Sunday, July 31, 2011

Apple's Cash Helps Apple Grow More Cash And Put Distance Between It And Its Competitors

PC Magazine has a pretty good post that I've kept locked away in my Instapaper account for about a week or so that I finally got around to reading.  Then I reread it and thought I share it with you.  With $76 billion in the bank, which is simplifying things a bit, Apple had more cash available to it than the US federal government (until Congress passes the debt ceiling and budget deal worked out by Congressional leadership and the White House).  And instead of wastefully throwing it away as dividend, stock buybacks, or reckless buying up companies, Apple used it to help secure components and reduce costs.

First, Apple uses its cash to help finance building new factories that could build out new technology faster.  When new tech comes to the market, the cost could be prohibitive to adopt.  And because Apple can almost guarantee its that its devices, like the iPhone, will sell in great numbers, Apple can be sure that its investments in this manner is sound.  

Take the iPhone 4's retina display.  To this point, no competitor has been able to adequately compete on the same level or come out with an even greater screen pixel density.  PC World pointed out display technology in another manner:  the capacitive screen worked better on the iPhone because Apple had the tech a year or more before everyone else.

And once competitors gain access to technology that Apple previously enjoy exclusively for a period of time, Apple had prior deals that would allow it to continuously secure components at a discount.  After all, Apple had help financed ability of its suppliers to build factories.  

Here's the interesting part about the post.  PC Magazine acknowledge that Apple does, in fact, build premium devices with futuristic feels to it.  In the past, before the second-coming of Steve Jobs, before the iMac and the iPod, PC Magazine typically lead the charge that Apple's Macintosh computers were overpriced.  

Having said all this, one might say that Apple is pushing innovation forward in ways that fans, rivals, and supporters of its competitors could appreciate.

There is more in the post that I encourage you read if you like to know more about Apple's operations and why it is fighting so hard, as evident in the patent war, to protect its innovations.

Source:  PC Magazine.

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