A new research report by analyst Ming-Chi Kuo (via MacRumors) indicates that Apple will mix suppliers with respect to the AirPods Pro, the new generation Apple Watch and the iPod Touch. While this may not seem like important news at first glance, it highlights Apple’s continued efforts to increase supply, streamline operations and increase profitability wherever possible.
Specifically, Kuo notes that Luxhsare will now be the sole supplier of the S-series chips within the Apple Watch. Meanwhile, Apple called on Goertek, based in China, to help manage production of AirPods Pro. As a result, Apple will soon have two suppliers of AirPods Pro, which should ultimately help the company meet the continuing staggering demand for its next generation wireless headphones.
Recall that the supply of AirPods Pro was a bit thin during the last holiday season, some analysts noting that Apple was still struggling to keep up with demand. In addition, general interest in all AirPods models has exploded in recent months. At this point, a report from a few weeks ago indicated that cumulative deliveries of Apple AirPods in 2019 were poised to double the number of Apple deliveries in 2018.
While Apple moving or adding suppliers is seemingly trivial, it underlines the operational side of Apple’s business. Indeed, much of Apple’s financial success over the past two decades can be attributed to the company’s operating strategy.
Taking a quick look back, when Tim Cook first joined Apple as Executive Vice President of Global Operations in 1998, the financial impact was significant and easily apparent. Cook immediately streamlined the company’s supply chain and drastically reduced inventory.
You may also remember that Cook, in the mid-2000s, had the foresight to pay billions of dollars in advance to guarantee favorable prices for flash memory. Not only did it ultimately help Apple increase its margins, but it also helped Apple meet demand for the iPod.
Finally, here’s an interesting treat that might surprise you: Apple’s wearable sector now generates more revenue than the iPod when it was at its peak.
