software because using/contributing to OSS allows companies to decrease their costs since core components of the OS/databases/browser engines/web server/frameworks/etc. are not the things they would use to differentiate their end product. And that's great because they are able to pool resources together and come up with something much better than they would on their own. But that only works if your core product remains proprietary, if you can make money from offering additional services like consulting/customization/support or by adding an additional layers on top which provide end value to consumers (.e.g. Android, Chrome etc.).
What if your core business model is developing and selling a proprietary general purpose server/workstation operating system and you don't have a massive moat like MS (and well that's has been their business model for years anyways..)? Well tough luck.. you went bankrupt decades ago..
How would this work for companies that make CPUs/GPUs/any other high-end chips (or to be fair any hardware in general)? What incentives would they have to develop anything new if they can't keep your designs proprietary? Do stuff for the greater good of advancing technology?
Well sure why not.. With what money though? Since the market is more or less perfectly competitive everyone's margins are effectively zero. It only makes sense to invest into things which lower costs/increase productivity for your factory/distribution. How exactly could any R&D investment payoff? You want to make you chips faster/more efficient, well sure you can invest 1-5% of your total revenue into that at the cost of making your company total unattractive for investors since you'd not be making any money by doing that.
IMHO if we want to live in a world without IP communism (or something close to it) is our only real option. But we all know how that works out when it's enforced top to bottom....
Just add a few lines to the regulations about schematics, individual spare parts to component levels, no blocking sales by manufacturers, and we're a step closer to a greener world.
The USB-C regulation should also include user-replacable batteries (or at least something that doesn't need additional parts (eg. glue) to reassemble, since the battery is guaranteed to fail with time, even if the rest of the phone survives.
What?
Oh wait, we've been doing that already for a few decades already.
And well unfortunately the general trend is the less open and more proprietary their products are they more money they make from it (or the higher is their share price) and the more money they have to (potentially) invest into future R&D. ARM which is the most open successful company in the sector is almost literally working for peanuts (relatively to their overall impact) compared to Nvidia, AMD, Qualcomm or Intel.
I'm not sure how would you solve that?
I mean if Apple invested X into designing M1/2 because they expected that they'd earn Y from that. However it turns out they have to make this design available to everyone (well maybe not for free but for a royalty comparable to what ARM gets) erasing their competitive advantage and as a result can only make 0.2Y at most? What would they do? Would they still invest X? 0.5X? 0.1*X? Not design a new chip at all and spend their money on something else? Maybe they wouldn't even have any money to spend in the first place because they wouldn't have been able to maintained massive margins by keeping their Software and HW designs proprietary over the years?
Why do price controls never work? The paragraph behind the sentence doesn't talk about it or i'm struggling to understand the relationship.
Forty Centuries of Wage and Price Controls: How Not to Fight Inflation [0] tracks the history of wage & price controls from Hammurabi's Babylon, Diocletian's Rome, Ancient Egypt, and down to modern-day examples. The book has dozens (if I remember correctly) of examples of price controls never working, explained carefully in detail.
It's an extremely interesting and carefully argued book with a lot of objective evidence.
My comment isn't directly related to the Apple situation but to the failed history of price controls.
[0]: https://cdn.mises.org/Forty%20Centuries%20of%20Wage%20and%20... (PDF)
So then one of two things happens. If you can transact around the price control, that happens. So Apple signs a contract with Foxconn to pay them a billion dollars and give them a pile of industrial waste in exchange for a pile of new parts. The industrial waste has negative value and Apple wants to get rid of it, but they claim it was worth another billion dollars, so now their "cost" for parts is three times as high because they're de facto including the cost of paying Foxconn to dispose of some industrial waste and then claiming the benefit as a cost.
If you try to prohibit that, first of all it hardly ever works because transfer pricing is a pickle, but to the extent that it does, you now have perverse incentives and inefficiencies. Apple used to get away with charging $100 even though their cost is $10, but now that means they can only charge $12 and make $2 since that's 20% of their cost. Unless they can raise their cost by overpaying vendors for equipment or hiring a bunch of people to dig holes and fill them back in. If they pay $10 for that then their cost is $20 and they can charge $24 and make $4. Making $4 is better than $2. But the customer will pay up to $100 if they have to, and if Apple raises their cost to $80+ then they can still charge $100 and make almost $20. "Cost plus" is a massive incentive to be inefficient.
So now you want to pick an amount instead of a percentage. But now if you guess to low you get shortages, and even if the price you set is alright today, it might not be tomorrow.
Limiting price movements almost never places it such that the price is where the supply and demand curves meet, especially since supply and demand are constantly changing. It is simply statistically impossible to guess where they will be in the future.
Therefore, limiting prices will always result in undersupply/oversupply or excess demand / lack of demand.
The robust way to influence prices is to change supply and demand itself, and use the price movements as a signal of what you need to do (increase/decrease supply, and/or increase/decrease demand).
You're assuming that the market is perfectly competitive which is almost never even close to being the case outside of some commodities.
There might be enough surplus so that the effect of price controls on supply would be minimal
>There might be enough surplus so that the effect of price controls on supply would be minimal
"Might" being the operative word. Other things that might happen is sustainable businesses get driven out of business, misallocation of resources due to erroneous price signals hampering future investment in that field, etc.
The error free solution to achieving lower prices is to increase supply and decrease demand, which are many times politically unachievable due to them requiring sacrifices (higher taxes, lower consumption, etc).
But in this case the lack of supply is due to a lack of competition, as a result of vertical integration.
Suppose you want a logic board for your PC. Well, it's not a secret what goes in it. It's got a circuit board, a processor socket, some memory slots, a network port, etc. If you have an Asus board and it goes bad or you need one with more memory slots, you can go buy another one from Asus, or you can get one from Gigabyte or ASRock or Supermicro that can be mounted in the same chassis and use the same processor, memory and storage devices.
Phones don't have to be any different. Some may argue that they can't be modular because of size and weight considerations. That's not true, companies have made modular phones. The Fairphone weighs about the same as the iPhone Pro Max, and in fact the Fairphone is marginally lighter. Shiftphone weighs 19g less than the iPhone 11.
But no one can make a logic board for an iPhone, because it uses a CPU that Apple won't license to anyone else. Even if you could make a board that fits in an iPhone chassis and could source memory chips and a baseband modem and so on, you can't get the CPU. And then iOS is tied to that CPU. That's why you can't get a replacement iPhone logic board from Gigabyte or run iOS on a Fairphone. It's not because Gigabyte doesn't know how to solder chips to a logic board or make one in the right shape to fit in the chassis, and it's definitely not because they don't want to take your money.
Well technically.. but if we're talking about certain inelastic markets a minimal adjustment in supply can result in a significant increase in price (well it's the other way around to be fair).
Monopolies and oligopolies do and did exist. If the government can increase supply by finding ways to increase competition that's great. If that fails price controls are a less optimal solution, sure. But they can still work perfectly fine in some cases (as long as the producer is allowed to keep some surplus there is not financial reason to reduce supply). In non-temporary cases were it would be justifiable in my opinion:
"sustainable businesses get driven out of business, misallocation of resources due to erroneous price signals hampering future investment in that field, etc."
are not actual issues because none of that is happening anyway, the producer has no incentives to invest anything into future improvements all the funds get absorbed by it's shareholds or the administrative apparatus.
Or in some other cases it might make more sense for the government to do all that itself through targeted subsidies or concessions (.e.g. should consumers be charged fair market prices for public transport?)
I disagree, there is huge misallocation of resources. For example, medicine, housing, transportation, etc. And as you mention, the problem is monopoly and oligopoly, which is insufficient supply of sellers.
So society can choose to fund taxpayer funded R&D for medicine that is in the public domain, or technology, or use land value taxes to disincentivize large landlords, or landlords at all.
The point of my original claim though is that price should only be used as a signal of which way society needs supply and demand to go. Another way of saying which way society needs goods and resources to be allocated. Directly controlling price will always lead to corruption and inefficiencies.
So does allowing monopolies or oligopolies to abuse their position. I mean obviously price controls are not the perfect solution and should only be the last resort but I don't see how forcing a monopoly to share some it's surplus with consumers could have a negative outcome if the price cap is set at such a level that it would not affect actual supply.
> And as you mention, the problem is monopoly and oligopoly, which is insufficient supply of sellers.
In certain markets that's unavoidable. Should we have multiple competing power grids, train/metro tracks, water supply or sewage networks etc? Probably not since that would be very inefficient. In these situations the only reasonable option is price controls (without or without subsides) and I can't think of any other solution.
You still don't need price controls.
Suppose you have a subway system. The monopoly isn't on the cars; you could have multiple operators using the same tracks. The monopoly is on the tracks. Alright, so the tracks can be publicly owned.
They don't have to be publicly operated. They can work like this. Construction and maintaining the tracks is put out to competitive bidding. Competing train operators then bid for timeslots to use the tracks. If a line doesn't receive enough bids to pay for its maintenance, it gets shut down. If operators place bids for operating a new line (with e.g. a 10-year contract) that exceed the lowest bid received to construct it, it gets built.
The government isn't actually operating anything or setting any prices. All they do is retain ownership of the tracks and put out the provision of services to competitive bidding, so you don't need any price controls.
Yeah they can. I mean sometimes the model you're suggesting works out great. Sometime it doesen't.
> The government isn't actually operating anything or setting any prices
Which is not necessarily a good thing if your goal is to increase the numbers of passengers by making mass transports more attractive than other options instead of maximizing it's potential profits.
And there are other examples were pretty controls are clearly in the societies interest. Let's look at what happened with energy prices in Europe last summer. A spike in fossil fuel costs caused the price of electricity to go up by up to 10x. Producers using hydro, renewables, nuclear even coal had massive surpluses. I can't think of any reasons against price controls in situations such as that. As a result such markets (.e.g stationary PC market) tend to stagnate.
It felt crazy to scrap the machine for want of a part that couldn't cost more that £20 to sell me (and £5 to make?)
Amazon is well placed to provide distribution of these parts at reasonable rates. Maybe they can be forced into such in order to continue receiving government contracts. Assuming they wouldn't play nice.
Capture more externalities of energy usage into a products' price, and people will be less able to waste money on throwaway products, and hence businesses making long lasting, repairable products will win in the market.
Of course, the problem is, people want cheaper, throwaway products so they can consume more.
I believe part of the problem is that many people simply cannot afford to pay more. If we could target both problems at once I can see this working very well.
The solution I posted does consider low income people and would have an immediate benefit to everyone except the companies that have created the problem.
We could also tax all new goods, except parts. To bring the cost incentive back to reality. Perhaps multiplied on a climate impact rating that would also be tied to repairability. So the cheapest product would definitely be the longest lasting product, which would also be cheapest to repair.
Yes, you can. Give cash to everyone, and take it back via increased marginal income taxes rates (ideally an exponential tax rate function), aka wealth redistribution.
>The solution I posted does consider low income people and would have an immediate benefit to everyone except the companies that have created the problem.
The problem is in the logistics and crafting of the legislation, and then the court fights, and so on and so forth. We have seen this time and time again, and probably will, because legislation with tons of loopholes that makes people feel like they are sacrificing, but not really, is the only politically possible solution.
How long do parts have to be provided for? Which parts? What about parts that are dangerous? What is dangerous? Just goes on and on and on, and society ends up wasting even more resources.
They can deal with it if they don't want to use competing brands that are quite as good.
I am super happy that companies like Framework are getting some traction, and there's a fairly high likelihood that once my current Macbook breaks that my next laptop will be a Framework, but I also feel like Framework is still kind of a niche outlier; Apple seems to be the "test the limits of what customers will tolerate" company.
The headphone jack... Turns out people didn't care, or Sony phones would be a lot more popular than they are (I like them, I accept I'm not normal.)
Framework is a niche outlier, but Dell isn't and you can get service manuals and spares easily for all their business laptops. Maybe people just don't know that? (Don't touch the consumer lines, obviously - and I include XPS in that.)
I actually didn't know that business Dell laptops were easy to repair...I'll need to look into that.
That will just force Apple to integrate everything into one single part.
"In an attempt to increase reliability, we've soldered & epoxied everything into one seamless part, including the casing. Thanks to this monumentous effort, we've been able to guarantee that part replacements by 3rd party repair services will now always be successful."
If you still choose to buy their products despite this 'abuse' then you're indirectly saying that it's a net positive for you & that you don't mind.
- Normal Google Android, which is just spyware
- Android but without any GApps, which barely runs anything relevant
- Android with either MicroG / sandboxed Play Services, which AFAIK breaks Google's ToS and is at the mercy of them not breaking those
- GNU/Linux phones, which I can not in good conscience call primary daily-driver ready
- Dumb phones I guess?
Doesn't leave us with many options. At this point it's choosing the lesser of two evils.
Louis Rossmann mentioned this too, where he has to buy an apple powerbank, to remove one chip (charge controller?) to fix an iphone, and then throw away the rest of the powerbank, because the manufacturer is not allowed to sell him a chip worth a few cents.
Government intervention in markets is usually predicated on some kind of ‘market failure’ and I don’t see how that is the case here. There is plenty of competition in the phone market and if the option to have a phone repaired by third parties was really desired by consumers then someone would sell such a phone.
It seems more like Rossmann is angry there is not a product-market fit for his services. Something like that.
If the parts can only be sourced from Apple and are expensive, third party repairs are expensive too. My perfectly useable 2017 iPad Pro got a screen broken and the third party repair service quote was equivalent to a new 2023 iPad Air (around 400€!)
So effectively we are gradually abolishing private proterty.
But that's immaterial, because as the article mentions, you -are- able to repair it. There's just not enough of a market for third-party repair shops, when they're competing with Apple offering the same service.
Of course it'd be nice if repairs were cheaper, who wouldn't want that? But the cost of repair doesn't define whether something is your property or not.
depends where you put a border between a part and a device. If you treat PC as a whole, CPU is just a part. And frankly - CPU is useless by itself.
There is plenty of a market for repair services. Lots of people with skills and lots of customers with broken devices. What there isn't is access to parts necessary to do the repairs. When Apple is the only source, they add the full markup they charge to do the repair themselves to the price of the part itself, which prevents anyone else from offering a lower markup.
The answer to this is to have competing suppliers of the parts, but that doesn't happen when the system is purposely designed to be non-modular so an indivisible part can only be produced by a huge conglomerate and the parts that can be replaced are DRM locked to prevent even that level of competition.
Apple: "Uhh… we're actually eating most of cost by making rent from device sales and shipping parts through the same chain the phones go through so if you tried to buy them retail it wou... uhh guys?"
Furiously typing, "Apple is using their monopoly power to screw over local repair shops."
And how do you know it's true?
If I remember correctly, the Iphone 13 Pro costed an estimated $570 USD build, with a retail sale cost of $1,099 USD.
Of course, the same can probably(?) be said about the phones produced by competitors such as Samsung, with the Galaxy.
Point being, Apple has always marked their garbage up by anywhere from ~150% to 200% of the actual build price. There is no reason to trust Apple's pricing for spare parts. Especially when previously, these same repair stores went by the back door to get these parts directly from the factories in China.
Every step of the supply chain has costs; labour and raw materials for example. Then there are land costs, taxes, services (power, water, machinery, et.) and distribution. Then there is R&D to account for; software needs to be developed, for instance. Their actual markup is around the 30% mark.
I did some basic research again (last comment was on the toilet) and everything I am finding says that Apple's Iphone margins are sitting at around 40%.
Either way, I can't afford one if I can't replace parts at cost.
You can see their overall profit margin though, which they keep around 25%:
https://www.macrotrends.net/stocks/charts/AAPL/apple/profit-...