Apple’s announcement in November 2018 that it was to cease the reporting of iPhone sales volumes really worried investors. A flattening of sales, combined with doubts over Apple’s projected innovation, impacted on its stock price. Around the same time, Chinese tech giant, Huawei, beat it into third place on smartphone sales and even set their sights on surpassing the leader, Samsung, with promises of foldable screens and artificial intelligence.
Technology pundits began suggesting the unspeakable: the very beginnings of the iPhone’s end of life.
OEMs can sometimes struggle to manage product end of life effectively. Instead of managing the process from an early stage, they focus all their attention on maintaining sales. History shows that even Apple can be caught off guard.
The iPod - From 1000 songs in your pocket to none
Apple introduced the first-generation iPod in October 2001 with the slogan "1,000 songs in your pocket". Second, third, fourth and fifth generations followed until September 2007 when Steve Jobs unveiled the 6th Gen iPod "Classic" with a new, thinner chassis and a better battery life. The last hardware update occurred in 2009, and then in September 2014 it was finally discontinued. Apple CEO Tim Cook told us one of the reasons at the 2014 WSJD Live event: “We couldn’t get the parts any more, not anywhere on Earth”. Even Apple, the first US company to achieve a $1,000,000,000,000 market value is subject to the same pressures as every other large electronics manufacturer.
There are many reasons that a product may enter an EOL process: component shortages, technology barriers, functional redundancy, competitor activity and a lack of investment that causes old or worn tooling can cause and accelerate product decline. It remains a truism that all good things must come to an end; what makes a difference is how you manage it.
Best practices and strategies for managing EOL
Since product decline is inevitable, lifecycle support is an essential service that an EMS partner should provide to its customers. Different solutions can be applied to end-of-life situations: some products get superseded by newer models or versions, meaning only slight tweaks to the manufacturing and sourcing procedures. Other products may simply need support as they dwindle, which can involve investing in enough stock and parts to last the predicted period before obsolescence. Sometimes it’s necessary to re-invest in alternatives. We can advise our customers, ensuring money and resources are not wasted.
Manage EOL early within a Product Lifecycle Plan
Every product goes through a similar Product Life Cycle (PLC) - introduction into the market, growth, maturity, and then a decline with EOL. Products should therefore be managed within a Product Lifecycle Plan, covering of all aspects of the product development, from conception to the disposal of the product and components. Start-up manufacturers often overlook this critical aspect but a skilled EMS partner will be able to help develop such a plan.
Allow products to evolve
Although the iPod was eventually doomed by component shortages and alternative technologies, Apple foresaw the trajectory of the smartphone and rightly predicted how the iPod would become all but redundant. Is that possible with the iPhone too? Ask most tech companies which product is likely to replace the smartphone and the most probably answer will be something “wearable”. The Apple Watch is likely to see many evolutions, as it changes in shape, size and functionality to communicate with a plethora of smaller IoT devices that are likely to surround us in the future. In an ever-changing global landscape, agile lifecycle support for products is critical. An EMS manufacturing partner can help you make the evolutions from one generation to the next.
Manage component shortages by investing in stock to guarantee a lifespan
As we saw in the iPod example, component shortages can accelerate product decline and in extreme cases force an OEM into sudden and radical design changes. An EMS partner can assist during times of shortage by staying on top of these issues and combining financial leverage to secure large amounts of stock on behalf of clients as well as buffering to provide uninterrupted supply. Chemigraphic operates a demand-based MRP (Material Requirements Planning) system, which ensures on-time delivery, material presentation requirements, stock accuracy and component batch traceability.
New regulatory requirements, responses to field performance issues and specification adjustments can all drive the need for design and process changes. Following the introduction of RoHS compliance, for instance, many components became unavailable available, due either to the rationalisation of component manufacturers’ production lines, or to having had their part numbers changed. To assist our customers – many of whom are exempt but have stringent approval criteria to meet – we have introduced a fully comprehensive process to verify that the RoHS approved alternative is acceptable before offering it to our customer for their approval. An experienced EMS partner provides flexible and responsive change management to ensure cut-in is effective, controlled and pain-free.
Don’t overlook the value of returns, repairs and warranty
Customers may choose their EMS partner to manage aspects of their returns procedures, typically for in- and out-of-warranty support, root cause analysis; or to repair/refurb products to sell as used. Revenue can be gained through these channels that may influence a decision to maintain or discontinue a product. Chemigraphic frequently takes on aspects of this process, since we have access to the components as well as testing experience to rectify product faults, plus the automation and logistics skill to make this process as efficient as possible.
Communicate clearly to customers
Customers will be more critical of businesses that cannot smoothly manage the transition from older products to new versions. Some customers will not upgrade, so it remains particularly important to clearly communicate when and what is being eliminated and help them find a solution.