Last week, The New York Times published a look at Foxconn’s push into creating its own products, specifically branded televisions. It’s a pretty good report, with a pretty big flaw; In an attempt to catch readers interests, and page views, reporter Lin Yang focuses on Apple, not Foxconn. The article frames Foxconn’s move into making their own televisions as a move away from Apple, Foxconn’s biggest customer. But Foxconn isn’t moving away from Apple, and Apple isn’t moving away from Foxconn.
Apple doesn’t currently make television sets, and if they do plan on making them, they most likely won’t compete with the low-end sets Foxconn is building. If Apple makes a television set, it will be a high-end panel that competes with Sony’s best offerings, not Foxconn’s panels sold under the Vizio brand. Foxconn is using its own name on the televisions outside of America (Vizio) and China (RadioShack), and that is interesting in and of itself, but that doesn’t mean that Apple needs to start worrying about a Foxconn phone or tablet.
What is happening with Foxconn’s move to manufacture televisions is the same thing that happened in the PC space five to ten years ago. OEMs had taken on so much of the manufacturing and development process that a Dell laptop was really just an Asus or Acer laptop with a Dell logo slapped on. Dell (and the rest of the PC industry) was no longer outsourcing its manufacturing to overseas companies, overseas companies were outsourcing marketing to Dell. That was fine when Dell was still a profitable partner, but then came the netbooks. Margins dropped in the PC business, and every unnecessary expense that could be cut was. Asus, Acer, and a bunch of other PC OEMs realized they could make the same amount of money branding the laptops themselves, and drop the price to capture market share in the process, and that is exactly what they did.
Something similar has begun to happen in the television business. HD was good to the display makers of the world. It had studio support, marketing cachet, and was a relatively easy pitch to customers. Now that HD is the standard and 3D has failed as a home theater technology, the television business is seeing serious downward price pressure. Until 4K, or UHD as it has been rebranded, starts to grow, television OEMs are faced with the same decision PC manufacturers had to make five years ago. They can stick with their established partners, or they can cut out the middle man and sell the panels themselves. Foxconn, stuck in a difficult position, decided to start selling the television sets themselves.
It’s a compelling business story about a brave executive in a complicated, pressure-filled market deciding to cut ties with floundering partners and take a risky plunge into a new business. It’s a story with heroes, victims, and — if you look long enough — probably more a few villains. It’s a story about the television market, globalization, outsourcing, and a collection of other interesting topics. It’s a story Ling had a chance to tell. It’s the story The New York Times should have published, and it’s a story I would want to read.
Instead, we got sophisticated link bait written by a Harvard graduate. Foxconn is not a subdivision of Apple, and every story about Foxconn is not inevitably a story about Apple. News about Foxconn’s products deserves to be reported in the same way that news of a new Apple, Samsung, or Microsoft product would be reported. If Apple is involved, mention Apple. If Apple is not involved don’t, or at least don’t make them the focus of the story. Anything less than that cheapens reporting on what Foxconn is — the largest electronic manufacturing service company in the world.