What it is: Apple recently acquired Maxim Integrated Products and its chip manufacturing facility in San Jose, California. What they plan to do with it remains a mystery.
One huge difference between Apple products and rival products is that rivals typically use off the shelf components. As a result, their products are little different from their competitor’s products. When you combine commodity hardware with a commodity operating system such s Windows or Android, you have a whole army of companies selling virtually identical products under their own brand names. When consumers can buy the same product from different manufacturers, the only compelling difference is the price. That means manufactures have to keep cutting expenses in a race to the bottom to sell products in volume.
Such a strategy means lower profit margins, inferior build quality, and weaker customer support. It’s no secret that Dell Computers outsourced their technical support to call centers in India to save money, despite the hassle of poorer customer service. When money is your own criteria, you have no choice but to maximize profits but cutting costs at every point of the product’s creation. That results in inferior materials, less reliable parts, and virtually no customer support afterwards.
That’s why Apple charges more, maintains as much control over both the hardware and software as possible, and optimizes their products to deliver the best user experience possible. While critics charge that Apple products cost too much, the trade off is that rival products may appear to save you money initially but costs you both time and money afterwards by delivering a poorer experience in using that product. Combine the wasted time and frustration using a product that doesn’t work without problems and you have to wonder if paying less initially is worth the price when you must pay for additional costs over the product’s lifetime.
While Apple uses off the shelf processors from Intel like everyone else to make computers, they use OS X on the macintosh to differentiate a Macintosh from a Windows PC. If you want to use a Macintosh, you have no choice but to buy a Macintosh. If you want to use a Windows PC, you can be perfectly happy with one from Acer, ASUS, Hewlett-Packard, or Dell. For those companies, they have less leverage to get and retain customers. If you’re happy using a Dell PC, you’ll likely have little trouble switching to a Toshiba PC because there’s little to differentiate a Dell PC from a Toshiba PC.
In the mobile market, Apple uses a custom version of the ARM processor used in practically every smartphone and tablet. By customizing and optimizing their processor for iOS, Apple can optimize both the hardware and software to provide the best possible customer experience. Even though the iPhone typically contains only 2GB of RAM compared to 8GB of RAM for many Android smartphones or tablets, the performance of an iPhone with 2GB of RAM is equal or often superior than an Android phone with 4 or 8GB of RAM.
Android manufacturers try to point out that 4 or 8GB of RAM must make their products better, but they don’t point out how Android devices aren’t optimized to use that extra hardware and often needs extra hardware simply to match the performance of better optimized iPhones and iPads.
That’s why Apple’s purchase of Maxim Integrated Products is so interesting because it shows that Apple will likely develop future chip products that will later be mass manufacturers by someone else. However, this means that Apple can continue optimizing their hardware and software to provide customers with the best possible user experience. In the meantime, rivals must keep p[iling on a laundry list of hardware specifications to keep up, and still fall short of the iPhone/iPad’s performance.
The bottom line is that greater hardware specifications don’t always translate into superior performance, and that custom parts will usually outperform off the shelf components every time or else there’s no reason to use a custom part. With Apple developing more of their own parts, they’ll not only have a compelling performance difference from rival products, but they’ll also have parts that rivals can’t purchase and use at the same time. Apple is striving to create the best components possible and keep them for their own products, locking out their rivals.
In the future, expect more Apple custom parts to appear beyond Apple’s own ARM processor used to power iPhones and iPads. The more Apple differentiates their products with higher quality components, the further rivals will continue falling behind in a losing battle.