Apple, GT Advanced Technologies, and the ‘new’ vertical integration

and content from its Mac products. It also had the opportunity to launch these new product lines to its existing base of loyal Mac users. Horizontal integration expanded and strengthened Apple‟s business, with the iPhone and the iPod currently representing about 51% of Apple‟s net sales.52 Vertical Integration Apple demonstrates vertical integration with its PC and music market, where it is able to integrate the content, hardware, software, online service and retail stores under its firm. However, unlike vertical integration of the past, Apple engages in contract manufacturing, where hardware is manufactured by third-parties such as Foxconn and Asus. These companies manufacture Apple‟s products according to its precise design specifications. Hence, Apple still retains full control of the manufacturing process. Besides, Apple has taken a step further by manufacturing its own A4 and A5 processors to power iPhones and iPads, and producing its proprietary iOS for the non-PC devices.53 It also took over P.A. Semi, a chip company.54 With this platform control, Apple is able to optimize the use of different components and create products with a performance advantage over its competitors‟. Vertical integration allows Apple to have control over design, innovation and production throughout the vertical chain. Hence, it is able to enhance the quality of its customers‟ experiences and possess unparallel pricing strength to outperform its competitors.55

needed to compete effectively with vertically integrated apple and rim

This vertical integration allows Apple to control the quality of their customers' experience soup-to-nuts. The attention to detail that pervades their products starts with the packaging and ends with customer loyalty and a globally charismatic brand with unparalleled pricing strength.

that is the new vertical integration

Vertical integration allows Apple to have control over design, innovation and production throughout the vertical chain. Sharp Corporation manufactures and sells consumer/information products and electronic components. Apple's supplier list and tear down analyses indicate Sharp supplies displays for several Apple products including the iPhone and iPad. The supplier list also indicates Apple uses many other display vendors including Japan Display, LG Display (NYSEMKT:), Samsung, Sharp, Sony (NYSE:), Innolux Corporation, and AU Optronics (NYSE:). A cursory review of Sharp and LG Display's financials show that the display market is ultra-competitive with both firms having low or negative operating margins (see below). An ultra-competitive market like this is typically a poor choice for vertical integration because Apple is able to source their supply at or near cost with little or no capital investment.

Samsung, Apple and Vertical Integration | Sramana Mitra

Sharp Corporation manufactures and sells consumer/information products and electronic components. Apple's supplier list and tear down analyses indicate Sharp supplies displays for several Apple products including the iPhone and iPad. The supplier list also indicates Apple uses many other display vendors including Japan Display, LG Display (NYSEMKT:), Samsung, Sharp, Sony (NYSE:), Innolux Corporation, and AU Optronics (NYSE:). A cursory review of Sharp and LG Display's financials show that the display market is ultra-competitive with both firms having low or negative operating margins (see below). An ultra-competitive market like this is typically a poor choice for vertical integration because Apple is able to source their supply at or near cost with little or no capital investment.

Horizontal Integration | Strategic Management Insight