Apple

Years back, when rejecting the opportunity to use the technology of my first start-up (optical touch screens), Steve Jobs told me (very nicely I might add) that ‘we don’t do new hardware; we let others take that risk and we follow quickly’.

It seems that this wisdom has been lost at Apple. They were planning on using sapphire top glass on the iPhone 6 due to its improved hardness and scratch resistance. They would have been the first to do this.

The supplier of the sapphire manufacturing technology, GTAT and partners, had also lined themselves as the operating partner and they managed to screw it up.

They built a plant but couldn’t get the yields up in time and Apple eventually pulled the plug on the project. GTAT is now in Chapter 11. Apple is looking for a new operator and the reborn GTAT will be just an equipment supplier.

There is another bit of common wisdom lost in this story; never let a manufacturing equipment supplier become a BOO/BOOT partner. They generally suck at operations and their core skill is technology and manufacturing tool development which, culturally, is orthogonal to that of an high yield operating/manufacturing company.

The twain should only ever meet at the bar at trade shows where they can swap lies and dream that they can do each other’s jobs better than the other; which they cannot.

Footnote – I should have tried harder at Apple but this was before they released the iPhone and we didn’t have a crystal ball big enough to see the opportunity in front of us. We could have ‘given’ them the technology and retained the patents or 1% equity share and still done well out of the deal. Live and learn.