Apple Inc. is reportedly hiring more than 600 engineers and supply chain professionals in China as the world’s biggest consumer electronics manufacturer by market value responds to growing challenges from a swarm of competitors threatening its once unrivalled domination of the smartphone and tablet PC markets. News reports indicate Apple (NASDAQ: AAPL) is adding engineers in China to speed time-to-market for its products by making them work closely with component suppliers on hardware and software quality assurance. (See: Apple Goes on Hiring Binge in Asia to Speed Product Releases).
This development tallies with the findings of a landmark survey recently carried out by EPS that showed a tighter level of collaboration than previously assumed between engineers and procurement professionals. The purchasing professionals who responded to the survey told EPS they “collaborate closely with engineers and other cost-centers in the supply chain to bring products to market at the right time and price.”
Another finding of the survey was that procurement professionals believe their services are highly valued by their employers; not surprising since senior executives at high-tech firms are driving the collaboration between procurement and engineers to get products to market more efficiently.
Apple is believed to be responding to swiftly changing conditions in the consumer electronics industry as competitors continue to chip away at its market share. The company’s share of the tablet PC market slid sharply in 2013, to 36 percent from 52.8 percent in the previous year, according to Gartner Inc. During the same period Samsung Electronics’ market share jumped to 19.1 percent from 7.4 percent in 2012. Apple sold more tablets during the year – 70.4 million versus 61.5 million in 2012 – than any other OEM but its approximately 15 percent year-over-year growth lagged the 68 percent reported by Gartner for the entire market. In addition, Google Android-based operating system suppliers have swamped the market, reducing the Apple operating system (iOS) share.
“In 2013, tablets became a mainstream phenomenon, with a vast choice of Android-based tablets being within the budget of mainstream consumers while still offering adequate specifications,” said Roberta Cozza, research director at Gartner in a report. “As the Android tablet market becomes highly commoditized, in 2014, it will be critical for vendors to focus on device experience and meaningful technology and ecosystem value — beyond just hardware and cost — to ensure brand loyalty and improved margins.” (See: Gartner Says Worldwide Tablet Sales Grew 68 Percent in 2013, With Android Capturing 62 Percent of the Market).
Apple embarked upon its China hiring binge well before Gartner released its tablet market report. However, there had been other news previously indicating pressure building on the Cupertino, Calif.-based company. Apple had been panned by analysts for releasing its products at a slower pace than rival Samsung, which roles out new smartphones and tablets numerous times each year. It recently at the Mobile World Congress announced the availability of the Galaxy S5, the latest update to its flagship smartphone.
Getting products to market at a faster pace is now a priority for Apple, according to the report cited above from the Wall Street Journal. In other to do this, however, Apple’s design engineering team must work more closely with purchasing and component suppliers, the report noted. The engineers being hired in China won’t be involved in new product development, according to the report, but would work on streamlining procurement and making sure components are customized quickly where necessary for Apple products.
That’s a world Douglas Alexander, principal at Components Engineering Consultants, understands very well. An engineer and veteran of the high-tech world, Alexander has worked at some of the industry’s leading companies, including Microsoft Corp., where he served as the founding components engineer for its WebTV unit. In his career, Alexander has worked on and continues to participate in new product development, procurement/sourcing and also managed the production process. He calls himself a components engineer, a term that describes a profession which straddles product development, sourcing and the production process.
The components engineer is often not involved in the new product development process but instead focuses on making sure parts specified by the design engineer or sourced by purchasing fit well during the manufacturing phase. The components engineer is also responsible for ensuring second sources and replacement parts are available, tested and useable should purchasing run into non-availability problems. Their role in the manufacturing process is making sure the products function as expected and hit the market on schedule without any price overruns.
That’s what Apple is aiming for with this hiring frenzy in China.
DISCLAIMER: Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at firstname.lastname@example.org.