It's pretty much the same in software too. I often get requests for functionality and when I say "no, we can't do that", I get "Why not? Amazon does it".
Hrmm... Amazon has dozens of people working and supporting just that one feature. You're trying to engage me to do an entire project. On a fixed budget. With a fixed time frame. And you've changed your mind 3 times in the last 3 weeks on key points.
Of course, yes, there are amazing things you can do with software that weren't remotely feasible even just 5 years ago. But there's always a moving target - the market leaders (Apple, Google, Amazon, etc) are constantly pushing the boundaries of what's considered 'normal', and most people have 0 idea of the real cost and effort involved in having the functionality come across as polished and error free as the big boys.
On the other hand, doing even simple things at Amazon scale is WAY more difficult and time consuming than doing them at practically zero scale. There are plenty of examples of features that can be accomplished using quick and dirty methods that Amazon couldn't dream of using.
It's a shame someone down-voted you. I'm not sure if you were being rhetorical, but this question is easily answered because the answer is, quite simply, "just about anything".
Want to add anything new to the page? Well, at Amazon-scale, your little widget is going to have to go through some pretty intense design review and load testing, because at over 150 million page views per day, tiny time penalties can add up to significant capacity issues.
Amazon is also notorious for deep introspection of user behavior, so any little thing you want to add is going to have to go in to the big bin of factors that might influence a customer to "click the button" (or not). Data about your new feature will have to be integrated in to the models that are used to evaluate user behavior, or at a minimum, the group who handles that will have to sign off on not tracking the impact of your new feature on user behavior.
The whole concept of "the group that manages that" isn't unique to Amazon, but once you pass a certain size, you don't simply add features or new products without a involving lots of people. That is a challenge unique to Amazon-sized companies.
Reminds me of the many times someone tells me "oh you're developping apps ? I've got a great idea : ". 9 times out of 10 this idea involves rebuilding google search engine and facebook, plus a third thing on top.
I was going to say the same thing; this actually works really well. "But Amazon does it!" becomes a less compelling argument to people when they see how much they'd have to spend to be like Amazon.
This is why building trust by starting small and delivering exactly what you said you would for exactly the price you said is key.
Clients and stakeholders alike will never cease the asking for more than you can reasonably deliver because they have absolutely no way of knowing how reasonable their request is. That is why pulling all nighters and heroics are so bad for developer / business relationships. They set a precedent for what is reasonable or possible.
If the client or stakeholder never really can have the data necessary to fairly judge whether you are "holding out" or not then the only thing you can do is build personal trust by doing what you say you will, not a damn thing more, not a damn thing less.
I generally do if they press the point, or some similar variation. "Oh, but Google does XYZ". And again, yes, but... their budget has 3 extra zeroes on it. etc...
Hardware, software, anything really - there's probably an analog to this in most things.
Personally, what I run up against most often aren't questions about fulfilling the initial requests, but the aftermath of someone focusing on specific details to the exclusion of the bigger picture.
An organization spending a few million on software licenses, but nothing on staff / support being the most common example.
I feel like people in tech are particularly prone to this for whatever reason.
I'd wager a person will typically to sustain more criticism for a sub-optimal, but complete, functional implementation than a disjoint pile of fine-tuned components that doesn't add up to anything.
I would personally point to a framework like Meteor as my example. Having a framework handle all of the reactive parts of your code with no additional work, and giving the end user a way to simulate database updates on the client side while it's being processed server side is a huge win for performance.
Now of course none of this was impossible to do before, but the advent of all major browsers now supporting web sockets, and the existence of this framework and community which has already solved all of the hard parts of the implementation makes it actually feasible.
I was thinking of things like deploying auto-scaling SOLR clusters for hundreds of dollars, vs tens of thousands for dedicated search infrastructure years ago - maybe a bit more than 5 years, but that's the gist.
Twilio. Maybe Twilio is within the 5 year window too.
Mobile apps in general - the hardware infrastructure in peoples' pockets lets us do stuff with software that was not on most peoples' radars 5 years ago.
Forget fancy techniques, just scale alone is enough to shock you when looking into manufacturing. We got quotes from various providers at $4-$12/part. Meanwhile, in grocery stores, department stores, even dollar stores we would see similar products (using the same materials) being sold for $1-2.
The difference is mostly related to the number of parts being ordered. For a startup, ordering 100,000+ parts just to get pricing reasonable is a no-go unless you (or your backers) take a major risk.
Makes you feel like getting off the ground is almost impossible, when you can't even get your wholesale cost below the retail cost of similar products.
It's important to note that 20 years ago the surprising thing would be the surprise that you express here:
"The difference is mostly related to the number of parts being ordered. For a startup, ordering 100,000+ parts just to get pricing reasonable is a no-go unless you (or your backers) take a major risk. Makes you feel like getting off the ground is almost impossible, when you can't even get your wholesale cost below the retail cost of similar products."
We just had 150 years where this was so normal that most people didn't think much of it, and very few people ever thought about starting their own business, exactly because it was understood that you could not compete with the economies of scale enjoyed by John Davison Rockefeller, Andrew Carnegie and Andrew W. Mellon.
What's interesting is that this attitude has recently been changing. The economist Larry Summers has made this point about WhatsApp, using WhatsApp as an example of the falling need for capital:
"Ponder for example that the leading technological companies of this age, I think for example of Apple and Google, find themselves swimming in cash and facing the challenge of what to do with a very large cash hoard. Ponder the fact that WhatsApp has a greater market value than Sony with next to no capital investment required to achieve it. Ponder the fact that it used to require tens of millions of dollars to start a significant new venture. Significance new ventures today are seeded with hundreds of thousands of dollars in the information technology era. All of this means reduced demand for investment with consequences for the flow of - with consequences for equilibrium levels of interest rates."
He suggests a negative consequence, that it is difficult to get real interest rates above 0% in a world where people can start a business with little capital, and he suggests that this might contribute to secular stagnation.
Of course, things don't need to be as grim as he suggests. Ideally, the low costs would lead to a flood of research, but that hasn't happened so far, in part because VCs are scornful of what they refer to as "science projects" and the financial community continues to look for returns within 10 years, which is almost certainly the wrong timeframe for 0% interest rates (the low rate suggests a low discount rate which suggests that investors should think long term).
The surprise is a consequence of the "software is eating the world" mentality. Software is a very unusual kind of business, in that it effectively costs as much to make and distribute one copy of a software product as it does a million, or a billion. (Even more so today than 20 years ago, now that even marginal costs like boxes and plastic disks have fallen away.)
The problem is that people are increasingly applying software-business logic to businesses that aren't software businesses, where it falls down horribly because suddenly costs scale with output and economies of scale are a real and powerful thing.
> Architect a completely different approach to change the cost equation. (Throw software at the problem instead of hardware.)
I'll bite: what does that sentence even mean? How did Tesla "architect" a different approach to the "cost equation" of manufacturing, sourcing, and assembling the parts of an automobile? What are they "throwing" software at?
This one's a looser fit to Tesla. Better examples might be anything that replaces a built-in touchscreen with your smartphone's. In Tesla's case, by going all-electric they were able to make a drastically simpler drivetrain (and sure, this in some ways contradicts the previous point). I think that resulted in a much better cost-for-performance than a startup would've been able to get building around a combustion engine.
I understand that a big part of why Tim Cook filled Steve Jobs' shoes was that he's a master of supply chain management. He understands what it takes to move a product idea's components from "nonexistent supplies" to "commodity pricing".
The main point is that manufacturing, especially high-volume, consumer, apple-quality products, is very hard and requires serious expertise. Such startups should bring in such mechanical & production engineering expertise, because the hardware becomes as important as the software & electronics.
The irony is that many software startup wizards brush off mechanical design the same way that naive managers treat software development. "It's just a [box/case/app/website], how hard can it be?"
You have summarized the perfect take-away from this article. Disclosure for bias: I am the 4th generation of an American manufacturer, that has survived for 100 years in New York City.
Of the hundreds of retail startups I have seen that are going to contract manufacturers, none have had a manufacturing expert or even one with any experience. In fact, it's severely undervalued with respect to importance. If they do have someone from manufacturing, they probably aren't being paid relative to their market scarcity.
The best manufacturers also design what they make, their own product, and do not make for others.
Apple has manufacturing experts and manufactures themselves, hence they control what they make. <startup-person class="random inexperienced" /> does not, so they cannot have their quality level, by definition. Hence, they pay more because they didn't capture the margin, and because they have to get in line to pay a contractor who knows how. But they cannot bring a serious order unless they are funded by deep pockets.
Here in America, we have lost most of our manufacturers, leaving three generations missing manufacturing experts. This is a no-brainer, obvious to all. However, the connection is rarely made that we have lost our manufacturing capability because /it is difficult/. It's so difficult it had to go to a highly efficient country with cut-throat competition, abundant labor supply, and abundant poverty. The perfect conditions for plunging down manufacturing costs.
Manufacturing is quite different from "making." We are having a resurgence of interest in making in this country, which is exceptional. Arduino is amazing! It manufactures for the people, not for other companies, reducing cost and providing access. Making doesn't scale without manufacturing expertise. I hope manufacturing is part of the renaissance as it grows.
> Of the thousands of retail startups have seen that are going to contract manufacturers, none have had a manufacturing expert or even one with any experience.
Wouldn't that be why they are trying to contract manufacturers?
Not at all. Manufacturers constantly contract to other manufacturers. Hence terms like OEM. If you haven't been involved in some part of the chain at some point, it's non-straightforward to learn the ropes. Certainly possible, of course; the stats are not encouraging though.
Basically I was trying to say, it really helps to have someone with some manufacturing experience in-house if your startup involves it, even if you're not the actual manufacturer.
Consumer-level quality is not a thing you can easily spec. You're going to give a 3D model to a manufacturer, and they'll put the parting lines, ejector pins and gates wherever is easiest/cheapest to manufacture, not where it'd minimize evidence of molding. You can then spend a lot of time learning about processes and redesigning your form to meet both cost and aesthetic requirements, or you can have someone with manufacturing experience iterating with you from the beginning.
Plastic parts are often made by pouring hot plastic into a mold. When the plastic is done drying, often a robotic arm or crane needs to pull it off to bring the plastic to the next stage of the manufacturing process. But it's hard to get the plastic off the surface once it's dried; it needs to be "popped" off of it. So manufacturers build ejector pins into the mold. When the plastic is done drying, the pins pop up and push the plastic off the mold, into the crane or whatever will take it to the next part of the operation.
Their attention to detail in casings is the same as the very high end hi-fi, jewelery, or sports-car industries. Nobody else in computing seems to come close.
In terms of electronic components however, you can nearly always get more bang for your buck, the exception sometimes being the screens.
That might be true of computers, but how true is it of mobile devices? A handheld mobile device isn't even conceptually a single computer; it's a small network of computers.
I think it still is true in mobile, but in mobile the general computing components just need to be good enough not to lag, build quality and interface elements are the things to buy on with laptops, tablets and mobiles.
Doesn't matter if you have a powerful gizmo if the hinges are broken and it overheats, however with PC's you can buy a high-end motherboard and find a power supply in a skip and just nail them to the wall if you like. Build quality is far more optional.
Yep, a fully specced macbook pro costs around $2500. I'm betting you can get the same specs at around $1000 - $1500 from someone else. What you won't get is the insanely nice display and build quality. You'll likely get a shitty 1080p or less display and a plastic chassis.
All I needed to stop believing that was to hold an Apple product in one hand and a competing one in the other. Whether you care about fit and finish is a matter of personal taste, but the difference is visible.
I didn't say every Android out there, just every one I've used. I've used Galaxy phones, an HTC, a Galaxy, and various display phones at cellphone stores, and I've used friends' iPhones. The Androids always felt more comfortable to me. The iPhones always felt too small, unnecessarily thick and heavy with a metal casing instead of a plastic casting, and their home buttons were harder to press. The new iPhone apparently has a larger version at least. iPhone power and home buttons also seem to wear out faster. I've had two iPod Touch devices that I used a few years each and each ended up with an issue with the power button going bad to some degree, and this has happened to other iDevice owners I know, but I've never seen it happen with an Android device, including the ones I had for longer stretches of time than I had my iPod Touches. Small sample size but I believe I've read about this happening elsewhere.
Really this, I hear from a lot of people that Apple products are shit because they are much more expensive for similar specced devices but no one ever considers the hardware outside of the specs. Sure I can get a huge Galaxy note XYZ with 10gb of ram but at the same time it has a subpar UX and is made of cheap plastic and cheap glass and a cheap display and has no where near the build quality of an iPhone, same goes for MBP vs Any Other Laptop.
Packaging is a product to be designed unto itself, especially as what you're usually ultimately selling is an experience. I think I've seen people rave about packaging I've designed as much as the products. And just like the product itself, manufacturing experience helps you hit a better price/performance note, all the way down to making boxes that fit in a certain USPS weight class which you can slap a mailing label on.
I find packaging to be a very mixed bag, emotionally speaking.
While I like the higher-end treatment from Apple and similar companies, I can't help but think of the waste involved in producing that fancy box that I'm just going to throw away in a few days.
And Apple doesn't need the fancy packaging to sell to me - I'd but their stuff regardless. I wonder if they could/would consider generic cardboard for online orders, and save the fancy stuff for retail?
They do that for refurbs.
It's just another design challenge. For a great experience, you don't need to spend a lot of money on packaging - just have an element of surprise and thoughtfulness. That can be done in cardboard and smart graphic design, or even off-the-shelf packaging used in a different context (see: T-shirt in a can).
That's how they package everything that's "frustration free".
Their packaging has actually gotten very good in the last several years. They use recyclable air bags for fill, and even their tape now is paper so you can recycle the whole box as one material.
"Very good" in terms of minimizing packaging maybe... not always so good when it comes to actually protecting contents. The air bags are sometimes not so good at keeping heavier items from crushing lighter ones, especially when shipping in a box that's 3x larger than the combined volume of what's inside. And for awhile now I've had books ship loose with other items instead of shrinkwrapped to cardboard like they used to be, leading to mangling. Amazon is good about replacing damaged items and I'm sure they build the cost into their decisions, but the hassle and waste is still kind of annoying.
Not mentioned is the challenge of managing a good CM in China or Malaysia. If you're small you get what everyone else does, at higher prices. If you're huge you can groom your CM and make sure you get what nobody else does, at a lower cost. Of course sooner or later the manufacturing knowledge leaks out so it's a rat race even for someone like Apple.
When did Apple go from manufacturing ordinary hardware to making that leap where they had the financial resources to truly make something incredibly unique and beautiful? Was it one product one year, or did happen over a span of years where they had smaller increments of change?
I'm curious to know how a company can get to a point and say, "Ok, we can do something really cool, on a massive scale and make it successful." Is a slower transition, or more of an abrupt change that takes place?
It was definitely a gradual thing. As early as the "Snow White" design language introduced in 1984, Apple was pushing the limits of conventional computer manufacturing techniques. And they didn't go from beige boxes to unibody aluminum slabs in one step.
This is why -- for example -- Flextronics opened their Lab IX [1] in SV last year. In cases where hardware ideas are good ones, it makes a lot of sense for the guys with the manufacturing expertise to get in the loop early on. They can incubate, invest, and indulge in some of the wild stuff innovators want but can only be executed with $mm of equipment.
There are so many acronyms in this article that aren't defined. Maybe I'm not the intended audience for this article, but it's pretty hard to understand when you don't know what CM, CNC, or BOM mean. Is it really so hard to use the <abbr> tag?
Article does not mention capacitive touch screens. Apple basically build its own factories (and subsequently entire industry) to manufacture for iphone 1.
Capacitive screens are petty much custom for whatever the end applicaton is. Apple pretty much bought out the market for CNC laser ablation machines used in this line of work.
but apple is not the only large luxury goods manufacturer, right? how does louis vuitton do their thing? or leica? or rolex? if anything, aren't lv and rolex the orginals at mass producing/marketing luxury goods?
separately, i imagine not just leica, but the entire optics industry has answered the question of precision/quality at scale before?
and finally, there're more , right? like mercedes-benz, bmw, lexus, porsche, medical instruments, the aerospace industry... don't all of them have to solve 'quality at scale' problems?
and at smaller scales..parker pens? zippo lighters? swiss army knives?
and then..something like http://www.muji.us/store/ could be good enough as far as the perception of quality goes?
Rolex is similar to Apple in that they control most, or almost all, of their manufacturing and parts process. Rolex is one of the very few watch companies that produces their own movements instead of outsourcing them, or slightly modifying/customizing an OEM movement. Rolex has proprietary metallurgy for metals. They make their own stainless steal and gold for all their watches. The watch case is milled from a single piece of material, much like a unibody MacBook.
I don't know as much about Leica, but Canon grinds and polishes their own glass for their lenses (the higher-end ones at least, not sure about EF-S lenses). Other companies create lenses with OEM's elements.
I think the idea is that most of those companies are large (compared to a 10 person startup) and have manufacturing expertise, which most start-ups may not have.
Even companies like Parker Pens are part of large companies -- (e.g. Parker is part of Newell Rubbermaid with 19,000 employees and almost $6 billion in revenue).
actually parker was founded in 1888 and was independent until 1993 when gillette bought it. i imagine they didn't need gillette's help to scale their manufacturing..
i think there're plenty of small firms, from furniture makers to knive makers to bicycle makers to audio equipment makers, that do quality at low volumes. i'd imagine a startup is exactly that - low volume. and they could probably figure out how to scale when they need to? its a good problem to have, right?
i'm thinking of a car analogy.. its like.. i can't imagine that porsche, when they first launched the 911, were thinking about how to make 100000 of them a year.. or for that matter, a more recent example like koenigsegg or even tesla..they didn't exactly start with a 100000/year plant either..
They hired the brilliant Bould[0] design for ID and partnered with a Tier-1 Taiwanese ODM for manufacturing[1]. This takes a bit of money, connections and being able to demonstrate you will have volume.
What the article doesn't mention is that you can manufacture in Apple's wake. After Apple started purchasing 4" touch panels and LCD displays for iPhones, and then larger displays for the iPad, the capacity increased and prices went down. Same with all the CNC machines purchased for the iPhone 4 frame - they are no longer being used to manufacture Apple devices, but they are being used to manufacture other devices.
Second part is that modern manufacturing tech means you can have lean hardware startups. As much as cheap hosting, software as a service, etc. have made software app development cheaper manufacturing tech has made hardware manufacturing cheaper. You can now get rolling with complete custom hardware in thousands of units (as opposed to millions) with 6-figures in capital.
The key is knowing one of the small number of people who understand design, materials, the capabilities at the ODM's, the right people at these companies, supply chain etc. and have them design the product to fit the current manufacturing capacity without requiring customization. It is easy to hire an industrial designer sitting ten thousand kilometers away from Shenzhen who can CAD something nice, but knowing that manufacturing that fancy designed device would cost extra millions in tooling and setup is where the real skill is. Good ID people can design great products and in a way where they can be manufactured easily and with a smaller investment. If you don't have one of these people on your team, your either going to get something that is very ordinary looking (think Chinese knockoff) or you'll attempt something ambitious, run out of money and fail.
What Nest did is use clever ID to create a product that looked unique without over-stretching the manufacturing requirements. They didn't go anywhere near the scale Apple does.
I'd like to see some evidence that they have sunsetted any of their CNC capacity, as well. They're still making the iPhone 5s, and as far as I'm aware aren't the new iPhones, as well as the iPad and Mac lines, all still using CNC milled enclosures? I think all that's been phased out is the diamond-chamfered edges.
They were rich former Apple staff that created a luxury item (it was 10x the price of other thermostats) and still were smart enough to not require CNC or matched white plastics or even a fancy box.
And their products are absurdly expensive (for the market). You don't notice for the thermostat, but their smoke detectors are $100 when the carbon monoxide smoke detector it is replacing is $20.
A Nest thermostat is quite expensive if think about it. An average Honeywell thermostat is maybe $50 while a Nest is $250. Also the cylindrical design of the Nest is a little easier to manufacture.
This article actually misses some key points while it is telling the truth.
Most of the things mentioned in the article is correct BUT,
If you are going to make a product and you think that your product is going to be as revolutionary as Apple was at the beginning, then don't worry. You will be good to go.
If you can provide a unique, mind blowing product just like Apple Lisa in 1983, you can sell it for really unrealistic prizes.
Apple Lisa was sold for US$ 9,995 at the time it was released. You could buy a new house around $86000.
So the question is not how expensive is going to be, the real question is,
Perhaps financially, accountants weren't able to attribute black pennies to it.
But spiritually it was a big success. Everybody wanted one. And it was the roots of the Macintosh.
If Apple didn't do the Lisa, I cannot see what else they could have done at that time, and still become the biggest company of the world 30 years later. Without it, they would probably have disappeared long ago as so many people predicted.
> If you are going to make a product and you think that your product is going to be as revolutionary as Apple was at the beginning, then don't worry. You will be good to go.
I would disagree with this, but keep quiet, if you removed "you think". As it is, the advice just seems irresponsible.
If you think your product is going to be as revolutionary as Apple was at the beginning, you are probably wrong, and you should adjust your expectations accordingly.
I don't see that anywhere. Closest thing I could find is:
> 4-color, double-walled, matte boxes + HD foam inserts
> I know you’re going to do this anyways, but be aware that these kind of boxes will literally be the most expensive line item on your BOM. It’s not unusual for them to cost upwards of $12/unit at scale. And then they get thrown away.
...which is talking about your costs, not Apple's.
$12 is a lot of money for a box, and would be one of the most expensive things you buy, unless you want the latest communications chipset or next years display technology. I guess apple do. But it's still a lot of money for a box. News to me.
The double-wall material seems to be the primary driver of that price, and also not necessary for most products.
I've designed and purchased a lot of retail boxes for my needs. If you can get away with a heavy-duty paperboard (which will suit most non-luxury products), the combination of full-color box and custom foam can be had as low as $5/unit, or less, in quantities starting at 500 units. Once you start getting into custom multi-wall product, you're often having to pay die costs which greatly drive up the per-unit price.
I agree that he didn't say that. The 4 color boxes are what apple ships computers in. The iphone is shipped in:
> Many small Apple products come in polycarbonate + ABS/PC mix molded packaging. This is both harder and more expensive than you might think. Recycled cardboard is your friend
I always assumed the iphone packaging was polystyrene. I am pretty sure it is, and I think the author is wrong. Of course the S in ABS is polystyrene, but my limited knowledge is that ABS is never clear in any formulation.
You guys should watch how it's made. Modern cars are dipped to get the "primer", then shot with a single coat of color/clear, and dried in an oven. It's been that way since at least the early 90s.
Presumably you can't just move the car anywhere while it dries, since you don't want dust or particles to get stuck in the coat of paint. So now you have to create a second clean room, plus figure out how to keep the path in between the paint room and the drying room dust free. So why not just move the car to the drying room, and paint it there? Except now you have the same problem, you've just shifted it to a larger space.
Since there are multiple layers of paint I would guess that the wait time is for the intermediate layers, and that removing and replacing the car from the line is the expensive part.
Hrmm... Amazon has dozens of people working and supporting just that one feature. You're trying to engage me to do an entire project. On a fixed budget. With a fixed time frame. And you've changed your mind 3 times in the last 3 weeks on key points.
Of course, yes, there are amazing things you can do with software that weren't remotely feasible even just 5 years ago. But there's always a moving target - the market leaders (Apple, Google, Amazon, etc) are constantly pushing the boundaries of what's considered 'normal', and most people have 0 idea of the real cost and effort involved in having the functionality come across as polished and error free as the big boys.