Bowen Liu / Apple

At least that’s the word from Foxconn chief Terry Gou, who said as much during today’s groundbreaking ceremony for the company’s new Shanghai headquarters.

“We’ve discovered that [improving factory conditions] is not a cost. It is a competitive strength,” Gou told reporters today. “I believe Apple sees this as a competitive strength along with us, and so we will split the initial costs.”

Gou didn’t elaborate on the size of Apple’s financial commitment, or its terms. Nor did he explain if this investment is a new one, or simply part of the same deal that’s seen the two companies invite audits by the Fair Labor Association. But it’s clear that Apple is bolstering its efforts to improve labor conditions at factories where devices like the iPhone and iPad are built. And any forward movement there is welcome.

Apple declined comment on Gou’s remarks.

Hon Hai, which makes Apple’s iPhones and iPads under contract, has been facing pressure to improve wages and working conditions since several employee suicides at its facility in Shenzen in 2010 and an explosion in Chengdu in 2011 that killed four workers. Following the incidents, Hon Hai, also known as Foxconn, increased salaries in China and outfitted worker dormitories with safety nets.

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Bowen Liu / Apple

While the probe found several health and safety risks, and a large communications gap between management and the workforce, the biggest concerns dealt with overtime, both the amount and the compensation. Evidently a number of Foxconn employees were not being paid enough for unscheduled overtime. From the report:

During peak production, the average number of hours worked per week at Foxconn factories exceeded both the FLA Code standard and Chinese legal limits. This was true in all three factories. Further, there were periods during which some employees worked more than seven days in a row without the required minimum 24-hour break. The root causes include high labor turnover, which undermines efficiency, and gaps in production and capacity planning.

… FLA also discovered that 14 percent of workers may not receive fair compensation for unscheduled overtime. The assessment found that unscheduled overtime was only paid in 30-minute increments. This means, for example, that 29 minutes of overtime work results in no pay and 58 minutes results in only one unit of overtime pay.

A troubling finding to be sure, but the FLA was able to win from Foxconn an agreement to restructure its compensation plan to protect pay while bringing overtime down.

“Foxconn committed to pay workers fairly for all overtime as well as work-related meetings outside of regular working hours,” the FLA explained. “In addition, FLA secured agreement from Foxconn and Apple to retroactively pay any worker due unpaid overtime. The companies are currently conducting an audit to determine the payments due to workers.”

So, a good outcome. And Apple pronounced itself pleased with the report.

“We appreciate the work the FLA has done to assess conditions at Foxconn, and we fully support their recommendations,” Apple spokesman Steve Dowling told AllThingsD. “We think empowering workers and helping them understand their rights is essential. Our team has been working for years to educate workers, improve conditions and make Apple’s supply chain a model for the industry, which is why we asked the FLA to conduct these audits. We share the FLA’s goal of improving lives and raising the bar for manufacturing companies everywhere.”

Foxconn, too, said it was pleased the FLA’s work.

“We are committed to work with Apple to carry out the remediation program, developed by both our companies, that has been presented along with the FLA audit findings and we will continue to support Apple’s initiatives to ensure that its business partners are in compliance with all relevant China laws and regulations and the FLA’s Workplace Code of Conduct,” Foxconn said in a statement to AllThingsD. “Our success will be judged by future FLA audits and the monitoring of the implementation of the remediation program, by reviews carried out by Apple and other customers and by future employee surveys. Our employees are our greatest asset and we are fully committed to ensuring that they have a safe, satisfactory and healthy working environment.”

Boy, oh boy, is Mike Daisey confused.

After a weekend of savage pounding by the media, Daisey, the opportunistic fabulist who was caught lying to one of the most respected radio documentarians in the history of broadcasting, reemerged in public today. In his latest attempt to mitigate the damage done to his reputation, he appears to compare himself to Mark Twain, opening his latest blog post by quoting — his words — another famous monologuist: “Reports of my death have been greatly exaggerated.”

Instead he seems to be borrowing from Phineas T. Barnum, the great American showman who is often credited — perhaps apocryphally — with saying “There is no such thing as bad publicity.”

I couldn’t tell you how ticket sales to Daisey’s show have been affected by the ensuing controversy and, frankly, I don’t care. I know that Daisey addressed it in opening comments before his performance of “The Agony and the Ecstasy of Steve Jobs” on the night of March 17 in New York.

In summary, his defense is that his work is theater based on a body of facts that are largely true, and though they shouldn’t have been aired as factual on “This American Life,” he stands by it as theatrical work. Never mind that he insisted, not once, but repeatedly according to one account, that the words “This is a work of non-fiction,” be printed on his show’s Playbills. (For an example see page 3 of this PDF.)

But the money quotes that give the deepest insight into his state of mind are these:

“Especially galling is how many are gleefully eager to dance on my grave expressly so they can return to ignoring everything about the circumstances under which their devices are made. Given the tone, you would think I had fabulated an elaborate hoax, filled with astonishing horrors that no one had ever seen before. …

“If people want to use me as an excuse to return to denialism about the state of our manufacturing, about the shape of our world, they are doing that to themselves.”

Right. Mike Daisey, a confessed liar who parlayed his appearance on “This American Life” into a months-long string of media appearances on CBS, MSNBC, HBO and PBS — which helped raise his public visibility, built buzz and goosed ticket sales — thinks he can retake the moral high ground?

The only benefactor of all this attention certainly hasn’t been Chinese workers, but Daisey himself. Some 70,000 people have seen his show in 18 cities, and tickets in New York have been going for $75 to $85.

Worse, he continues to believe it is he alone who has been shining a light on the problems that have emerged over the years with Apple’s manufacturing arrangements in China and around the world. “Given the tenor of the condemnation, you would think I had concocted an elaborate, fanciful universe filled with furnaces in which babies are burned to make iPhone components …”

Sorry, Mike, but the discussion about Apple, Foxconn and its employees was going on well before you elbowed your way onto the scene.

For openers, at the D8 conference in 2010, AllThingsD’s Kara Swisher and Walt Mossberg asked Apple’s then-CEO Steve Jobs about the situation at Foxconn, in the wake of a string of suicides.

That same year — indeed, only weeks after nine suicides by Foxconn employees — Bloomberg Businessweek’s Fredrik Balfour conducted a three-hour interview with Foxconn CEO Terry Gou, and also several unsupervised interviews with Foxconn workers, for a story featured on the magazine’s cover. The Atlantic Monthly considered Foxconn in the wider context of the rise of China as a leading economic power. The BBC looked at Foxconn after the suicides. Indeed, there had been a great deal of attention paid to matters related to Apple, Foxconn and workers in China, well before the days of Daisey. Who does he feel has not been talking about this?

In fact, let us not leave Apple itself out of that conversation. The way Daisey tells it, you might assume that the electronics giant is sweeping its dirty laundry under the nearest rug.

This is not the case. Awakened to allegations that emerged in 2006 of worker abuses and bad conditions at a Foxconn plant in Longhua — in a British tabloid newspaper, no less — Apple started issuing an annual document it calls its “Supplier Responsibility Progress Report.” The latest one, from 2012, is here (PDF). Reports are available from 2011, 2010, 2009, 2008 and 2007.

These reports hardly let Apple off the hook. Rather, they document progress made, as well as progress yet to be made. Apple CEO Tim Cook admitted to The Wall Street Journal earlier this year that a priority for 2012 is to reduce the number of hours that employees at Foxconn and other companies work. It is, as you can see by Apple’s own admission, the most difficult of its China labor issues to solve.

Hard as this is to believe, employees often want to work long hours — and to earn the overtime pay that comes with them. In being too aggressive, they run afoul of Apple’s demand that no one work more than 60 hours a week, six days a week. And keeping accurate records that prevent employees from overworking themselves is proving difficult. If you visited Foxconn, Apple’s own disclosures suggest, you would probably have no trouble finding someone who recently worked more than 60 hours in a week.

What you would have trouble finding are the underage workers that Daisey said — in a now-debunked statement from his stage show and radio appearances — were so plentiful. Apple’s 229 audits found none of those at the final-assembly plants owned by Foxconn and others, and found only five active and 13 historical cases of underage workers at other facilities it does business with.

You would also have trouble finding people poisoned by n-hexane. As Apple documents in its 2011 report, a poisoning incident did happen, and when it did, Apple ordered the factory in question to stop using the chemical, the use of which I understand, is already a violation of Chinese law. Most of the 137 people who were poisoned had returned to work by the time the report was published. One plant using the chemical was shut down entirely by local authorities.

Read any of these reports by Apple, and you’ll find not the PR-sanitized language you might expect, but instead a rather unvarnished assessment of a company trying to come to grips with the human costs of a deeply complex industrial operation. Each report, which Apple releases voluntarily generates a new round of negative press coverage. Meanwhile, China is, despite its size, still a developing nation, and it will be some time before workplace standards there come close to resembling what we take for granted in the U.S. It is an evolving situation, one that will improve over time.

And while I readily admit that consumers and activists should continue to pressure and engage Apple on the subject of workers’ safety and rights, in China and in the other countries where it does business, it rarely gets any credit for the progress it has made and the leadership it has shown.

On that note, I think the discussion on the matter has been a healthy and engaging one for the better part of a decade. Contrary to his own inflated sense of self-importance, Mike Daisey has added nothing of value to it, and should consider shutting up.

I said as much on CNN’s “Reliable Sources” yesterday, and have embedded the video below:

CNN Reliable Sources March 18 2012 from Arik Hesseldahl on Vimeo.

Who in their right mind would lie to Ira Glass?

That was my first reaction to the revelation that the theatrical monologuist Mike Daisey had lied or fabricated — or in his words, “taken dramatic license” with — certain parts of his stage play, “The Agony and the Ecstasy of Steve Jobs.”

When I met people at parties in recent weeks and told them that I write about technology and that I had devoted more than a decade to covering Apple, the first question I used to get was: “Did you know Steve Jobs?” Since about January of this year, that first question has become, “What do you think of Mike Daisey?”

I haven’t had a real answer. I hadn’t seen his show, which was favorably reviewed by the New York Times, nor had I heard the episode of the highly respected public radio documentary program “This American Life” titled “Mr. Daisey and the Apple Factory,” that had been adapted from his play.

The show — or shows — hit a cultural nerve at a critical moment. Apple is the biggest company in the world, sporting a market capitalization of $546 billion as of Friday, with $100 billion worth of cash and investments on its balance sheet and the most popular stable of consumer electronics products in the world, especially the iPhone and the iPad. All of them are manufactured by workers in China, who labor for wages that are low by Western standards, put in hours that by Western reckoning are long, under conditions that to Western eyes aren’t ideal, doing jobs that by any standard are incredibly tedious.

Daisey’s stage show, which became a sensation among New York’s chattering classes, sought to draw attention to the plight of allegedly oppressed workers at Foxconn, Apple’s manufacturing partner in China. As New York Times reviewer Charles Isherwood put it, the play “is a mind-clouding, eye-opening exploration of the moral choices we unknowingly or unthinkingly make when we purchase nifty little gadgets like the iPhone.”

The stage show had been adapted for radio on public radio’s “This American Life,” which is probably the most-respected radio documentary program in the history of broadcasting. And the Daisey episode was presented as documentary, meaning the radio show’s staff of journalists and producers were vouching for it being true.

The problem: Much of it wasn’t.

In the show, Daisey described a trip to China, as well as a visit to Foxconn’s outer gates and other manufacturing companies in Shenzen, where many are located. He delivers a detailed and emotionally riveting account of meeting girls as young as 12, 13 and 14 years old who claimed to work for Foxconn. This would be in violation both of local laws and of Apple policies.

He also told of meeting workers poisoned by a chemical called n-Hexane, used to polish screens.

And, perhaps most movingly, he related a tear-jerking scene in which he showed a working iPad to a man who said he had crippled a hand while making its parts in a Foxconn metal press, yet had never so much as seen one of the devices powered on. Seeing the iPad’s screen in action, he tells Daisey, “is like a kind of magic.”

The word “magic” fits oddly here, because these meetings didn’t happen as Daisey said. “This American Life” yesterday aired a lengthy episode entitled “Retraction,” documenting Daisey’s many liberties with the facts.

To help do so, a reporter for another public radio show — Rob Schmitz of “Marketplace” — did what no one else in the media seemed to be willing to do, which was subject Daisey’s claims to scrutiny. Most damning of all in Schmitz’s report was the testimony of Daisey’s translator, called Cathy. She was found — after Daisey had told TAL he had lost contact with her — and disputed many of the anecdotes taken from the play and used in the radio segment about Foxconn.

Among the fabrications: Daisey didn’t speak to quite as many people nor visit nearly as many plants as he said he did. She disputed finding underage workers. The n-Hexane poisoning incident occurred not at Foxconn in Shenzen where Daisey visited, but at a Wintek facility in Suzchou, more than 900 miles to the north of Shenzen.

The stage show, and therefore the radio show that was derived from it, turned out to be a mixture of facts and fiction. Which might be fine for a production on the New York theatrical stage, where fiction and fact blend readily. And, while it might be okay in entertainment products, you don’t expect it from a prestigious radio documentary program.

And that is where the problems began.

When Daisey’s monologue was adapted for “This American Life,” outrage began to grow among people who wanted to do something about it. It was, Glass says, the most downloaded episode of “TAL” ever, and public radio listeners did what public radio listeners tend to do. For one thing, they started a petition. More than a quarter of a million people have signed a petition at Change.org, inspired by the TAL production based on Daisey’s work, demanding that Apple make changes.

That includes crafting a “worker protection strategy” for new products released, as well as publishing data from Fair Labor Association audits.

Feeding the frenzy, Daisey stepped up as the leading voice for worker rights in China’s electronics industry. He was seemingly everywhere in the media. Since the TAL segment aired in January, Daisey has been seen on “CBS News Sunday Morning,” in a report that, like the “TAL” episode, is now going to have to be retracted or at the very least walked back.

Another CBS-owned property, CNET, hosted Daisey as part of “Reporters Roundtable,” alongside Charles Duhigg of the New York Times, co-author of a series of front page stories in that newspaper. Duhigg ended his “Roundtable” appearance by urging people who care about the issue to go and see Daisey’s play.

Daisey also appeared on MSNBC repeating the same anecdotes and tarnishing the usually shiny Apple. And on HBO. And PBS. And C-SPAN.

Needless to say, there will have to be many more retractions in the days ahead.

At this point, it’s hard to determine what’s more outrageous, Daisey’s lies to Ira Glass and his team, or the national media’s willingness to give Daisey a platform to repeat the same lies and fabrications without making the slightest effort to vet them.

The circumstances around Apple’s manufacturing arrangements in China aren’t new. As a columnist for Businessweek I wrote about Apple’s first round of “sweatshop” allegations in 2006, well before the age of the iPhone and the iPad, which had at the time first come to light in part because of the reporting by London’s Daily Mail.

I’ve never been to China. Many people know more about the on-the-ground facts concerning Apple’s factories than I do. But there are many reporters who have been there. In 2010, Bloomberg Businessweek’s Fredrik Balfour wrote a powerful cover story for that magazine, which aimed to get to the bottom of the string of suicides that occurred among Foxconn employees that year.

ABC’s “Nightline” visited Foxconn earlier this year. Its report was criticized in some circles, because at the time of his death, Apple’s late CEO Steve Jobs happened to be the largest shareholder of that network’s parent company, Disney. Also, ABC had been invited by Apple and Foxconn. Even so, “Nightline” anchor Bill Weir, seeing conditions very different from what Daisey described in the course of his reporting, wondered if Mike Daisey’s work was questionable.

At the very least, Daisey is a dramatist who now admits he chose to lie, but for reasons known only to himself. The chance to raise his profile and sell more tickets to his monologue are obvious potential motivations. Whatever it was, his dramatic product is meant to be consumed as thought-provoking entertainment, not as fact-based journalism, which many people assumed it was.

This is the crux of Daisey’s defense for lying to Ira Glass and his fact-checker: That he’s not a journalist and took dramatic license with the events, and now regrets doing the “This American Life” segment.

And that’s the real shame here.

Clearly, people care about how workers who make our electronics are treated, or there wouldn’t have been a market for Daisey’s show, or for an hour-long radio documentary adapting it. And the subject is one we need to discuss at length as a society. The net result of Mike Daisey’s efforts to put self-promotion ahead of the facts has badly muddied the waters, and has probably done more harm to the people he sought to help.

So, instead of illumination on a serious topic, we are left with little. Mike Daisey is an opportunistic fabulist and should be ashamed of himself for lying. Ira Glass and his team are ashamed for giving him wider attention, and have said so. But there are many more people who should be even more ashamed for taking Daisey’s lies at face value. There should be many more retractions and apologies in the days ahead.

But now we have to start the conversation about Apple and Foxconn and workers’ rights all over again, this time with real, verifiable facts at our command. Is that so much to ask?

(Image courtesy of Mike Daisey’s Web site.)

Nobody at Apple is running for U.S. president at the moment, but that doesn’t mean the company can’t brag about how many American jobs it has created. In addition to 47,000 jobs at Apple, the largest portion of that figure is an estimated 257,000 jobs supported by Apple at companies like Corning and FedEx. That includes the people who deliver and build Apple products and components, professional and technical services, and healthcare. The estimate comes from a standardized “employment multiplier” applied to Apple’s spending by an outside firm called Analysis Group.

And then added to that, Apple said 210,000 iOS-related jobs have been created since 2007, funded by $4 billion in royalties paid to date. The iOS number piggybacks on recent research by TechNet.

For comparison — sort of, given that it was a totally different study sponsored by Facebook — last September, the University of Maryland’s Robert H. Smith School of Business found that Facebook’s own app economy had created 182,000 new U.S. jobs in the previous year.

As for Apple’s workforce, of the company’s 47,000 jobs in the U.S., 19,500 were added since 2008, the company said. Apple noted that its call centers are in the U.S., and its retail employees are mostly full-time.

Of course, Foxconn knew “Nightline” was coming and was obviously well prepared for its visit. Indeed, there are already allegations that Foxconn has been hiding underage employees from investigators.

That said, the Fair Labor Association is at this very moment conducting a massive audit of Foxconn that will see it not only examining production lines and employee dormitories, but digging through the company’s employment records in search of evidence of more serious problems. So perhaps there’s more to learn here. Maybe, Foxconn really doesn’t meet social responsibility standards.

But perhaps it does. And if — if — that’s the case and the FLA’s probe concludes without incident, maybe it’s time for the conversation to expand from allegations of employee abuse to subjects like fair wages, which actually seem to be top of mind for the Foxconn employees interviewed by “Nightline.”

Not to downplay any past or as yet uncovered worker mistreatment, but right now Foxconn seems to be just a massive contract manufacturer that folks living in industrialized nations probably wouldn’t want to work for. But thousands of others do, because, troubling though it may be, collecting $1.78 per hour for performing mind-numbing labor for 12 hours a day is a better alternative to remaining in the rural villages they come from.

More Kindle Fire augury, I know. But it does jibe with recent reports from China Times and Pacific Crest analyst Chad Bartley, who both claim that Amazon’s got a bigger Fire in the pipeline.

Why does Amazon even need to bring a larger Fire to market? Perhaps to take on the iPad in the market it created? Or perhaps it has decided that the device’s current 7-inch form factor isn’t as optimal as it once thought — something Apple CEO Steve Jobs remarked on back in 2010.

“One naturally thinks that a seven-inch screen would offer 70 percent of the benefits of a 10-inch screen,” Jobs said. “Unfortunately, this is far from the truth. The screen measurements are diagonal, so that a seven-inch screen is only 45 percent as large as iPad’s 10-inch screen. You heard me right: Just 45 percent as large. If you take an iPad and hold it upright in portrait view, and draw an imaginary horizontal line halfway down the screen, the screens on these seven-inch tablets are a bit smaller than the bottom half of the iPad’s display. This size isn’t sufficient to create great tablet apps, in our opinion. … The seven-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad.”

In the meantime, they’re offering this teaser clip, along with a story-behind-the-story (warning — comes with annoying auto-play video):

This morning, a team of labor rights experts began inspections of Foxconn, a manufacturer that has been plagued with employee suicides and, last year, an explosion that killed four workers at its plant in Chengdu, China. The audits will cover the broad spectrum of working and living conditions at the manufacturer — health and safety, compensation, working hours and communication with management. Thousands of employees are to be interviewed and, according to Apple, the FLA will have unrestricted access to Foxconn’s manufacturing areas, as well as employee dormitories.

“We believe that workers everywhere have the right to a safe and fair work environment, which is why we’ve asked the FLA to independently assess the performance of our largest suppliers,” Apple CEO Tim Cook said in a statement. “The inspections now underway are unprecedented in the electronics industry, both in scale and scope, and we appreciate the FLA agreeing to take the unusual step of identifying the factories in their reports.”

When completed, the FLA’s inspections will cover factories where more than 90 percent of Apple’s products are built. So, another step forward for labor rights — assuming that these audits have teeth, and that Foxconn is held accountable for whatever violations and issues the FLA turns up. And who knows, perhaps it will pressure other companies to implement similar measures. Apple isn’t the only consumer electronics company using offshore labor. Hear that HP? Dell?

In the message, first published by 9to5Mac, Cook says Apple is not “ignoring the human cost” of its supply chain, and dismisses accusations that it is complicit in worker abuse as mendacious.

“We care about every worker in our worldwide supply chain. Any accident is deeply troubling, and any issue with working conditions is cause for concern,” Cook wrote. “Any suggestion that we don’t care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It’s not who we are.”

And for evidence of that, one need only look at Apple’s supplier-responsibility efforts. If there are problems at overseas suppliers, says Cook, no one is doing more than Apple to prevent them.

“Every year we inspect more factories, raising the bar for our partners and going deeper into the supply chain,” Cook explained. “As we reported earlier this month, we’ve made a great deal of progress and improved conditions for hundreds of thousands of workers. We know of no one in our industry doing as much as we are, in as many places, touching as many people.”

Which is probably true. Apple has been conducting supplier-responsibility audits and issuing reports on them for years now. And it recently became the first tech company to join the Fair Labor Association, which will serve as an independent auditor for its supply chain.

That said, there’s still a lot more to be done, and Apple could likely do it. With the $13 billion in profits it reported earlier this week, and that $97 billion in cash it’s sitting on, it’s hard to argue otherwise.

As a former Apple executive told the New York Times, “Suppliers would change everything tomorrow if Apple told them they didn’t have another choice.”

An overly simplistic argument, I suppose. The solutions to these issues are far more complex than threats over contracts. But again, more could be done. And not just by Apple. There are plenty of other big consumer electronics companies using offshore labor. And ultimately, the biggest driver of these issues isn’t Apple or HP, but our own buying habits.

The U.S. software giant said in a statement that a protest erupted earlier this month over “staffing assignments and transfer policies, not working conditions” at the Wuhan facility, where Foxconn reportedly manufactures the Xbox game console. Redmond, Wash.-based Microsoft said workers at the plant manufacture hardware products but didn’t specify which ones.

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Foxconn is working with the Chinese city of Zhengzhou to double the size of the workforce at its facility there, recruiting an additional 100,000 employees — the same number it hired in 2011. Valued at about $1.1 billion, the expansion would make the factory the largest smartphone production facility in the world.

That should make for a massive increase in production, once hiring is complete. Foxconn’s Zhengzhou plant currently cranks out about 200,000 iPhones per day, according to reports. So a doubling of its workforce would presumably also increase that number by a factor of two.

Product strategists in the PC industry are gearing up for 2012 to be the year of the “ultrabook” — very thin, very light laptops, usually with solid-state drives (SSD), that compete with Apple’s MacBook Air — such as the Asus Zenbook and Lenovo U300s. We agree that ultrabooks’ lighter, thinner form will appeal to many consumers. Already, 21 percent of U.S. online consumers say they’re interested in owning one, according to a Forrester Research survey fielded in September. But we see the ultrabook as an evolution of the laptop rather than an entirely new form factor. So what is the next big thing in consumer computing?

The “next big thing” is likely to be many things — we anticipate accelerating form factor diversification beyond the desktops, laptops, netbooks, tablets and smartphones we have today, as we advance deeper into the Post-PC Era. Based on what we see in research and development labs, new products beginning to come to market and gaps in consumer computing experiences, we’ve identified these five form factors as the best candidates for what comes next:

• Wearables: Wearable devices, or “wearables” for short, are devices worn on or near the body that sense and relay information. Many wearables, like the heads-up display (HUD) contact lenses in development at the University of Washington, are years from marketability. But other wearables are already available as consumer products, for uses such as communication and health and fitness. An increasing number of wearables in the health-and-fitness space interact with Apple iOS devices, such as the Lark Technologies vibrating wristband that doubles as an alarm clock and a sleep sensor; and BodyMedia FIT Armbands, which have four sensors to track activity, sleep and calorie intake. WIMM Labs, a Foxconn-funded start-up in Los Altos, Calif., has designed multifunctional wearables, based on Google’s Android software, that it will license to other companies.
• Embedded devices: We define embedded devices as physical objects that incorporate computing processors and sensors, excluding those worn on the body, which we classify as wearables. Like wearables, embedded devices are diverse in form, ranging from devices such as Livescribe smartpens that fit into your pocket, to LG Thinq refrigerators that sit in your kitchen. Embedded devices may or may not have a display — Livescribe pens don’t; the LG Thinq appliances do. Today, embedded devices are widely used in industrial automation and automotives, and they have emerging consumer uses in home automation, entertainment and productivity.
• Surfaces: Surfaces are large interactive displays, which may incorporate multitouch, voice and gesture control, facial recognition, near field communication (NFC), quick response (QR) codes or other input/output mechanisms. Today, surfaces are found mostly in public places such as hotels (Microsoft Surface tables in Sheraton bars) and conferences and events (Obscura Digital’s custom multitouch video installations), as well as in education (interactive whiteboards) and news media (red state/blue state maps), but we see potential for additional uses, especially in retail and marketing. For example, retailers such as Victoria’s Secret have commissioned the design firm frog design to create interactive displays for their retail stores. In Seoul, South Korea, retailers use surfaces to extend their reach beyond their stores: Tesco Homeplus, the No. 2 grocery retailer in South Korea, built “virtual malls” in subway stations to reach more customers without building more stores. Commuters take pictures of QR codes under the groceries they want to buy, and the groceries are delivered to their homes.
• Flexible displays: Flexible displays are computing screens that can be rolled, folded or flexed. Flexible devices can take the form of personal devices, such as an e-reader, or larger surface displays, such as furniture or wallpaper. Flexible displays are likely the farthest from becoming commercialized products because of the lack of a defined use case or customer: Polymer Vision, a spinoff of Philips Electronics, promoted its flexible eBook Reader for years, but declared bankruptcy before bringing the device to market. HP has been developing printable Mylar displays that it imagines could be used for candy wrappers, armband computers for the military or living room wallpaper, but the displays are still several years from commercialization.
• Miniprojectors: Miniprojectors are small devices that project a larger image onto another surface or, in the case of holographic projection, into 3-D space. Miniprojectors can be combined with cameras that recognize gesture to become interactive, similar to the Microsoft Kinect for Xbox 360. Today, miniprojectors such as the Brookstone Pocket Projector are gaining in popularity as iPhone accessories. But they’re still niche products, as consumers must purchase them separately. Apple has already filed a patent to embed interactive projectors into its iPhones, iPads and Macs. Embedded miniprojectors would appeal primarily to information workers, but there could be broader consumer uses as well, such as impromptu photo slide shows or YouTube viewing in a group.

It’s easy to read about computing wallpaper, or contact lenses with embedded heads-up displays, and think that these form factors have no bearing on what product strategists are doing today. But product strategists who see what’s coming can anticipate disruption — or even innovate and become disruptors themselves. As you think about what’s coming in 2012 and beyond, know that none of these devices will operate in isolation. The most successful products will work with other products — for example, wearables that talk to smartphones and TVs; surfaces that are activated by the presence of your smartphone. We’re living in a multidevice, multiconnection world, and the best experiences will be those that work across devices and platforms. In that sense, the next phase of the Post-PC Era doesn’t look so different from today.

Sarah Rotman Epps is a senior analyst at Forrester Research, serving consumer product strategy professionals. Follow her on Twitter at @srepps

Supply chain sources tell the Commercial Times that Pegatron Technology has received orders to build another five million iPhone 4S handsets; this is in addition to the 10 million it has already been contracted to produce.

Pegatron is the smaller of Apple’s two iPhone 4S OEM partners — the larger being Foxconn. It had initially been tapped to handle about 15 percent of the device’s production load, with deliveries not scheduled to begin until early 2012.

But supply chain insiders now claim Apple is looking to take delivery of a few million of them before the end of the year. Which may mean that demand for this latest iteration of the iPhone is greater than even Apple expected. Add to this record first-day sales of one million and it’s pretty clear that consumers are as enamored of the 4S as they were of each version of the device that preceded it.

As Brian White of Ticonderoga Securities observed earlier this week, “While the unveiling of the iPhone 4S received a muted response, both from the market and tech blogs, the customers have the final word, in our view, and they have spoken with resounding enthusiasm for the iPhone 4S.”

Shares in the company, which have been charting new all-time highs recently, fell $8.21, or 2 percent, to $396.09 in early trading following the report, which claimed supply chain vendors indicate a 25 percent cut for fourth-quarter iPad sell-in orders.

A nasty bloodletting, and unmerited according to a few other analysts. Piper Jaffray’s Gene Munster, for example, dismissed J.P. Morgan’s report as a misinterpretation of supply chain noise.

“Following our recent trip to Asia we remain confident in our iPad estimates for the September and December quarters of 10.0m and 12.0m, respectively,” he said in a note to clients. “While we heard chatter of supply chain order reductions, the absolute sell-in figures for 2H CY11 likely remain well above our estimates. We also note that previous calls based on sell-in or supply chain data have, for the most part, proven to have very little correlation with Apple’s results vs. consensus.”

Susquehanna chip analyst Chris Caso also raised an eyebrow over J.P. Morgan’s claims, arguing that what we’re seeing is a scheduling adjustment, not a cut.

“We believe chatter regarding iPad production cuts are misleading — we have seen pull-ins, not cuts,” Caso said. “We have noted recent comments by competitors discussing iPad production cuts for 4Q. Our recently published AAPL supply-chain checks noted a sequential decline in 4Q iPad builds from 17 mln-19 mln units in 3Q to 11 mln-13 mln units in 4Q. However, the 4Q sequential decline was accompanied by an increase in 3Q builds, leading us to conclude that production was likely pulled-in from 4Q to 3Q. We believe AAPL has attempted to accelerate production in 3Q to ensure product availability for the holidays. In addition, we expect AAPL will need to modulate production of iPad2 to prepare for iPad 3.”

In other words, don’t pay too much attention to supply chain noise. J.P. Morgan’s Apple analyst Moskowitz isn’t. He hasn’t changed his iPad numbers and, according to the note that inspired today’s sell-off, “does not expect the supply chain adjustments to result in downside to his estimates.”

UPDATE: Later Monday afternoon J.P. Morgan issued a second research note on rumored iPad production cuts, this one written by Moskowitz. Its gist: Apple is fine.

“A recent alert on Hon Hai Precision from our J.P. Morgan Asia colleague Gokul Hariharan has the equity markets worried about Apple,” Moskowitz wrote. “Mr. Hariharan’s report focuses on how Hon Hai could be impacted by potential iPad sell-in order cuts. This alert is not the view of the US IT Hardware team. As referenced at the end of the Hon Hai alert, our estimates for Apple remain unchanged, and we do not expect any downside risk.”

Supply chain sources tell Taiwanese trade mag DigiTimes that Foxconn Electronics is pumping out 150,000 next-generation iPhones per day, with a goal of shipping up to six million in September alone. With volume like that, fourth-quarter iPhone shipments could rise as high as 22 million.

Which is just about the number some analysts expect Apple to sell during the period. BTIG analyst Walter Piecyk, for example, predicts Apple will sell 21.5 million iPhones in Q4, though he argues it could sell far more than that if the company adds Sprint as a third carrier in the United States, and the debut of a brand-new iPhone at Verizon causes a big spike in sales.

“Since the iPhone 4 has been launched we estimate that AT&T and Verizon have represented 30 percent of Apple’s unit volume,” Piecyk says. “If the U.S. continues to represent 30 percent of Apple’s iPhone sales, it would imply a global iPhone demand for as many as 30 million iPhones in calendar Q4.”

Question is, can Apple deliver that many phones?

Apple manufacturing partner Foxconn is ramping up iPad production heading into the company’s third quarter. Supply chain sources tell the occasionally reliable DigitTmes that Foxconn is expected to ship 20 million iPads to Apple this quarter, which concludes at the end of September.

That’s about 60 percent more than it shipped in the spring. And if that number is accurate, it means Apple expects to sell more than double the 9.25 million iPads it sold last quarter.

That’s extraordinary growth, considering the company sold just 4.19 million iPads during the first full quarter it was available. Still, it’s hardly surprising. Given back-to-school sales, foundering competition and massive demand in new markets like China, an accleration in iPad volume was really inevitable.

[Image credit: Appertunity]

D1: Steve Jobs Onstage in 2003, on the Tablet

A day after Bill Gates took the stage, enthusiastic about the future of the tablet computer, Jobs dismissed the idea as a niche product for rich guys. “We looked at the tablet, and we think it’s gonna fail.”

View the full session video of Steve Jobs at D1.

D2: Apple CEO Steve Jobs in 2004, on Not Doing a PDA

Specifically referring to ongoing speculation about Apple’s development of a PDA, Jobs said “I’m as proud of the products that we have not done as I am of the products we have done.”

View the full session video of Steve Jobs at D2.

D3: Steve Jobs Onstage at D3 in 2005

As Kara pushed for info about an “iPod phone,” Jobs laid out the challenges of creating such a product, though he didn’t make any outright denials that Apple was doing so.

View the full session video of Steve Jobs at D3.

D5: Steve Jobs Flashes the iPhone

In the first of two appearances at 2007′s D5 conference, Jobs joked with Walt about Apple’s “three businesses and a hobby” and gave attendees an oh-so-quick peek at the forthcoming iPhone.

D5: Steve Jobs and Bill Gates look back

In their first joint appearance in 20 years, Gates and Jobs reminisce about competition between their two companies and the state of the graphic user interface in the mid-nineties.

D5: Steve Jobs and Bill Gates look ahead

Jobs and Gates discuss the future of the industry and the roles of Apple and Microsoft as entertainment delivery systems.

View the highlight reel of Steve Jobs and Bill Gates together at D5.
View the full session video of Steve Jobs and Bill Gates together at D5.
View the full session video of Steve Jobs at D5.

D8: Steve Jobs on the iPhone’s Origin

In 2010, Jobs told Walt and Kara how the iPhone actually grew out of a multitouch display Apple was developing for a tablet. The OS was so promising that Jobs put the tablet on the back burner and used the OS for the iPhone instead.

D8: Steve Jobs on Apple’s Relationship With Google

“Just because we’re competing with somebody doesn’t mean we have to be rude.”

D8: Steve Jobs on Foxconn

Apple has a better understanding than most companies in the tech industry of the working conditions in its supply chain, Jobs told Walt and Kara in 2010, but it’s still working to understand the suicide rate at its Foxconn plant in China.

D8: Steve Jobs on iAds Restrictions

Here’s a hint for iOS developers: Don’t put third-party analytics software in your apps, especially not if the analytics firm involved is going to publish personal data about your users and their devices without asking them first. It really pisses Steve off.

D8: Steve Jobs on Television

The reason that Apple TV remains a hobby, Jobs explained at D8, is a balkanized television market that makes it impossible for the company to innovate across the board.

D8: Steve Jobs on AT&T

With the Verizon iPhone deal still on the horizon, Jobs was unable to offer any concrete hope to the Houston-based iPhone user in the D8 audience, whose only real problem with the phone was its inability to make any calls.

D8: Apple CEO Steve Jobs Talks About Flash

At D8, Jobs discussed his still-fresh “Thoughts on Flash” memo with Walt and Kara.

View the full session video of Steve Jobs at D8.

Related posts

• Steve Jobs Resigns as CEO of Apple; Cook Takes Reins
• Steve Jobs’s Resignation Letter: “I Have Made Some of the Best Friends of My Life at Apple.”
• Apple Stock Falls After Jobs Announcement
• Steve Jobs Live on Stage in 2010 (Video)
• Tim Cook as Apple CEO: A Tested and Steady Hand
• Essay: Jobs’s Departure as CEO of Apple Is the End of an Extraordinary Era
• What Happens Next at Apple?
• Mossberg on Jobs (Video)
• Analysts Confident in Apple’s Prospects
• Apple Shares Bounce Back
• Tim Cook: Apple Will Continue to Make the Best Products in the World
• Does Tim Cook Need His Own Tim Cook?

]]> http://allthingsd.com/20110826/steve-jobs-through-the-years-highlights-from-the-d-conference/feed/ 6 http://allthingsd.com/20110826/apples-supply-chain-optimistic-about-future/ http://allthingsd.com/20110826/apples-supply-chain-optimistic-about-future/#comments Fri, 26 Aug 2011 10:37:51 +0000 John Paczkowski http://allthingsd.com/?p=114226 There’s little reason to think Steve Jobs’s resignation as Apple’s CEO will have any impact on the company’s supply chain, but its manufacturing partners are offering up assurances just the same.

Sources close to Apple suppliers Foxconn and Quanta tell Taiwanese trade mag DigiTimes that there’s little concern that the leadership transition that occurred at Apple this week will affect their relationship with it. And really, there’s no reason to think otherwise. Apple’s deals with its Asian supplier partners and contract assemblers are likely firmly established for at least the next year, and newly minted CEO Tim Cook was almost certainly involved in their negotiation.

Indeed, Foxconn, which assembles the iPhone and iPad, says its partnership with Apple is solid.

“Foxconn has had a long and very successful partnership with Steve Jobs, Tim Cook and the entire Apple team for many years and we look forward to working with Steve and Tim in their new positions within Apple,” Foxconn said in a statement to AllThingsD. “We have every confidence in Apple’s leadership and its ability to continue to innovate and to drive much of the global technology industry’s growth. Steve has built a great company and a great management team and we wish him all the best as he transitions to chairman of the board of Apple.”

Related posts

• Steve Jobs Resigns as CEO of Apple; Cook Takes Reins
• Steve Jobs’s Resignation Letter: “I Have Made Some of the Best Friends of My Life at Apple.”
• Apple Stock Falls After Jobs Announcement
• Steve Jobs Live on Stage in 2010 (Video)
• Tim Cook as Apple CEO: A Tested and Steady Hand
• Essay: Jobs’s Departure as CEO of Apple Is the End of an Extraordinary Era
• What Happens Next at Apple?
• Mossberg on Jobs (Video)
• Analysts Confident in Apple’s Prospects
• Apple Shares Bounce Back
• Tim Cook: Apple Will Continue to Make the Best Products in the World
• Does Tim Cook Need His Own Tim Cook?

]]> http://allthingsd.com/20110826/apples-supply-chain-optimistic-about-future/feed/ 0 http://allthingsd.com/20110731/foxconns-terry-gou-tells-employees-the-robots-are-coming/ http://allthingsd.com/20110731/foxconns-terry-gou-tells-employees-the-robots-are-coming/#comments Sun, 31 Jul 2011 17:35:45 +0000 Arik Hesseldahl http://allthingsd.com/?p=104622 By now most people who know anything about the world of consumer electronics know that most of the gadgets they love — their iPads, iPhones, Android tablets and so on — are made in China in huge factories, many of them owned by a Taiwanese company called Foxconn.

Foxconn has in recent years seen its share of negative press. There was an explosion that killed three people at one of its plants in June. Prior to that there was a disturbing string of suicides that so shocked the sensibilities of Western consumers that it prompted demands for better working conditions and two lengthy cover stories in Wired and Bloomberg Businessweek. The concern was significant, in no small part because of the shadow the matter cast over Foxconn’s most prominent customer, Apple, which has done its best to force Foxconn to make the lives of its workers better.

Manufacturing electronics by the millions isn’t exactly mentally stimulating. The Wired story used the phrase “repetitive, exhausting, and alienating,” and it’s not hard to imagine going stir-crazy after doing it for any length of time. That’s why it’s interesting to see the news out of China today that Foxconn is going to boost the number of robots doing those repetitive tasks on its assembly line.

The story from Xinhua News, China’s state-controlled news agency, is headlined “Foxconn to replace workers with 1 million robots in 3 years,” and relates that the announcement came from Foxconn CEO Terry Gou himself at a company dance party.

Eerily absent is any comment on the reaction of those employees in attendance. Did they cheer at the thought of being freed up by robots from the least-popular jobs on the line? Or did they begin to worry anew, grasping the economic realities that additional factory automation bring with it?

Robots are efficient, they don’t get tired, and aside from routine maintenance, they don’t take breaks. They also don’t complain about soul-killing work conditions. All of this makes them appealing to Foxconn management and its growing list of clients.

But as anyone who knows even the barest details of the history of factory automation in the U.S. auto industry is aware, robots have a funny way of causing job losses. While Foxconn already uses some 10,000 robots now, the story says, the number is going to multiply by a factor of 100, to one million robots within three years. If those numbers turn out to be accurate, there is simply no mathematical way that some portion of the 1.2 million people currently in Foxconn’s employ can avoid losing their jobs. And that can’t help but cause other unexpected ripple effects throughout the Chinese economy.

(The image is a screen grab from the trailer for the 2004 Will Smith film “I, Robot,” which I obviously selected with tongue in cheek. Real robots used in the assembly of electronics look more like the one assembling cellphone speakers in the video below, from a Florida-based company called AccuPlace.)

]]> http://allthingsd.com/20110731/foxconns-terry-gou-tells-employees-the-robots-are-coming/feed/ 0 http://allthingsd.com/20110729/apple-doubling-down-on-manufacturers-for-ipad-3/ http://allthingsd.com/20110729/apple-doubling-down-on-manufacturers-for-ipad-3/#comments Fri, 29 Jul 2011 10:00:55 +0000 John Paczkowski http://allthingsd.com/?p=104058 Apple is diversifying its supply chain in advance of some big fall product launches. Industry sources tell Taiwan Economic News that the company may soon tap Pegatron to manufacture the iPad 3, alongside longtime iOS device partner Foxconn.

“Industry insiders believe that Pegatron has a good chance to win this [iPad] business, because of its integrated production network specifically for the production of tablet PCs,” the publication explains. “Already, the company has produced three or four different models of tablet PCs and e-book readers for several globally prominent customers, including Asus and Toshiba. Further, the increasingly close partnership that Pegatron has built up with Apple after a year of cooperation in the production of the iPhone’s CDMA edition will also encourage Apple to place orders with Pegatron for the iPad 3.”

Not an entirely unexpected move, as Apple had been rumored to be considering lining up additional manufacturing partners in hope of tempering the supply constraints that have plagued iPad launches in the past. As Apple COO Tim Cook said during the company’s recent earnings call, “We sold every iPad 2 we could make this quarter. There is no shortage of demand.”

Presumably, adding a second manufacturing partner would increase supply, allowing Apple to satisfy that demand and driving its profits even higher. And an arrangement like this will also go a long way toward mitigating the company’s vulnerability to supply chain disruptions, whether they be caused by natural disasters or tragic industrial accidents.

[Image credit: Appertunity]

]]> http://allthingsd.com/20110729/apple-doubling-down-on-manufacturers-for-ipad-3/feed/ 0