How many people does it take to make 9 million Samsung Galaxy S3 smartphones?

Over the last year, a truly huge number of column inches has been dedicated to Apple’s relationship with Foxconn, the Taiwan- and China-based manufacturer who produces the iPhone and iPad. First those stories revolved around a spate of suicides and explosions, then we boggled at the fact that Foxconn has 1 million employees, and finally the news cycle was rounded out with Apple working hard to improve worker conditions at the factory — and its public image.

For a company as large as Apple — to date it has sold around 200 million iPhones and 80 million iPads, and it’s by far the most valuable company in the world — such scrutiny is inexorable, but it also means that other companies tend to get washed away by a tsunami of Apple press. Take Samsung, for example, a South Korean conglomerate with 350,000 employees worldwide and $220 billion in revenue in 2010 — more than twice Apple in 2011, its biggest year yet (by far). While Apple has sold 180 million iPhones in total, Samsung sold 300 million phones in 2011 alone — and its market share is increasing. On the back of the Galaxy S2, Samsung’s smartphone market share in the US rose from 10% to 24% between 2010 and 2011. Worldwide, Samsung is by far the largest smartphone maker.

Which brings me neatly onto the Galaxy S3. This morning, Reuters announced that pre-orders of the Samsung Galaxy S3 now total 9 million. This is huge. First-weekend sales of the iPhone 4S totaled “just” 4 million. 9 million would make the Galaxy S3 the fastest selling gadget ever — a title currently held by Microsoft’s Kinect, which sold 8 million units in 60 days.

Buried at the bottom of the Reuters report is another equally interesting tidbit: According to an unnamed Samsung official, its smartphone factory in South Korea is running at “its full capacity of 5 million units per month.” Back in March, a Foxconn insider said the company was gearing up to produce 57 million iPhone 5 handsets this year — divide that by 12, and you get 4.75 million units per month.

Now, I’m not entirely sure how Samsung does this, but South Korea actually has a rather high income per capita — $24,000 — and the average monthly salary for a factory worker is $2000 per month. The average monthly wage for a Chinese Foxconn worker is only $400. As far as I can tell, this simply means that Apple pays significantly less to produce its iPhones. A report from February confirms this disparity: If you average it all out, Chinese workers get $8 per iPad, while Korean workers get $34 per iPad.

If we throw some other numbers into the mix, we can derive some other interesting facts about the manufacture of Apple and Samsung smartphones. In March, what seems like the diary of a Foxconn worker was published on the web. This worker, named Li Qi, says that in the lead-up to the launch of the new iPad, his production line churned out 150 iPads per hour. Li Qi’s base wage is 2,350 yuan per month ($370) — and considering Foxconn employees work six days a week and eight hours per day, that means he gets paid around $15 per day, or $1.85/hour.

Looping back around to that $8-per-iPad figure: If the team produces 1200 iPads during an 8-hour shift, and they get $8 per iPad, then it costs Foxconn $9,600 to staff each production line for a day. Divide that by the employee pay of $15-per-day, and we get 640 — the number of workers on each production line.

We’re not done yet! Another report from a Foxconn worker says that iPhone production lines are expected to spew out 3,500 units per day. We don’t know if this is because iPhone production lines have more workers, or because they’re easier to make. If we assume the latter, then 640 employees can create 84,000 iPhones per month (before overtime). If the Galaxy S3 is roughly equivalent to the iPhone 4S in terms of manufacturing complexity, then Samsung’s South Korea factory must have 60 production lines to produce 5 million Galaxy S3s per month, for a total of 38,400 workers.

This might seem like a fairly small number compared to Foxconn’s city-sized factories, but it’s more than 10% of Samsung’s total workforce, or more than Google’s entire workforce. It’s also worth noting that Samsung produces almost every component found inside the Galaxy S3, too, from the Exynos processor, to the OLED display, to the RAM and NAND flash — so, all told, we’re probably looking at at least 75,000 people working flat out to produce the first 9 million pre-orders, and then the tens of millions of Galaxy S3s that will be sold in 2012.

Read our hands-on review of the Galaxy S3, or why you should(n’t) upgrade from the Galaxy Nexus

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The iPhone elite

iPhone users are elitists. It’s one of those things that we’ve always suspected — including iPhone users themselves — but to maintain the status quo and to prevent high tech culture devolving into all out war, we dance around the issue by using euphemistic terms like hipster. The fact is, many iPhone users consider themselves a cut above the rest. They sneer at unresponsive Android devices, laugh derisively at crippled BlackBerrys, and guffaw at Windows Phone 7′s lack of apps. When they buy an iPhone, they’re buying into a way of life and an elevated, entitled echelon of society — the upper class of the technorati, if you will.

No where is this feeling of entitlement and privilege more apparent than with the recent release of Instagram for Android. For the last 18 months, Instagram has been an iOS exclusive, racking up 30 million users in the process — not bad, when you consider that only 180 million iPhones have been sold. Instagram for Android, in less than 24 hours of availability, has been downloaded one million times. This has resulted in iPhone users tweeting some truly deranged utterances. Here’s a sample:

“Bummed to see Instagram is coming soon to Android. I like the exclusivity of iPhone users only.” – @matthewtpain

“Don’t follow me on Instagram if you got an Android. Only iPhone users following this way. I’m blocking Android users. This is war.” – @iFollowBlindPpl

“I’m absolutely #outraged that Instagram is on Android now. Now it’s gonna be populated by people who are poor and can’t afford an iPhone.” – @Chino_Wanker

While the last one is hopefully a joke, there arehundreds of other examples of iPhone users who are upset at this loss of exclusivity. It is patently clear that, at least for some iPhone users, Android users belong to a lower class of citizenry — that the Android ecosystem is some kind of ghetto where poor, underprivileged humans fight tooth and claw for their smartphone fix.

But are iPhone users actually at fault for entertaining such delusions of grandeur? There are certainly people out there who intentionally buy iPhones as a social statement — to stand out of the crowd — but the problem, if you can call it that, really stems from Apple itself.

At this point, Apple’s reputation and brand recognition is so high that, really, anything it touches turns to gold. After more than a decade of runaway success that begun with the iPod, excellent advertising campaigns, and the cult of personality that surrounded Steve Jobs, there is an implicit agreement that when you walk into an Apple Store, you will walk away with a device that is recognized the world over as being best-in-class.

This is the fundamental reason for the semi-religious fanaticism that surrounds Apple. iPhone buyers might not know why the iPhone is better than the rest, they just know that it is. This isn’t to detract from the iPhone’s actual strengths — it’s an excellent phone — but if you asked those iOS users whythey hate the idea of Instagram for Android, I don’t think many rational responses would be forthcoming. They just know that it feels wrong — that, for some reason, Android is stealing a sip of Apple’s secret sauce. Your iPhone — which you might’ve saved up for, or begged daddy for — suddenly doesn’t seem quite as exceptional. The gap between you and the ghetto has narrowed significantly, and that’s a horrible feeling.

Likewise, if you ask an Apple user why their iPhone or MacBook Pro is better than the Android or Windows equivalent, you will nearly always get some kind of rote response: “It just works,” “Windows sucks,” “I’m a Mac/hipster/artist/bourgeois.” This is because their Apple zealotry isn’t predicated on fact — it’s based on Apple’s incredibly well-cultivated (and well-deserved) reality distortion field.

Now just to be clear, even the staunchest fan of Windows or Android would admit that Apple’s smartphones, tablets, and laptops are good devices. Many (presumably objective) power users choose Apple laptops and smartphones because they are actually good — they’re not just a machination of hype and dream. Apple wouldn’t be the most profitable company in the world if its devices sucked.

Using an iPhone does not elevate you to a higher rung, though — no more than using a Galaxy Nexus, HTC Evo 4G LTE, or an ultrabook. As the saying goes — you are special, just like everyone else. You have access to a delightfully maintained walled garden, but so does everyone else. Your Apple device might have a cool, unique feature — but so do other, non-Apple devices.

By all means be proud of your iPhone, and please, encourage your friends and family to join the smartphone party — but don’t for one second think that spending a few hundred dollars on one phone instead of another somehow makes you a better person.

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Does Daisey’s lie change what we know about Apple’s manufacturing?

Almost two months ago, we published a story detailing the results of several investigations into Apple’s manufacturing partner, Foxconn. The allegations of shoddy inspections and poor worker conditions came just days after Apple announced record earnings and profits. Apple hotly denied all of the claims the New York Times’ articles leveled against it and partnered with the Fair Labor Association to verify that Foxconn’s factories were in tip-top shape.

The back-and-forth ignited a great deal of general interest. Mike Daisey, the man behind the one-man show The Agony and Ecstasy of Steve Jobs, went on the radio program This American Life to discuss his visits to Foxconn, interviews with hundreds of workers, and his experience and observations of the company. The resulting TAL episode broke download records and fanned the flames of debate — until follow-up analysis proved that Daiseymade up most of his story. This raises the question of just how far Daisey’s lies percolated into the general body of what’s known and how much of the various analysis done by the media holds up.

Here’s the good news: Daisey’s fabrications were confined to TAL. The NYT stories we based our own reporting on and the investigation Apple launched as a result, regardless of whether or not you agree with the tone of the former or the need for the latter, are solid. This American Life host Ira Glass interviewed Daisey as part of its retraction of the original story; Glass’s normally unflappable demeanor ripples with anger at having been taken in in such a fashion.

Glass states:

Mike’s monologue in reality is a mix of things that actually happened when he visited China and things that he just heard about or researched, which he then pretends that he witnessed firsthand. He pretends that he just stumbled upon an array of workers who typify all kinds of harsh things somebody might face in a factory that makes iPhones and iPads. And the most powerful and memorable moments in the story all seem to be fabricated.

The bits about child workers? Fabricated. Meeting workers poisoned by n-hexane? Fabricated. Showing an iPad maker who lost the use of a hand while building them for Foxconn? Made that bit up, too. Some of these lies were woven into his one-man show, some were created especially for TAL. In both cases, Daisey defends his statements, claiming that “if I untied these things, that the work, that I know is really good, and tells a story, that does these really great things for 15 making people care, that it would come apart in a way where, where it would ruin everything.”

The “big picture” facts about Foxconn, its relationship with Apple, and the question of whether or not Apple bears a unique responsibility to push for improved factory conditions as part of its agreements with suppliers are all still valid. That’s where this post might have ended, if Daisey had managed to keep his mouth shut. Over on his website, the actor has posted a whinging, self-pitying rebuttal that criticizes the recent TAL retraction as “pulled out of context.” He then writes:

Given the tenor of the condemnation, you would think I had concocted an elaborate, fanciful universe filled with furnaces in which babies are burned to make iPhone components, or that I never went to China, never stood outside the gates of Foxconn, never pretended to be a businessman to get inside of factories, never spoke to any workers.

Especially galling is how many are gleefully eager to dance on my grave expressly so they can return to ignoring everything about the circumstances under which their devices are made. Given the tone, you would think I had fabulated an elaborate hoax, filled with astonishing horrors that no one had ever seen before…

But understand that if you felt something that connected you with where your devices come from — that is not a lie. That is art. That is human empathy, and it is real, and even if you curse my name I hope you’ll recognize that and continue reading, caring, and thinking.” (emphasis added)

He’s wrong. It’s a lie. More specifically, it’s deliberate emotional manipulation. As a journalist, I get the allure of this particular slippery slope. The n-hexane poisonings? Real. Could they have been prevented? Absolutely. Are the survivors of that event stuck dealing with crippling side effects for the rest of their lives? Yes. Did he go to China to investigate the labor situation? Yes he did. Put those three facts together, and the temptation to go one step further and fabricate the meeting of an affected individual is enormous. It’s the linchpin that transforms an article or production from a simple discussion of Someone Else’s Problem to a personal intersection of two living, breathing humans.

Daisey’s actions are understandable; his post makes it clear that he believes he was serving a greater moral imperative. The fatal flaw in his reasoning is that the situation didn’t require him to lie. It never does. The original New York Times stories, which have withstood fact checking, put a very human face on the problems Foxconn workers face. The image that accompanied our original story (pictured above) was, to the best of our knowledge, taken at the first Foxconn aluminum explosion in May of 2011. It’s uncomfortable to look at precisely because it makes the viewer a part of the pain and fear that accompanied the disaster.

Movies like Life is Beautiful, Schindler’s List and Saving Private Ryan put human faces on World War II by meshing historical fact with narrative fiction. They, and literally hundreds of other films on various topics, are movies that contain truths, even when they aren’t factually accurate to the last event. Daisey has conflated the two and fell into the trap of using his personal credibility to humanize and tell the story of what goes on to build the tablets and smartphones we gobble up like candy.

The worst part of Daisey’s lying is that he’s damaged the credibility of the cause he sought to champion. Thanks to him, people who followed the situation peripherally will conclude that Apple got accused of a bunch of bad things in China but the guy who did it was “lying all along.” The public mind rarely pauses to parse nuance. In reality, Daisey’s story was only a small piece of the investigative puzzle; his contribution was modest at best. His lie, however, is disastrous. No amount of self-congratulatory blogging on his part can hide that.

Read our review of Daisey’s play, The Agony and Ecstasy of Steve Jobs

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The dumbphone strikes back

The growth of smartphones has been phenomenal. From a virtually non-existent flyspeck in 2007, to over 400 million units sold in 2011 and the most popular consumer electronics device in the US, smartphones are a huge money maker — but only if you’re Apple or Samsung.

In 2011, Samsung and Apple were the only two smartphone manufacturers to turn a healthy profit — which is perhaps unsurprising when you consider that both companies each own around 25% of the market. Motorola, HTC, LG, Sony-Ericsson, and any number of other also-rans sold millions of handsets but barely managed to eke out a profit between them. The fact is, it’s hard to compete with Apple, which has the best supply chain in the world and an army of devout fans, and Samsung, which is one of the largest manufacturers in the world, and the top manufacturer of LCD-, OLED- and memory-related tech goods.

Meanwhile, however, Nokia squeezed out a very healthy 13% profit margin on its feature/dumbphones. Nokia’s immense experience in the design and manufacture of cheap handset means that it makes more money on a $50 phone than Motorola makes on a $200 phone. While feature phones are definitely losing ground to smartphones, it’s important to note that they’re still a huge market, with around a billion feature phones sold in 2011. Just last week, Nokia announced that it had sold 1.5 billion Symbian Series 40-based feature phones. To put this into perspective, the total number of Android smartphones to date is around 250 million. The total number of iPhones, despite the monumental record of 37 million devices sold in the last quarter of 2011, is only around 120 million.

In the short term, this situation isn’t going to change. Apple and Samsung will continue to dominate the smartphone market, and Motorola and co will try to subsist on the leftover scraps. Nokia is trying to squeeze itself into a seat at the table with Windows Phone 7, but unless Microsoft suddenly decides to throw billions at its smartphone OS, it isn’t going anywhere fast.

More importantly, though, and mostly unreported by the press because feature phones are the epitome of uncool, is the fact that Nokia and Microsoft are also bringing Windows Phone 7 to low-end smartphones in 2012.

When does a dumbphone stop being dumb?

The Windows Phone 7 Tango update will make the feature phone and low-end smartphone sector very interesting indeed. As it stands, the WP7 spec dictates that an expensive, high-performance SoC from Qualcomm is used, along with a high-resolution 800×480 screen; with Tango, both of those requirements are being relaxed. Furthermore, Tango will support 120 languages, compared to the 35 supported by Android, iOS, and current WP7. In other words, the Tango update will put Microsoft and Nokia in prime position to sweep through China, India, and other developing markets where feature phones are still the dominant form factor. Tango will bring tens of thousands of apps, cloud sync, and many other smartphonesque features to the cheap handset market. Due to its thrifty, utilitarian interface, cheap WP7 devices should be a lot more usable than cheap Android devices, too.

If you’ve ever used a modern feature phone — especially a Symbian Series 40 (S40) device — you’ll have realized that it’s a lot like a smartphone. It might not sync with Google or Apple’s cloud services, but there’s a decent Webkit-based web browser (or you can run Opera Mini), lots of apps (including Angry Birds and web apps), and support for 3G, WiFi, and Bluetooth. Series 40 even supports tethering: With a dinky, light-weight Series 40 phone in your pocket, you can access the internet on your laptop or tablet from anywhere. The other thing about dumbphones, which again you won’t appreciate unless you’ve used one, is that they’re very easy to use. They don’t have five-deep menus like Android, and the interface is generally very responsive. A good dumbphone is kind of like a toy version of the iPhone.

Lest you think that smartphones have a monopoly on bleeding-edge tech, it’s worth noting that the Japanese have had NFC tech in their dumbphones for years, Nokia will undoubtedly bring it to S40, and it’s only a matter of time until Microsoft implements it in WP7. Likewise, accelerometers and gyros are supported by S40, and both WP7 and Symbian support LTE and other emerging wireless standards. Really, smartphones are not significantly cooler or more powerful than dumbphones.

In short, it looks like we are heading towards a market that is dominated by Apple and Samsung at the top end, and Nokia at the low end. There simply won’t be any reason to buy (or sell) a $200 Android smartphone when you could get the same kind of functionality in a $50 Nokia phone, or the real smartphone experience for $200 more.

There’s no way that billions of people living in developing countries will magically find the money to buy an iPhone or Samsung Galaxy phone. Nokia and other white label Asian OEMs are all competing for a slice of the huge dumbphone markets in China, India, and Brazil. Market forces (and Moore’s law) dictate that they grow in features and coolness, and eventually there will be very little difference between a dumbphone and a smartphone. Screen size alone will decide which side of the fence a device falls on.

The smartphone/tablet dichotomy

And you know what? If I could get a cheap phone that was almost a smartphone, I think I would sell my Galaxy Nexus. You see, when I leave the house I currently have a horrible decision to make: Do I bring my smartphone, tablet, or laptop? The smartphone currently wins because it fits in my pocket, but its battery sucks and I hate entering data on it. I’d like to bring my tablet with me, but it’s only a WiFi model — ditto my laptop.

What if I could keep an attractive, fun, light, easy-to-use dumbphone in my bag or back pocket, and have internet access wherever I go? Series 40 and WP7 Tango support hardware QWERTY keyboards, too, so sending texts and email on the move would be a lot easier. It would be cheaper to own, and cheaper to replace.

The other point of view is that many people can’t afford a smartphone and a tablet — and indeed, tablets are now eating into the PC market, suggesting that some people are forced to choose between tablets and laptops, too. These consumers could afford a $50 dumbphone and a tablet or laptop, however — they would even save money by avoiding the hideously over-priced 3G tablets.

Ultimately, then, this will come down to convergence. If we converge on smartphones, their prices will drop and feature phones will eventually be squeezed out. If we converge on tablets or laptops, dumbphones will seem a lot more attractive than smartphones. That’s another topic for another day, though.

For now, I am content with the idea that dumbphones are a surprisingly viable alternative to smartphones. It’s definitely going to be hard to let go of that beautiful, crowd-forming 4-inch OLED screen — but when you realize how much money you’re saving, and how much flexibility you’re gaining, and how cool Nokia’s latest Asha feature phones look… well, it makes my tech senses tingle just a little bit.

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