July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

It doesn’t matter how great your phone is if you can’t actually get it built.

That’s the problem HTC is facing right now, as it has delayed its latest flagship phone, the HTC One, to late March and early April in some markets. According to the Wall Street Journal, HTC’s problems stretch all the way into its supply chain, which has seemingly lost faith in HTC after its recent rough years.

“HTC has had difficulty in securing adequate camera components as it is no longer a tier-one customer,” one unnamed executive told the WSJ. That’s a pretty big deal, since the One’s unique camera is supposed to be one of its killer features. Additionally, HTC is apparently having trouble sourcing the phone’s attractive metal casing (I guess this is why Samsung sticks with ugly plastic cases).

“The company has a problem managing its component suppliers as it has changed its order forecasts drastically and frequently following last year’s unexpected slump in shipments,” the anonymous exec said.

The One may be HTC’s last shot at rebuilding its business — the company’s profits fell a whopping 91 percent in Q4, and it hasn’t had a hit phone in several years. It’s particularly sad, since HTC’s recent phones, like last year’s One X and One S, have been more appealing than Samsung’s when it comes to overall design and functionality.

Ultimately, it seems like HTC just can’t compete with Samsung’s supply chain skills and marketing might.

Photo: Devindra Hardawar/VentureBeat

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

After a long day at work, you open your fridge and are greeted with a forlorn-looking piece of cheese and some rancid smelling milk. We have all experienced this pain and that weary reluctance to make a trip to the grocery store.

A startup called Instacart is fast becoming a favorite in the Bay Area for its mobile and web service that lets you order food and beverages in a snap. The app is available for free on Google Play and the App Store.

Since it launched in August 2012, Instacart has found a niche with busy, urban professionals — but it’s also used by office managers at local startups.

To make it easier for roommates or colleagues to order items for a shared kitchen, Instacart has launched a new feature called “Shop with Friends.”

Click the “Shop with Friends” button to access a communal shopping cart, which anyone can access by clicking a custom link. ”The idea is to give people the flexibility they have at the checkout counter,” said Instacart’s founder, Apoorva Mehta, in an interview. Mehta is a former supply chain management engineer for Amazon.com, who saw an opportunity to fast-track online grocery delivery.

The company plans to beat out the competition with its focus on customer service and user experience design. Simply login via Facebook or set up an account, open a shopping cart, add a few items, share the link if you’re shopping with friends, and tap to place the order.

Thousands of items are available and will be delivered by Instacart’s team of personnel at home or an office in under three hours.

Instacart recently partnered up with yuppie chains WholeFoods and Trader Joe’s, and also delivers groceries from Safeway. The startup makes its money by charging a convenience fee ($3.99 for orders over $30) and an additional $14.99 for one-hour delivery.

We first reported on Instacart at a recent demo day for Y Combinator, the highly competitive accelerator program. At the time, we described it as an “Uber for grocery deliveries.” Similarly to Uber, Instacart has butted heads with city regulators (in this case, over its ability to sell wine and spirits).

In future, Instacart plans to bring in new revenues by selling an enterprise subscription to larger companies. The company has raised $2.3 million in seed funding.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple chief executive Tim Cook was surprisingly talkative during the company’s first quarter earnings call today.

When asked if Apple was worried about competing with larger smartphone screens from other phone makers, Cook boasted that the iPhone 5′s 4-inch screen was the most advanced screen in the industry. “No one comes close to matching the quality,” he said. “We don’t sacrifice the one-handed ease-of-use our customers love. We put a lot of thought into screen size and feel confident we picked the right one.”

That doesn’t mean Apple will never aim for a bigger screen, but for now, Cook sounds confident that the iPhone 5′s screen can take on the increasingly (and hilariously) large competition. Apple said today that it sold 47.8 million iPhones last quarter, missing analyst expectations.

Surprisingly, Cook was also quick to chime in on the rumors of the iPhone 5′s slowing demand, which were mostly based upon supply chain analysis. “I would suggest it’s good to question the accuracy of any kind of rumor,” he said. “Even if a particular data point were factual, it would be impossible to accurately interpret the data point for what it meant for our actual business … the supply chain is very complex … yield can vary, supplier performance can vary.”

It’s strange for any company to respond to rumors, let alone the CEO of one of the most secretive companies in the world. Cook’s eagerness to respond to the rumors could be a sign that the initial analysis from the Wall Street Journal (and others) was completely off. Or he could just be playing the defensive. In either case, it’s interesting that he said something.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Apple may have overestimated just how many display panels (and other components) it needed to meet the iPhone 5′s demand.

The company has reportedly cut its display orders in half for the current quarter, two sources tell the Wall Street Journal. Additionally, Apple has cut orders for other iPhone 5 components.

WSJ’s sources point to weaker than expected demand for the iPhone 5 to explain the order changes. We haven’t heard much about the iPhone 5′s sales since its launch, when it broke 5 million units sold in its first weekend. That was one million units more than the iPhone 4S launch, but it was still below analyst estimates of 6 million units.

The reduced orders may not necessarily mean iPhone 5 sales are worse than Apple expected. Apple may just have misjudged the amount of supplies it needed to keep its iPhone 5 stock in check. But this is definitely the sort of news that Android fans and Apple detractors will lap up.

Apple has faced stiff competition from Samsung over the past year: The Korean company held 31.3 percent of the global smartphone market in the third quarter of 2012, compared to Apple’s 14.6 percent, according to IDC figures. Apple’s smartphone market share reached a high point of 23 percent in the fourth quarter of 2011, but since then it’s been falling steadily as Android’s market influence grows.

July 9-10, 2013
San Francisco, CA

Early Bird Tickets on Sale

Research in Motion is cutting its supply chain up, starting with smartphone manufacturer Celestica, which will stop RIM production completely within the next 3-6 months.

The manufacturer expects to spend around $35 million on restructuring after RIM’s departure.

RIM has been reevaluating its supply chain as sales dwindle in the competition against iOS and Android. The company, whose devices were extremely popular in corporate environments, is failing to keep up with the consumer smartphone demands that Google and Apple have both readily met. In an effort to hold on, RIM is slimming down, including this supply chain restructure and an expected operating loss for its first quarter 2012 earnings.

“The on-going competitive environment is impacting our business in the form of lower volumes and highly competitive pricing dynamics in the marketplace, and we expect our Q1 results to reflect this and likely result in an operating loss for the quarter,” said RIM CEO Thorsten Heins in a recent company update that forced the company to halt trading on its stock.

Celestica reassured customers in its announcement today that it still anticipates a revenue increase from $1.65 billion to $1.75 billion, as well as a six cents increase on its earnings per share, at $0.26. The company is now being forced out into the wild to find new customers.

Early in June, RIM’s stock fell into the single digits at $9.57 a share for the first time in nearly a decade. The company is also planning to shut down production on its 16GB PlayBook, the company’s star-crossed attempt at entering the tablet market. But there is hope on the horizon for RIM. The company is planning to launch its Blackberry 10 operating system soon, which it hopes will refresh its line of smartphones.

Blackberry image via Shutterstock

BizSlate unveiled a supply-chain management tool for small medium-sized businesses today.

Until recently, enterprise resource planning (ERP) software has been an expensive, complicated proposition, offered by the likes of SAP, Oracle, and Sage to large companies that can afford multi-hundred-thousand-dollar packages and consulting contracts that can run into millions of dollars.

But small businesses have supply chains, too, and getting a handle on what’s where is an increasingly important competitive point in the global marketplace.

BizSlate’s ERP solution offers small businesses, typically with 100 employees or fewer, the ability to monitor and diagnose supply chain and operational issues as efficiently as larger companies, but with a lower cost. It’s a software-as-a-service (SaaS) solution, delivered over the internet. Among the features BizSlate offers are support for the following:

• Placing orders to factories for products
• Receiving products into inventory
• Receiving customer purchase orders
• Generating sales orders and fulfillment documents
• Printing pick tickets, packing slips, and shipping labels
• Shipping products to customers
• Creating customer invoices
• Automatically syncing with QuickBooks for general ledger and financial reporting purposes

BizSlate unveiled its ERP solution today at the DEMO Spring 2012 conference in Santa Clara, Calif.

CEO Mark Kalman

“It is exciting to fulfill our mission of helping [small and medium businesses] overcome the challenges they face managing their supply chain,” said cofounder and chief executive Mark Kalman (pictured) in an email to VentureBeat. “SMBs need to remain agile, they need rapid access to key information from anywhere in the world, and they need to maximize efficiency in their warehouse and back-office.”

Although it’s delivered over the internet, BizSlate’s technology is based on Java and Oracle on the back end. The company has raised a total of $370,000 to date from Kalman and from BizSlate’s 19-company customer steering committee, each of which contributed an average of $18,000.

These customers have been instrumental in helping BizSlate develop its ERP offering, Kalman said, providing input, guidance, and feedback from the company’s earliest stages.

Previously, Kalman was co-founder and chief executive of eZCom Software Inc., a SaaS Electronic Data Interchange (EDI) provider focused on helping SMBs streamline supply chain operations around EDI relationships. While at eZCom, he realized that almost half of his customers were using QuickBooks and were having difficulty integrating their own supply chains with Intuit’s tool. He left eZCom to start BizSlate in October, 2011.

The company is based in New York, New York.

BizSlate is one of 80 companies chosen by VentureBeat to launch at the DEMO Spring 2012 event taking place this week in Silicon Valley. After we make our selections, the chosen companies pay a fee to present. Our coverage of them remains objective.

Photo and screenshot courtesy BizSlate.

If you’re angry about Apple’s manufacturing process, you should be. But don’t stop with Apple.

As everyone knows by now, iPhones and iPads are built in huge Chinese manufacturing plants where tens of thousands of people work 12-hour shifts for little money, have little privacy, and are exposed to toxic chemicals and unsafe conditions every day. We’ve been hearing similar stories across other industries for years, but this one’s on us — the tech community.

That’s right — all of us. It’s not just Apple. Motorola (whose acquisition by Google got a green light this week) and Nokia are doing it. Toshiba, HP, Dell, and Sony all use factories the New York Times reports as “bleak.”

It’s virtually guaranteed that behind every gadget stands an army of underpaid workers and polluting factories.

Apple is hardly the only electronics company that makes use of cheap manufacturing provided by companies such as Foxconn, its major supplier, which hit the news a few years ago because of a rash of suicides among its workers. Almost every other electronics manufacturer uses the same manufacturing principles, many of them use the same manufacturing companies, and most of them scrutinize their suppliers far less rigorously than Apple. In fact, Apple chief executive Tim Cook has a point when he says that Apple really cares about conditions in its suppliers’ factories: The company has done a lot to audit those factories and to insist that its suppliers clean up their acts. Indeed, Apple is the first tech company to enlist the support of the Fair Labor Association, a trade group that until now has focused on working conditions in clothing factories.

That’s not to say that Apple’s free of blame. It’s just that many other companies are culpable too.

The Kindle Fire might have been designed in Seattle, but it was manufactured in China, most likely by Quanta Computer, a Taiwanese company with 30,000 employees worldwide and major manufacturing facilities in China. Do you know how many Quanta factory workers committed suicide last year? (I don’t.)

Foxconn, Huawei, ZTE, Quanta, Compal Electronics: These are the companies that actually make the gadgets we use. While they may tout high ideals (Quanta’s website includes documents with titles like “love the Earth” and “Truth Goodness Beauty”), their approach to business is matter-of-fact: Design and build electronic products with increasing speed and precision and decreasing costs. Was your new Motorola Droid Razr assembled by workers being paid a fair wage, without polluting local rivers and without strip-mining some country’s copper reserves?

In a global economy, making electronic goods means building factories wherever you can find sufficiently talented labor at the lowest possible cost. It’s not just cost, either: The just-in-time inventory principles of modern companies press their suppliers to turn on a dime. Need 3,000 new factory workers overnight, or 8,700 engineers in two weeks? China can deliver, and America can’t, at any price.

Given the hundreds of components that go into making something as complicated as a smartphone, the manufacturing process involves dozens of companies with scores of factories in as many different locations. All of them are getting squeezed by an economy that demands faster and faster turnarounds regardless of the human costs.

I say this as a gadget lover, and one who has spent much of his career writing about electronics, scourging the worst and glorifying the best. The best are elegant tools for the mind that have helped humanity immensely and are reshaping society and the world in profound ways, often for the better.

But making these gadgets requires a lot of steps. Along the way, some of those jobs are very good and some are abysmal.

Turning sand into silicon or mining lithium is dirty, nasty work. Turning purified silicon into wafers with billions of microscopic transistors is the work of bunny-suited engineers with master’s degrees and good salaries. Assembling packaged chips onto circuit boards and gluing LCD screens onto the chassis of phones is rote labor performed by minimally skilled workers who can easily be trained and replaced whenever necessary.

Most of this work happens outside the U.S., where different legal standards apply. And good luck finding out about the details of that process. I’ve been trying for years to get various companies to let me write the story of how they make their devices, but they’ve always shut me down, providing only generic information. There may be competitive reasons they don’t want to expose their whole supply chain, and it’s complicated enough that they may not even know where all their components come from. But it’s a fair bet that they don’t want a reporter scrutinizing that supply chain because they know it’s full of dirt.

(If any manufacturer out there disagrees with me, I’m all ears. I’d welcome details on where your components are made and assembled, and if I get a full picture, I will write about it.)

In other words, ditching your iPhone and picking up an Android phone because you’re concerned about conditions in Foxconn’s factories is just dumb.

Instead, let’s get mad about the inability of the American economy to compete on the global arena with the speed and precision of Chinese factories.

Let’s get mad about the poor labor conditions and lack of environmental controls throughout the electronics manufacturing process in other countries.

But let’s not pick on the most prominent seller of gadgets just because it’s an easy target.

Everyone who has ever bought a computer, cellphone, tablet, or television bears responsibility for this industry’s lack of transparency and accountability.

If you subscribe to my newsletter you can read these columns a whole day before they appear on our website. And check out my other Dylan’s Desk columns.

Photo: A worker in Ningbo, China assembles a camera. Photo credit: Robert S. Donovan/Flickr.

It’s becoming increasingly clear that Apple — which is now sitting pretty with $97.7 billion in cash after record-breaking earnings of $46.33 billion in the first quarter — has become addicted to the rapid-fire manufacturing capabilities made possible by low-wage Chinese workers, no matter the human cost.

The New York Times has begun documenting the current state of global manufacturing in its “iEconomy” series, which, not surprisingly, focuses on Apple as the latest manufacturing prodigy. Complaints about working conditions in Apple’s supplier factories aren’t new — Foxconn has been under the spotlight for years after a spat of worker suicides — but with Apple’s revenues on a seemingly non-stop tear, the fact that issues are still being reported is becoming increasingly troubling.

“We’ve known about labor abuses in some factories for four years, and they’re still going on,” an anonymous Apple executive told the New York Times. “Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn’t have another choice.”

The company has made gestures that it would keep tabs on its suppliers. A few weeks ago, Apple for the first time ever released a list of its suppliers, as well as the results of an internal audit report on conditions at supplier factories, which revealed ugly facts like child labor and slave labor conditions.

“I would like to totally eliminate every case of underage employment,” Apple CEO Tim Cook said at the time. “As we go deeper into the supply chain, we found that age verification system isn’t sophisticated enough. This is something we feel very strongly about and we want to eliminate totally.”

Cook announced that Apple is joining the Fair Labor Association, a non-profit dedicated to improving working condition worldwide, and it would add transparency and independent oversight of Apple’s suppliers. Notably, Apple is the first technology company to be approved for membership in the FLA.

Joining the FLA is definitely a significant step for Apple, though it is just one in many gestures the company has made regarding labor abuses over the past few years. As one anonymous executive told the New York Times (emphasis ours):

If you see the same pattern of problems, year after year, that means the company’s ignoring the issue rather than solving it… Noncompliance is tolerated, as long as the suppliers promise to try harder next time. If we meant business, core violations would disappear.

As Apple continues to reap the rewards of its Chinese manufacturing workforce, that last point echoes loudly. Thus far, Apple has been a company concerned with churning out as many iPhones and iPads as humanly possible. That’s not too different from every other company manufacturing products, though Apple certainly has worked its suppliers to the bone with its lean manufacturing processes and need for perfection.

The New York Times mentions one fitting example, recounted by a former Apple executive.

Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive told the NYT. “There’s no American plant that can match that.”

While Apple is seeing the brunt of manufacturing complaints right now, that’s likely only because the company’s processes are so advanced. Eventually, all electronics companies will have to take a closer look at how their products are built, especially as devices like smartphones and tablets get cheaper.

While you likely haven’t thought much about how Apple gets those green lights to shine through its metal products, like its webcam indicators on the MacBook Pro and MacBook Air, doing so was a significant problem for Apple’s design mastermind Jony Ive.

The big issue, as Businessweek explains, is that it’s impossible to shine light through metal. The eventual solution: lots of lasers.

Sources tell BusinessWeek that Ive assembled a team of manufacturing experts to figure out the problem. They eventually found that they could use a laser to create tiny holes in metal that, while virtually undetectable by human eyes, could allow light to come through.

The group also discovered a US company whose laser equipment could be modified to create the tiny holes. The unnamed company’s machines typically sold for around $250,000, but Apple ended up forming an exclusivity agreement with it to purchase hundreds of machines. Now Apple uses the laser to create green indicator lights on a slew of aluminum products, including the Apple Trackpad and wireless keyboard.

The laser solution is indicative of Apple’s design creativity, but it’s also a fitting example of the operational extremes the company will go to for its products. As BusinessWeek points out, Apple also went to great lengths to create its unibody aluminum MacBook cases, helping to create new tooling equipment for manufacturers. Apple now plans to double its supply chain spending to $7.1 billion, Businessweek reports, which means we’ll likely see plenty more interesting manufacturing decisions from the company.