It’s not design, Apple tremendous competitive advantage comes from the exclusive supply chain they have

This is what Business Insider says about Apple. The information comes from an anonymous user on Quora.

It is really interesting what he/she says:

“When new component technologies (touchscreens, chips, LED displays) first come out, they are very expensive to produce, and building a factory that can produce them in mass quantities is even more expensive. Oftentimes, the upfront capital expenditure can be so huge and the margins are small enough (and shrink over time as the component is rapidly commoditized) that the companies who would build these factories cannot raise sufficient investment capital to cover the costs.

What Apple does is use its cash hoard to pay for the construction cost (or a significant fraction of it) of the factory in exchange for exclusive rights to the output production of the factory for a set period of time (maybe 6 - 36 months), and then for a discounted rate afterwards.“

The advantages of this strategy is Apple can have access to new components months or years before its rivals, and when competitors catch up Apple in this specific component, the company still have access to the same product at lower costs thanks to the agreements signed with producers.

Tech Market Research

Technova @ Silicon Valley