09-11-2012, 10:30 AM
Join Date: Jun 2003
Location: Vienna, VA
Memb er#: 39142
Join Date: Jun 2003
Will you be one of the eight million people expected to pay $600 for an Apple (AAPL) iPhone 5S later this year? If so, you will be contributing to some 32,000 students who were forced to work on the Foxconn assembly line building your order — or face expulsion from school.
The New York Times reports that Foxconn claimed that it employs 32,000 “interns” — 2.7% of its 1.2 million workers in China. Foxconn says that schools “recruit the students under the supervision of the local government, and the schools also assign teachers to accompany and monitor the students throughout their internship.”
But this bland statement may mask a more basic reality — those “interns” are being offered a choice of working in the Foxconn factory to meet demand for the iPhone 5S or getting kicked out of school.
Li Qiang, founder of China Labor Watch, told the Times that as recently September 9 he learned that 10 if 87 workers on one iPhone assembly line were “interns.” And as Li said, they “don’t want to work there — they want to learn. But if they don’t work, they are told they will not graduate, because it is a very busy time with the new iPhone coming, and Foxconn does not have enough workers without the students.”
But if a JP Morgan Chase (JPM) is right, eight million people will pay $600 to buy the soon-to-be-unveiled iPhone 5S. Even without taking into account the moral cost of buying a product that is built on the backs of the misery of 32,000 student interns, you are grossly over-paying for the “brand.”
That’s because Apple is exercising an enormous competitive advantage at your expense and that of its workers and suppliers. It has managed to drive a huge wedge between what people are willing to pay and its cost to satisfy that demand.
How so? Your iPhone’s price is 44% higher than the Lumia’s — looks to me like overpaying — while Apple takes home a whopping 71% gross margin — compared to Nokia’s 54%.
Consider the comparison of the prices and bill of materials cost for the iPhone 4S and the Nokia (NOK) Lumia 900. According to iMore, the iPhone’s price is $649 while the total cost of all its components — an incomplete cost measure — is $190; whereas the Lumia 900 sells for $450 and its parts cost $209.
As for the moral cost of building your iPhone, in January we learned that 23 people had died and 273 has been injured building your iWorld, including
19 who committed suicide at the Foxconn factory by “jumping or falling” off of its factory or dormitory buildings between 2008 and 2010;
Four – including Mr. Lai — who died in two factory explosions at Foxconn and another 77 who were injured in them;
137 Wintek workers injured due to the use of a fast-evaporating chemical used to polish iPad screens; and
59 injured during a December 2011 Foxconn plant explosion in Shanghai.
I am hoping that’s all in the past now. But it leads to a question: Why will virtually every Apple product owner react to this discussion as they would to an attack on a loved one?
The answer to that is fairly simple: the iPhone stimulates the same part of the human brain that activates when you are near people you love. In September 2011, Martin Lindstrom wrote in the New York Times that he conducted a functional magnetic resonance imaging (fMRI) experiment on eight men and eight women between the ages of 18 and 25.
His finding was that when exposed to their iPhones those 16 experienced a ”flurry of activation in the insular cortex of the brain, which is associated with feelings of love and compassion. The subjects’ brains responded to the sound of their phones as they would respond to the presence or proximity of a girlfriend, boyfriend or family member,” according to Lindstrom.
As Lindstrom concluded, you love your iPhone and if JP Morgan Chase is right, eight million of you won’t let a little thing — like costing 32,000 Chinese students their education — keep you from spending $600 to smear your fingerprints all over your loved one’s glass screen.