Re: who gets the higher quality parts?

zara wrote:

The largest buyers automatically get the cream of the crop.

Having worked for several component suppliers, including ones that supply Apple, Dell, & HP, as well as on the other side of the fence for board manufacturers, let me assure you that the largest buyers do not automatically get the best parts.

First off, chips are screened and binned, and often assigned different part numbers, and this doesn't apply just to CPUs. The large quantity buyer will often take the lower spec part because it's cheaper, and because it's good enough.

Apple was an anomaly because they often wanted custom parts, which were manufactured in smaller quantities and consequently had higher prices (including NRE charges). We'd often shake our heads in disbelief that they would pay 3x-4x the price for a part that performed an identical function to the non-custom part that was manufactured in enormous quantities and sold to every PC manufacturer. Fortunately Jobs put a stop to this kind of insanity when he came back.

Then there's the white box manufacturers who's products, especially notebooks, you often see in big box stores under some weird brand name like "Super Quality." These machines are constructed from "parts from all over the world that no one else wants." Screens with more bad pixels than the top tier will accept, CPUs that are higher wattage or that have some defect that can be worked around, graphics chips that won't work at the frequency that they were intended to work at. You can construct a perfectly dreadful notebook that looks good on the outside, and sell it for $300. I remember working with a customer in Taiwan that had purchased graphics chips where AGP 1x & 2x worked, but not AGP 4x, and was pairing it with a CPU where AGP 1x & 4x worked, but not AGP 2x. So the had to operate at AGP1x, and they were perfectly happy to do so, and the chip vendors were happy to sell them parts for a very low price, rather than having to scrap the parts.

I have a friend who works for Western Digital. For disk drives he says that the customer specs the acceptable defect rate, as part of the price negotiation process. The better drives go to the customers willing to pay for better quality, and often the same customer is buying different quality levels for different products. No need to put the most expensive drives in the products with a 1 year warranty, but for laptops that include a 3 year warranty it's worth spending more for the better product.
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