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3258 Posts

02-17-2008

Australia

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Contract Manufacturing of large Computer Manufacturers.

2008-09-06, 15:24 PM

US computer maker Dell is planning to sell its factories around the world to contract manufacturers within 18 months in a bid to save more than $US3 billion ($A3.7 billion) in costs.

Most of the factories would be sold to manufacturers in low-cost Asian countries, who would then produce computers for the Texas-based company, the Wall Street Journal reported.

The move marks a drastic change to the business model that had propelled Dell to the spot of the world's largest-selling computer company before it was overtaken by Hewlett-Packard four years ago.

Dell had prided itself on its strictly-controlled production process and direct sales to customers.

But the company now uses traditional shops to sell its computers and lags behind competitors in using contract manufacturers to cut costs on ever-more popular laptops.

Last week the company reported disappointing quarterly profits, which sent shares falling more than 18%.

The company owns factories in Texas, Tennessee, North Carolina and Florida, as well as in Ireland, India, China, Brazil, Malaysia and Poland, where it opened a factory early last year.

As their focus is on manufacturing, contract PC makers generally have more efficient processes than larger companies such as Dell, which must also balance marketing and other considerations.

According to the report, Hewlett-Packard, the world's largest computer company, outsources the production of about 50% of its computers. Apple has many of its computers shipped directly from Asian manufacturers' factories to customers.

 

Source:  http://business.theage.com.au/business/dell-to-sell-its-factories-20080906-4avx.html

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339 Posts

01-20-2008

Canada

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Re: Contract Manufacturing of large Computer Manufacturers.

2008-09-07, 3:59 AM

 Does Lenovo have the same manufacturing process as Dell?

 

http://digitaldaily.allthingsd.com/20080905/course-you-could-just-shut-the-company-down-and-give-the-money-back-to-the-shareholders/

 

 

"According to an article in ValleyWag, “Thanks to rising fuel prices and wage inflation in China, it’s actually more expensive to manufacture and ship electronics across the Pacific for the American market than it would be to produce them domestically, according to a report from The McKinsey Quarterly.”
MacBook Pro, with an aluminum unibody enclosure **As of September 15, 2008, our company has completely switched to Apple. Having used ThinkPad products for over 10 years, we had desperately tried to find just one reason to continue using these products, to no avail. We are of the view that ThinkPads are no longer premium products. We wish you the best of luck with your ThinkPad! Happy computing…**
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3258 Posts

02-17-2008

Australia

1962 Signins

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  • Posts: 3258
  • Registered: ‎02-17-2008
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  • Message 3 of 5

Re: Contract Manufacturing of large Computer Manufacturers.

2008-09-07, 6:19 AM

LukeD that article you posted regarding the shipping costs was discussed in the Lenovo official blog by someone. Shipping costs of a shipping logistic companies depend on mainly two things, port docking costs and oil costs. While, most of the dock charges in China have remained steady, there are few ports in China where costs have risen, especially in Shanghai's new deep water ports. Oil costs have recently dropped, so in theory if the container ship can avoid China's expensive ports then the cost should decrease if oil price remain low.

 

The world's largest contract manufacturing company is Foxconn, which have market cap value of around $40 billion, it is the largest exporter in China. It owns plants across the world in Europe, Southeast Asia, India, USA, South America, etc. It is responsible for most of the Apple products, lots of HP/Compaq, some Dell, some Thinkpad products (i open up some of my laptop, it got lots of Foxconn stamps on it, i.e. T series, R series, X60 is manufactuered by someone else) and myriads of other laptop companies. Even Nokia have contracted work to Foxconn now.

 

While, Foxconn are increasingly moving their operations into countries with lower wages, China has increased most of the factory worker's wage by as much as 50% over the last two years, to keep up with the rising cost of Chinese living and keep the workers content under the current Chinese government administration. For many companies the only attraction China has over say over Vietnam is established logistic system and Cheap wages, the rest of the processing plants all use European, Japanese, Korean or American made equipments. Chinese government know that the only way for China to keep its double digit growth rate is to invest overseas (1/3 of Chinese GDP is generated from local and foreign investment) and produce high quality and high tech products, following the footsteps of Japan.

 

Obviously China don't have the say 30 or 40 years to establish all of the technological advances that Japanese had from end of WWII to its economical/technological peak. But what China does have is a lot of hard American greenback currency (number one reserve in the world) to the tune of 1.4 trillion US dollars or something. Most of the ill performing state owned enterprise or SOE in China have been closed during the last economical reform, those that have survived the change are now extremely large companies with large investment portfolios and cash reserves (funded by the government of course). Most of the profits generated in SOE are kept as retained profit, Chinese government from 2006 only took 5 % of the actual profit from SOE. 

 

China has to accomplish what the Japanese did in 30 or 40 years in 10 or 20 years time, therefore the only way to do that is to attract foreign talents into the local R&D scene (into universities mostly) and also to purchase or at least enter into a partnership with foreign companies that have shown exceptional research track records.

 

Lenovo is only the tip of the iceberg in terms of Chinese company investing/procuring in oversea companies, and using a large amounts of non-Chinese executives and managers to run the business. 

 

While, back to the topic of manufacturing, lot of the computers many laptop companies use no longer designed in House, but rather it is designed by the contract manufacturer using standardised layouts and parts, to save money. So in effect many companies' laptop are actually the same with slightly different casing layout and design. 

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339 Posts

01-20-2008

Canada

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Re: Contract Manufacturing of large Computer Manufacturers.

2008-09-07, 18:45 PM

Thanks for that information!

 

Lou Dobbs sure saw this one coming.

MacBook Pro, with an aluminum unibody enclosure **As of September 15, 2008, our company has completely switched to Apple. Having used ThinkPad products for over 10 years, we had desperately tried to find just one reason to continue using these products, to no avail. We are of the view that ThinkPads are no longer premium products. We wish you the best of luck with your ThinkPad! Happy computing…**
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339 Posts

01-20-2008

Canada

316 Signins

6645 Page Views

  • Posts: 339
  • Registered: ‎01-20-2008
  • Location: Canada
  • Views: 6645
  • Message 5 of 5

Re: Contract Manufacturing of large Computer Manufacturers.

2008-09-10, 6:54 AM

Add HP to the mix.

 

http://www.notebookreview.com/default.asp?newsID=4588

 

http://digitimes.com/systems/a20080908PD207.html

 

 

MacBook Pro, with an aluminum unibody enclosure **As of September 15, 2008, our company has completely switched to Apple. Having used ThinkPad products for over 10 years, we had desperately tried to find just one reason to continue using these products, to no avail. We are of the view that ThinkPads are no longer premium products. We wish you the best of luck with your ThinkPad! Happy computing…**
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