Apple’s secret weapon: Leverage

“If there’s one thing we’ve learned from the bankruptcy of GT Advanced Technologies it’s that Apple under Tim Cook bargains just as hard as it did when Steve Jobs was alive,” Philip Elmer-DeWitt reports for Fortune.

“‘Put on your big boy pants and accept the agreement,’ an Apple executive reportedly told GT when the New Hamphire-based sapphire supplier resisted what COO Daniel Squiller describes as Cupertino’s ‘massively one-sided’ terms,” P.E.D. reports. “If those terms were one-sided — and when Squiller spells them out they certainly look that way — it’s not just because Apple is big and GT small. Apple’s strength at the bargaining table — its leverage — comes from a deeper place.”

P.E.D. reports, “It was evident in 2003, when a smaller and much weaker Apple talked the five major record labels into selling music a la carte on iTunes for $0.99 a song. As Stratechery‘s Ben Thompson explained last week: ‘It turned out Apple had [an] ace in the hole: a customer base that, while small, had an outsized willingness and ability to spend.'”

Read more in the full article here.

[Thanks to MacDailyNews Reader “BD” for the heads up.]

Related article:
Newsflash: Apple sells premium products at premium prices to premium customers – October 23, 2012


  1. “when Squiller spells them out they certainly look that way”

    Huh? I call bullspit. Then why did they sign the contract at the very beginning? Was GTAT that bad at their own business or were their attorney’s that bad? I think not. I think that they knew exactly what they were doing and knew Apple was the cash cow to make them rich and if they could get it to work then great but if not, they would just file and bail with all that money from shareholders. Looks like a win-win for GTAT management only.
    Even so, why wasn’t there a “hint” of a problem in their quarterly reports? Why, because their only goal was to get rich on others money.

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