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Like a James Bond Villain, Apple Dominates by Stockpiling Lasers

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For years, journalists have been trying to figure out the secret to Apple’s success. Is it the culture of innovation? The “secretive predictability?” The company's near-religious belief in aesthetics? Or maybe Steve Jobs’ skills as a tweaker? Well, according to an article in Bloomberg BusinessWeek, the answer is much simpler: hundreds of lasers.

Apparently, about five years ago Apple’s design chief Jonathan Ive decided that he wanted a green light on the top part of the computer’s case to turn on when the camera was in use. The only problem was that it’s impossible to shine a light through metal.

Apple fixed this by using lasers to cut tiny holes in each MacBook’s case. To do this efficiently, the company signed an exclusivity agreement with a laser manufacturer. Cupertino has since bought hundreds of the lasers, at $250,000 a pop.

This anecdote is used to make a larger point about Apple’s operations spending. The company invests huge amounts on supply chain infrastructure and is willing to make large investments—like a laser stockpile—to ensure supply chain efficiency. This allows it to meet demand without keeping large inventories.

Apple’s focus on operations spending contributed to its 40% gross profit margin last quarter. It’s probably also useful to have a few extra lasers lying around if you want to make something like this.

The BusinessWeek article goes on to describe life as one of Apple’s suppliers, which evidently is somewhat painful. The company demands detailed accounting of suppliers' costs and projected profits on each item. Apple also requires many suppliers to keep two weeks of inventory within a mile of its factory in China and has waited up to 90 days after using a part to pay its manufacturers.

Steve Jobs always was a little bit domineering. Then again, it’s always a bad idea to mess with the guy holding the laser:

(See also: Adobe Heeds Apple's Advice by Killing Flash Mobile and Apple Ready to Boost Own Smartphone Profit Share, Says Analyst)

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