This is the first in a weekly series of short posts on media, innovation and current events.
I was fascinated this week by two New York Times stories about Apple’s manufacturing practices in China. As Apple has expanded its product lines from Mac computers to iPods, iPhones, and iPads, it has moved its manufacturing from the U.S. to China. According to the Times, President Barack Obama asked then-Apple CEO Steve Jobs what could be done to bring those jobs back to the U.S. That wasn’t possible, Jobs replied. The U.S. simply doesn’t have the industrial infrastructure, and there aren’t enough U.S. workers with mid-level training (some college, but not necessarily a four-year degree). Although the articles were framed as related to the political debate over job creation in the U.S., it offers lessons for media innovators about scalability. As it expands, a growing business needs to be able to find suppliers that can meet its needs. In today’s world, those suppliers very well may be offshore.
I also was intrigued by a Los Angeles Times post about Nintendo’s earnings. The video game company reported a $623 million loss for the first nine months of its fiscal year, compared with a $639 million profit a year earlier. Nintendo had been enjoying some success with its innovative Wii video game console. However, in recent months, consumers preferred more advanced machines such as Microsoft’s Xbox 360 and Sony’s PlayStation 3. In a marketplace driven by innovation, companies must keep up or be left behind, even if they have produced innovative products in the past.
Finally, Netflix’s earnings report this week showed it’s beginning to recover from last year’s debacles over price increases and a quickly reversed decision to separate its DVD and streaming businesses. According to the Los Angeles Times, Netflix’s U.S. subscriber base grew by 610,000 in the last three months of 2011. Netflix had lost about 800,000 subscribers during the previous quarter. (By contrast, Netflix added 2.7 million subscribers in the fourth quarter of 2010.) Netflix’s earnings report shows that a company can push forward even after temporary setbacks. However, Netflix continues to face significant challenges, including the decline in its DVD business and the resistance by Hollywood studios to adapting to new business models.
Sources:
Duhigg, C. & Barboza, D. (2012, January 25). Human costs are built into an iPad. The New York Times. Retrieved from http://www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html
Duhigg, C. & Bradsher, K. (2012, January 21). How U.S. lost out on iPhone work. The New York Times. Retrieved from http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html
Fritz, B. (2012, January 25). Netflix growing again, barely beating fourth-quarter expectations. Los Angeles Times Company Town blog. Retrieved from http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/01/netflix-growing-again-barely-beating-fourth-quarter-expectations.html
Pham, A. (2012, January 26). Wii are sinking. Los Angeles Times Company Town blog. Retrieved from http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/01/nintendo-sales-drop-31-percent-slips-into-loss-in-2011.html
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