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Apple's obsessive secrecy hurting relations with overseas suppliers

Apple's obsession with secrecy is legendary. For all the rumors and leaks that stoke media attention, very rarely do we have a clear picture of a new product until Steve Jobs comes out on stage and shows it to us. Even people who work for Apple often have very little idea what the company is up to; retail employees at Apple Stores usually don't know any more about upcoming products than anyone else, and retail managers have told me the first clear picture they get of new products is when they arrive on a truck. Even people who work in Apple R&D on products like the iPad operate in a "cone of silence," with security measures in place at Cupertino's labs that sound like something out of a James Bond film. And last year, an employee of Chinese supplier Foxconn allegedly leapt to his death to avoid further interrogation after he "lost" an iPhone prototype.

A new report from Reuters offers more insight into Apple's cloak and dagger world. Confidentiality agreements are only the beginning when it comes to Apple's tactics with its overseas suppliers. Apple contacts suppliers at the last minute, often only weeks before a product's release, and provides information about its products on a strict "need to know" basis. Apple also divides its projects between multiple suppliers, meaning that for a product like the iPhone, no one supplier is responsible for producing or assembling all of its components. As a result, even most of the people who are standing on the assembly line making Apple's products have no idea what they look like when they're finished. Only a handful of very closely monitored workers are responsible for final assembly. Apple also has a unique vetting process for its contractors: it will switch up product suppliers occasionally, issuing them different products, all in the name of hunting down and squashing leaks. Well, that and an attempt to thwart cheap knockoffs -- a somewhat common practice in certain parts of the manufacturing world.

One South Korean supplier has stated Apple makes "unreasonable requests." The company's demands for customization in its designs means suppliers are left with equipment and components that can't be used for other clients, and excess inventory cannot be repurposed.

The Reuters report paints a very dark picture of Apple's relations with its suppliers. The company has its reasons for being secretive, some of them more valid than others, but it seems incredibly ironic that the same company who satirized George Orwell's 1984 in their iconic Super Bowl commercial now employs the same sort of police-state tactics with both its own employees and its overseas contractors. As much as I enjoy using Apple's products, reports like the one from Reuters make it hard for me to like the company itself.

Read the Reuters report for yourselves, and then let us know how you feel about Apple's obsession with secrecy in the comments.

[Via AppleInsider]

Apple's obsession with secrecy is legendary. For all the rumors and leaks that stoke media attention, very rarely do we have a clear...
 

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itzumang

Is this really the tuaw ?
C'mon! seems like I am on a mike-crow-shoft's unofficial blog for a moment

Like most of us have stated... Easy Peazy to say NO if one does not want to meet the "unreasonable demands"
or is it tht they are being Forced to manufacture for Apple @ gunpoint?
Its the Money point tht they agree to work on!

Secrecy is good.... don't believe me?
We don't want the Redmond to start their copiers... if U kno wht I mean :)

February 19 2010 at 12:05 PM Report abuse rate up rate down Reply
sodapop

And the secrecy makes it all very exciting! WTF? Why do people always need to know stuff before hand? Media ruins surpries, movies twists, and what not. Don't reveal Apple's secrets, bro!

February 18 2010 at 6:50 PM Report abuse rate up rate down Reply
Rego

@David

You are spot on! Good post!

For other readers who are somehow offended by Apple's secrecy:
Just consider how so many other manufacturers try to copy whatever Apple makes.

When was the last time the world was abuzz over a tablet styled product?
Now every manufacturer of computers is suddenly announcing that they are making tablets.

Have you noticed any similarity between the design of the iPhone and every new smart phone offered by others?

It's bad enough that so many companies try to rip off Apple's design and products after Apple releases a new product.

If Apple, instead announced products in development long before they would be ready for sale it would be highly detrimental to their position as an innovator and market leader.

I want Apple's secrets to remain better guarded that Fort Knox, until Apple decides to announce them!~

Damn the torpedos! Full steam ahead!

February 18 2010 at 4:11 PM Report abuse rate up rate down Reply
Gillan

I think Apple should move back the the USA when it comes to manufacturing (not all parts, such as dangerous things etc.)
Granted Americans are not good at keeping secrets with our social lives with Twitter and all, but Apple made almost all of it's products in CA till at least 1999. My old black PowerBook G3 was made in the USA (with parts from all over the world)
Apple might need to charge even more, but it would be good skilled jobs, that people would enjoy.

February 18 2010 at 2:52 PM Report abuse rate up rate down Reply
mannyv

Easy: if you don't like working with Apple, don't take the contract. What's the issue?

February 18 2010 at 2:48 PM Report abuse rate up rate down Reply
Steve

I wish writers (especially TUAW) would stop rehashing the person who jumped to his death as a slant against Apple's secrecy. The employee had possibly stolen the prototype, and everyone makes it sound like big bad Apple pressured him until he killed himself.

Apple wasn't even involved in this. Any pressure came from his company directly, and it is stupid and juvenile to try and use this as an example of Apple's "secrecy" as if it caused his death.

Most companies rely on secrecy and Apple needs to rely on it more than any, because they are constantly pushing the envelope. If suppliers don't want to play ball, don't. Apple will find someone else. That's how business works.

February 18 2010 at 1:27 PM Report abuse rate up rate down Reply
DavidG

Companies compete with one another. That's their purpose and economic role. In order to do so in good faith and legally, they often need to hold their cards close to their vests, just as any individual would do. Unfortunately, because large companies have many employees and many relationships with other companies, managing secrets is quite tough.

Every employee that works for a company that possesses significant proprietary data signs non-disclosure agreements. These legally require employees to keep secrets under threat of termination and lawsuit. If employees were all on the up-and-up and help by these, no further measures would ever be necessary. Same with NDAs with contractors and suppliers.

Unfortunately, the ability to leak info and remain anonymous makes NDAs insufficient. For a high-profile company, these leaks are very damaging. Therefore, further measures are required, such as those taken by Apple. None are in any way punitive to anyone playing by the rules and even some that do "hurt" companies (such as those that purchase one-time-use equipment for customization, reference in the article) are doing so after making a business decision to work with Apple and after competing in the same bidding process along with every other contractor wishing to do the same thing. If you say you can do a job and agree to do it for a certain price and with certain aspects of the work laid out for you in advance, it's bad faith to then complain about it. Same thing with accepting a job at such a company and signing the NDAs that go along with it.

Exactly how does this compare with 1984, which is a commentary on how government controls the privacy and rights of individuals? If you volunteer for the armed forces and are issued an order, are you suddenly in a dictatorship? It's a matter of signing contracts, voluntarily and motivated by ones own hope for economic gain, and simply being expected to fulfill the terms ... including those that require secrecy or putting up with some expected logistically inconveniences.

It would be good for tech bloggers to actually go out, get some advanced technical training and take an engineering job in a real tech company for a while. Few articles reflect the realities of actually being a creator of tech rather than a mere consumer.

February 18 2010 at 11:44 AM Report abuse rate up rate down Reply
1 reply to DavidG's comment
NewtonHeath

Wasn't it Apple that used 1984 to mock IBM :/

February 18 2010 at 11:52 AM Report abuse rate up rate down Reply
PFar

Oh come on. This article is tripe. If it were not for Apple's "obsession with secrecy" do you really think that half the Apple related blogs out there would even exist? Have you ever looked at your own page hits ahead of an Apple event? I'm quite sure that the rumors that come as a result of the secrecy certainly add to the readership. So what are you complaining about again?! If one were to sit back and think about it, it is pretty amazing that in this day and age Apple can arrange their business in such a way as to only show products when Steve gets on stage. This highly connected world where there are camera's everywhere and yet almost no leaks. Think about it. Amazing.

Finally, as to the poor suppliers. Oh please. This is business. They can refuse to take on the contract. Do you believe that the "South Korean company" complaining about Apple making "unreasonable requests" is really not happy in their business relationship with Apple?! If that really is the case, I'm quite sure that there are plenty of companies behind them that would love to rake in the dough that manufacturing iPhone parts provides.

Kids, this is business. Apple is not the government. They are a business. They have every right to be secretive. In fact, I love their secrecy. It keeps things interesting.

Do you really want Apple to become HP, Lenovo, or Dell. Where are all the blogs solely devoted to those companies? Yeah thought not...

February 18 2010 at 11:33 AM Report abuse rate up rate down Reply
NewtonHeath

Having only seen Pirates of Silicon Valley for the first time last night, it's clear from that and the descriptions of the companies recent behavior after the film that Jobs has some issues both personally and professionally that are deep and personal. A great mind from a product perspective, but it sounds like Apple is a bit of a nightmare of a company.

Don't get me wrong, I love their products, but they are leaving a bit of an aftertaste in my mouth. It is especially funny to see them act like this today, especially given their "use" of intellectual property in the past in the early days.

February 18 2010 at 11:12 AM Report abuse rate up rate down Reply
1 reply to NewtonHeath's comment
Kai Cherry

Pirates of Silicon Valley isnt a documentary...although the Internet treats it like one :)

Just puttin that out there for ya...

-K

February 18 2010 at 1:44 PM Report abuse rate up rate down Reply
Nick

Your summary and the Reuters article reach vastly different conclusions, and I agree with most commenters that industrial secrecy is simply part of the game. As for "police-state" tactics, I would argue that surprise inspections fall far short of that type of label. Regulatory agencies and corporate entities perform surprise inspections and audits in pretty much all lines of business. How else do you as the buyer ensure that the terms of your contract are being met, without resorting to out-and-out surveillance?

February 18 2010 at 10:34 AM Report abuse rate up rate down Reply
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