Apple 2.0

Covering the business that Steve Jobs built

A New York Times anti-Apple article swallows its own premise

May 7, 2013: 7:45 AM ET

Once again, the paper twists itself into a pretzel to find the Apple-is-doomed angle.

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Photo: sogoodblog.com

FORTUNE -- Readers who remember the New York Times' 2012 investigation of conditions in the Chinese factories that build iPads and iPhones for Apple (AAPL) -- the article that described Apple as "reprehensible" and "morally repugnant" -- may be surprised if they open Tuesday's business section and read this lead paragraph:

"Terry Gou did almost everything that Apple could ask for. He made all those iPhones — and he made them cheap. When Apple was subsequently criticized for low wages and poor working conditions at his factories in China, it was Mr. Gou's company, the Foxconn Technology Group, and not Apple, that caught the most heat."

The Times, you may recall, won a Pulitzer Prize last month for turning up the heat on Apple in a nine-part series -- seven of which were based on the dubious premise that Apple was more guilty than its competitors of such sins as outsourcing work, sidestepping taxes, using patents as weapons and turning a blind eye on labor abuses in its Asian supply chain.

Why the New York Times picked on Apple is no mystery. The world's most valuable company made a big, fat target guaranteed to draw readers -- not to mention gullible Pulitzer jurists.

But the premise of Tuesday's piece is bizarre, even for the Times. The thesis is clearly spelled out in the headline (Foxconn Tries to Move Past the iPhone) and in the nut graph:

"But now Foxconn, a potent symbol of the perks and perils of globalization, is taking a step that, not all that long ago, would have seemed unthinkable: it is contemplating life far, far beyond Apple."

And that thesis is buttressed -- in good Journalism 101 fashion -- by a strong quote:

"Foxconn senses that the Apple aura isn't as invincible as before," said Jamie Wang, an analyst at the research firm Gartner. "So they are worried that they need something besides Apple's business that will allow them to grow."

Yes, readers, Apple is doomed, and to survive Cupertino's demise Foxconn must strike out on its own.

And on what evidence does the Times build its case? That Foxconn, led by Gou, has plunged into the low-margin TV business, bailing out Sharp, buying LCD factory capacity and even selling TV sets at a loss "to get their foot in the door."

Why would Foxconn be doing this? You have to read all the way to the kicker to discover that the Times' sources think that Gou might not be trying to get away from Apple after all. In fact, it might be just the opposite:

"Most analysts say they believe Foxconn needs a larger TV customer. Televisions represent less than 5 percent of Foxconn's business, far less than its revenue from Apple. And some analysts think Foxconn is just biding its time, waiting for Apple to figure how to create a game-changing television product that will increase demand once again.

"Representatives of Apple and Foxconn said they did not comment on speculation.

"Analysts say Mr. Gou's efforts to buy an LCD factory and vertically integrate his television manufacturing represent anticipation that orders for an Apple television product will come his way.

"'Their gamble now is if Apple will put out a TV, and they should know better than anyone else in the world,' said Mr. Wu, the Credit Suisse analyst. 'They're making a bet that it'll work.'"

Oh well.

As Gilda Radner's Emily Litella used to say at the end of one of her editorial rants on Saturday Night Live, when it turned out that she'd completely misunderstood the premise: "Never mind."

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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