Train Everyone Then Pit Them Against Each Other

“Given Apple’s scale and manufacturing concentration, the result of this strategy is that Apple spawned the formation of major industrial clusters in which engineers from Cupertino would teach multiple factories how to, say, shape glass for the iPhone. So instead of being beholden to Lens Technology—the company that cut and tempered Corning glass for the first iPhone—Apple would constantly send engineers from Cupertino to train its rivals. That kept Lens on its toes, lest Apple choose a different supplier for the next-generation iPhone—a potential catastrophe as Apple, by 2015, was producing a quarter billion iPhones per year. Moreover, it kept Lens from raising its prices. So any company supplying Apple with some component was preemptively thwarted from believing it had any power to exert, because Apple made it known that it had options.”

“O’Marah recognized that Apple’s strategy was brilliant. It accounted for why the company was running circles around the competition, turning revered companies like Nokia and BlackBerry into case studies of strategic failure. But it had one major flaw. Whereas smartphone rivals like Samsung could bolt a bunch of off-the-shelf components together and make a handset, Apple’s strategy required it to become ever more wedded to the industrial clusters forming around its production. As more of that work took place in China, with no other nation developing the same skills, Apple was growing dependent on the very capabilities it had created.”