A new research report from analyst Ming-Chi Kuo (via MacRumors) relays that Apple will be shuffling up suppliers as it pertains to the AirPods Pro, the next-gen Apple Watch, and the iPod Touch. While this may not seem like important news at first glance, it underscores Apple’s constant efforts to increase supply, streamline operations, and boost profitability wherever it can.
Specifically, Kuo notes that Luxhsare will now be the sole supplier of the S-series chips within the Apple Watch. Meanwhile, Apple has tapped the China-based Goertek to help handle AirPods Pro production. Consequently, Apple will soon have two AirPods Pro suppliers, which should ultimately help the company meet what continues to be staggering demand for its next-gen wireless earbuds.
Recall, supply for AirPods Pro was a bit thin over the recent holiday season, with some analysts noting that Apple was still struggling to keep up with demand. Further, overall interest in all AirPods models has exploded in recent months. To this point, a report from a few weeks back indicated that Apple’s cumulative AirPods shipments in 2019 was on track to double the number of shipments Apple saw in 2018.
While Apple shifting or adding suppliers is seemingly mundane, it underscores the operations aspect of Apple’s business. Indeed, a big part of Apple’s financial success over the past two decades can be attributed to the company’s operations strategy.
Taking a quick look back, when Tim Cook first joined Apple as a Senior Vice President of Worldwide Operations back in 1998, the financial impact was significant and readily apparent. Cook immediately streamlined the company’s supply chain and drastically reduced inventory.
You might also recall that Cook in the mid-2000s had the foresight to pay billions of dollars upfront in order to secure favorable pricing for flash memory. Not only did this ultimately help Apple boost margins, but it also ensured that Apple would be able to meet demand for the iPod.
As a final point, here’s an interesting tidbit that might surprise you: Apple’s wearables business now generates more revenue than the iPod did when it was at its peak.