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Apple's Dynamic Tension

Apple's Dynamic Tension

As torrents of cash flow into Apple's pockets, new attention is being drawn to how Apple makes the products it sells. The overseas manufacturers that Apple uses to make iThings are being put under the microscope yet again in regard to labor conditions. Meanwhile, other labor issues surface at home and Apple overtakes HP as the world's biggest PC maker ... depending on how you slice it.

By Rachelle Dragani MacNewsWorld ECT News Network
02/01/12 5:00 AM PT

A week after Apple revealed record-breaking sales numbers that drove its value to new heights, the company's fans were shown a bleaker image of Cupertino in a recently published New York Times series. The iEconomy series paints a picture of harsh working conditions in some overseas facilities that manufacture Apple products, including brutally long hours, unhealthy living and working spaces and ultimately worker suicides.

Since the story broke, human rights activists have advocated increased awareness of foreign labor conditions. Mike Daisey, the star of his one-man show "The Agony and the Ecstasy of Steve Jobs," which highlights some of the claims about Apple's labor policies, said he was delighted that The New York Times was highlighting the issue.

In one campaign from Change.org, Mark Shields, a self-proclaimed Apple "super-user," has gathered 140,000 signatures of people asking Apple to step up its protection of workers.

The newfound attention that the issue has drawn was enough for Tim Cook to personally respond to the article. In an e-mail to employees reposted on 9to5 Mac, Cook said the company cares "about every worker in our worldwide supply chain" and said the suggestion the company doesn't is "offensive." The company continues to investigate worker conditions, he said, and he directed employees to a Supplier Responsibility page within the website that outlines different areas of Apple's social responsibility, such as labor and human rights, worker health and safety and environmental impact.

Labor Practices Questioned At Home, Too

Apple and other large U.S.-based technology companies also faced questions about labor practices on their home turf. In a suit filed in federal court in San Jose on Monday, employee plaintiffs claim that Apple, along with Google, Intel, Adobe, Intuit, Lucasfilm and Pixar had agreements in place that forbade them from recruiting each other's employees. In this way, say the plaintiffs, the employers were able to keep competition, and therefore wages, lower among the best and the brightest in Silicon Valley.

In support of their case, the plaintiffs point to a 2007 e-mail that Steve Jobs apparently wrote to Google's then-CEO Eric Schmidt. In it, Jobs wrote that a Google employee was attempting to recruit an Apple engineer and asked that it be stopped immediately. Schmidt allegedly made sure Jobs' request was carried out, forwarding the e-mail to Google employees and mentioning there was a non-recruitment policy between the companies.

A similar case came up in 2010. That case was settled in September with the companies asserting these types of handshake, or "gentlemens'" agreements were legal and standard within the corporate tech world. However, they agreed not to use such tactics in the future.

None of the companies involved returned our requests for comment.

At this time, it's unknown how much kick the plaintiffs' case will have, since they must provide documents or other physical evidence that there was an overarching anti-poaching conspiracy. If the plaintiffs win the case, it's possible one of the companies would be forced to pay damages in the form of lost wages.

New Face of Retail

In addition to the workers that produce its products, Apple staffs thousands of employees in its more than 300 retail stores worldwide. Apple announced Tuesday they will soon have a new head honcho to report to: John Browett, CEO of Dixons Retail, a British electronics chain. He will take over April 20.

Browett has big shoes to fill. Previous retail executive Ron Johnson, who left Apple in November for the CEO position at J.C. Penney, is credited with much of Apple's retail success. He ditched many preconceived notions of what brick and mortar stores should be, eliminating traditional cash registers and giving each employee equipment to make personal transactions.

In a statement regarding the hire, Tim Cook said Browett and Apple shared a commitment to customer service, but he didn't indicate how closely Browett would follow his predecessor. Hiring from the outside may be a sign that Apple could use a strong managerial head as it continues to expand, especially in overseas markets.

"An experienced retail CEO may be able to help Apple Retail overcome the challenge to scale," Leslie Hand, research director at IDC Retail Insights, told MacNewsWorld.

PC Leader

If the numbers in Apple's last financail report are any indication, though, Apple's retail sales are going strong, with or without Browett or Johnson. The company released record high earnings, thanks mainly to iPhone sales. But the iPad continues to lead in the tablet market.

A report from Canalys Tuesday indicated that Apple has overtaken HP as the world's lead PC maker, capturing 17 percent of the total market during its last quarter, or 20 million personal computing devices.

The numbers are controversial because Canalys includes the 15 million iPads the company shipped in addition to the 5 million Macs it sold. Because consumers are using tablets for standard computing functions such as e-mail, enterprise needs and social networking, the devices must start to be viewed as part of the PC picture, Canalys analyst Tim Coulling said.

"Apple has such a head start that it's going to be tough for others to catch up," Coulling told MacNewsWorld.

At the start of 2011 there were plenty of predictions that it would be the year of the tablet, not just the year of the iPad. But after Apple's numbers on iPad sales were released, it's clear 2012 is going to have to be another year for competitors to catch up.

"This year will be a pivotal year for those vendors that were slow to launch pads. It is not just the product that they need to get right. Business models are equally important -- driving revenues from content delivery can help vendors reach lower price points in a market that is incredibly price-sensitive," said Coulling.


Rachelle Dragani is a freelance reporter based in Brooklyn, NY. She enjoys staying on top of e-commerce deals, reporting on what new gadget is coming your way, and keeping tabs on anyone trying to hack into your info. Feel free to e-mail her at rachelle.dragani@newsroom.ectnews.com.


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