How Apple Made ‘Vertical Integration’ Hot Again

Topics: Vertical integration, Supply chain, IPhone Pages: 3 (870 words) Published: August 29, 2013
How Apple Made ‘Vertical Integration’ Hot Again — Too Hot, Maybe By Knowledge@WhartonMarch 16, 20120
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Google recently acquired mobile-device maker Motorola Mobility and will soon manufacture smart phones and television set-top boxes. Amazon’s Kindle Fire tablet represents its bridge between hardware and e-commerce. Oracle bought Sun Microsystems and now champions engineered systems (integrated hardware-and-software devices). And even long-standing software giant Microsoft now makes hardware for its Xbox gaming system. Technology titans are increasingly looking like vertically integrated conglomerates largely in an attempt to emulate the success of Apple. Vertical integration dictates that one company controls the end product as well as its component parts. In technology, Apple for 35 years has championed a vertical model, which features an integrated hardware-and-software approach. For instance, the iPhone and iPad have hardware and software designed by Apple, which also designed its own processors for the devices. This integration has allowed Apple to set the pace for mobile computing. “Despite the benefits of specialization, it can make sense to have everything under one roof,” says Wharton management professor David Hsu. (MORE: $100 Billion Question:...
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