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Why Didn’t Apple Use Sapphire Glass in the iPhone 6?

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Why Didn’t Apple Use Sapphire Glass in the iPhone 6?

Why Didn’t Apple Use Sapphire Glass in the iPhone 6?

It is a longstanding tradition for the rumour mill to heat up before a highly anticipated Apple product launch. With each event getting more attention than the previous, it is no surprise that sometimes the hype gets out of hand.

This has led to a new tradition: the entire internet griping about which rumours and leaks that Apple was unable to fulfill with their latest product.

The case was no different for the iPhone 6 and iPhone 6 Plus launch yesterday at the Flint Center in Cupertino. Prior to launch, the most persistent buzz about the iPhone 6 was that it would be the first major smartphone to adopt sapphire glass displays rather than use Gorilla Glass, the industry standard.

However, as the launch got closer and closer, it became more and more doubtful that sapphire glass would be used – even despite Apple’s $578 million investment in producing the material. Reports were that the Arizona plant was still slow to ramp up, and it also surfaced that supply chain insiders had not seen enough orders go through.

So why didn’t Apple use sapphire glass in the iPhone 6?

The first reason has to do with the sapphire glass itself. While the material is almost as hard to scratch as a diamond, it turns out that any small impurity in the material can severely compromise its structural integrity. GT Advanced Technologies, the maker that Apple has partnered with, would have had to ramp up production to unprecedented levels while producing flawless material for an estimated 80 million iPhones.

What makes this even more difficult is the way that synthetic sapphires are made. To grow each crystal, aluminum oxide must be heated to 3,700°F in a controlled furnace. Then, the crystal is grown out in a boule and cut with diamond-laced saws. This is a very intricate and involving process, which is much more difficult to ramp up than an industrial scale glass operation such as that of Corning and its Gorilla Glass.

The second big reason that made sapphire glass difficult to integrate within a short timeline is that the economies of scale are not yet there to make the price worthwhile for Apple customers. There are multiple estimates on the price differential, but one estimate puts sapphire as 10x more expensive than Gorilla Glass.

That could be brought down significantly with streamlined production, likely to at least the 3-4x range. In any case, to keep the same margins Apple has, the cost would have to be passed to the customer. Is it worth $100+ to the end user to have more scratch resistant glass?

Maybe some would agree, but Apple believes that it definitely wasn’t worth the risk just yet.

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Chart of the Week

A Visual History of the Largest Companies by Market Cap (1999-Today)

See how the world’s largest companies have changed over time, and how this helps tell a broader story about what the market is thinking.

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A Visual History of the Largest Companies by Market Cap

The macro narrative that underlies the market is constantly under revision.

While this is partially a function of shifts in investor sentiment, it’s also driven by game-changing events as well as much more structural market forces.

For example, how does the macro narrative change after a commodity price crash? What about when the unprecedented scale of technology is truly understood by the market?

An Evolving Narrative

In this week’s chart, we look at how the big picture narrative has changed over time by using a very simple approach.

We have visualized the market capitalizations of the 10 largest public companies in the world over five-year intervals from 1999 until today, and it gives us a series of snapshots of what the market was “thinking” during these specific periods.

Not only is it evident as certain industries rise to prominence, but there are also some interesting individual stories to follow. We can see iconic companies – such as Apple – ascend into the public consciousness, while others fall off the radar completely.

YearDescriptionTop CompanyWho Dominates Top 10?
1999Dotcom BubbleMicrosoft ($583B)Five tech companies in the mix
2004Post-BubbleGE ($319B)Diverse mix of companies by industry
2009Financial CrisisPetroChina ($367B)Six non-U.S. companies make list
2014$100 OilApple ($560B)Last year for oil companies, tech starts ascending
2019Big Tech EraMicrosoft ($1,050B)Seven companies are tech

The composition of the top 10 changes in each of the snapshots above, and this simple approach helps capture the market narrative for each timeframe.

During the Dotcom Bubble, you can see that half of the list was dominated by tech companies. This was short-lived, and the years 2004, 2009, and 2014 have much more diverse lists.

You can also see the impact of the financial crisis on U.S. company valuations. In 2009, there is an equal distribution of Chinese and American companies. Royal Dutch Shell (UK/Netherlands) and Petrobras (Brazil) help round out the top 10.

Finally, over the last five years, you can see the impact of lower oil prices and the growing scale of tech. Back in 2014, Exxon Mobil was the second largest company in the world by a solid margin, but today it’s been displaced by companies like Facebook, Amazon, Tencent, and Alibaba.

The Big Tech Era

Here is the current top 10 list of the world’s largest companies by market cap:

RankCompanyIndustryMarket Cap
#1🇺🇸 MicrosoftTech$1,050 billion
#2🇺🇸 AmazonTech$943 billion
#3🇺🇸 AppleTech$920 billion
#4🇺🇸 AlphabetTech$778 billion
#5🇺🇸 FacebookTech$546 billion
#6🇺🇸 Berkshire HathawayDiversified$507 billion
#7🇨🇳 AlibabaTech$435 billion
#8🇨🇳 TencentTech$431 billion
#9🇺🇸 VisaFinancial$379 billion
#10🇺🇸 Johnson & JohnsonConsumer Goods$376 billion

In total, the five biggest tech giants brought in a combined $801.5 billion in revenue last year, and $139 billion in net income.

The Staying Power of Microsoft

With a valuation today of just over $1 trillion, Microsoft is again the world’s largest company by market capitalization.

In this way, the above lists come full circle, since Microsoft was also the biggest company in 1999.

While the software giant experienced short periods where it did drop out of favor, Microsoft was the only company to make the list in our five snapshots above.

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The World’s 100 Most Valuable Brands in 2019

Technology brands account for 20 of the world’s 100 most valuable brands in 2019, combining for a whopping 43% of total brand value.

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The World’s 100 Most Valuable Brands in 2019

Brand equity can be a challenging thing to build.

Even with access to deep pockets and an innovative product, it can take decades of grit to scrape your way into the mainstream consciousness of consumers.

On the path to becoming established as a globally significant brand, companies must fight through fierce competition, publicity scandals, changing regulations, and rapidly-evolving consumer tastes – all to take a bite from the same piece of pie.

Cream of the Crop

Today’s visualization comes to us from HowMuch.net, and it showcases the 100 most valuable brands in the world, according to Forbes.

Here are the powerful brands that sit at the very top of the list:

RankBrandBrand Value ($B)1-Yr Value ChangeIndustry
#1Apple$205.5+12%Technology
#2Google$167.7+27%Technology
#3Microsoft$125.3+20%Technology
#4Amazon$97.0+37%Technology
#5Facebook$88.9-6%Technology
#6Coca-Cola$59.2+3%Beverages
#7Samsung$53.1+11%Technology
#8Disney$52.2+10%Leisure
#9Toyota$44.6+0%Automotive
#10McDonald's$43.8+6%Restaurants

It should be noted that the list is ordered by brand value, a measure that tries to calculate each brand’s ultimate contribution in financial terms to the parent company. You can see that full methodology here.

Finally, it’s also worth mentioning that brands with only a token representation in the United States have been excluded from the rankings. This means companies like Alibaba or Vodafone are not represented in this particular visualization.

Tech Rules Again in 2019

For another straight year, technology dominates the list of the 100 most valuable brands in 2019 – this time, with six of the top seven entries.

Most of these brands saw double-digit growth in value from the previous year, including Apple (12%), Google (27%), Amazon (37%), Microsoft (20%), and Samsung (11%). The one notable exception here is Facebook, which experienced a 6% drop in value attributed to various struggles around the company’s reputation.

Here’s a look at how industries break down more generally on the list:

Industry# of BrandsBrand Value ($B)
Total100$2,231.9
Technology20$957.6
Financial Services13$198.1
Automotive11$208.9
Consumer Goods10$123.8
Retail8$133.0
Luxury6$124.1
Beverages4$49.3
Diversified4$56.8
Alcohol3$69.8
Apparel3$34.7
Business Services3$33.5
Restaurants3$73.0
Telecom3$24.3
Heavy Equipment2$36.7
Leisure2$19.8
Media2$34.8
Transportation2$41.1
Tobacco1$12.6

As you can see, technology brands make up 20% of the list in terms of the number of entries – and a whopping 43% of the list’s cumulative valuation.

In total, technologies brands combined for $957.6 billion in value. Even when including Facebook’s recent drop, this is an impressive 9.7% increase on last year’s numbers.

Will the double-digit increases for the world’s largest tech giants continue into 2020, or are brands such as Amazon and Google going to start seeing the same type of pushback that Facebook has grappled with among consumers and regulators?

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