Capturing Value in the Chain
(Via Noise Between Stations) A very interesting analysis of how value is created and captured in the iPod supply chain. They take a 30GB 5th Generation iPod ($300 price tag when the article was written), and take it apart. Then, they trace the value created by each component and/or assembly. As predicted, Apple gets most of the value ($80), but what is surprinsing is the authors’ estimate that Chinese assemblers get only $4!
Breakdown of the iPod30GB retail price (Linden et al, 2007)
Apart from the apparent simplification (the authors considered the iPod as a single gadget, rather than as an iPod+iTunes ecosystem), the message is clear: innovative concepts, executed right create value. Guess which of the two is harder!
