MacRumors

Apple is continuing to seek improved supply-chain risk management by shifting more of its manufacturing needs from its longtime partner Foxconn to Pegatron, notes The Wall Street Journal in a new report that suggests Pegatron will be responsible for the assembly of Apple's low cost iPhone.

Pegatron Corp., named after the flying horse Pegasus, will be the primary assembler of a low-cost iPhone expected to be offered later this year. Foxconn's smaller rival across town became a minor producer of iPhones in 2011 and began making iPad Mini tablet computers last year.

Pegatron's rise means an end to the monopoly that Foxconn Technology Group—the trade name for Hon Hai Precision Industry, the world's largest electronics contract manufacturer—has held over the production of Apple's mobile products.

According to the report, the change is meant to help Apple expand its product lines and prevent supply chain disasters that could hold up the production of Apple's devices. At launch, the iPhone 5 was criticized for its tendency to scratch and scuff, which eventually led to increased quality control standards to reduce out-of-the-box issues.

Foxconn executives admitted last year that the iPhone 5 was difficult to assemble, and an April rumor suggested that Apple returned 5–8 million defective iPhone 5s to the company after continued issues with quality control.

Foxconn, in its growing heft as the world's largest electronics contract company, was also getting more difficult for Apple to control, with incidents such as changing component sourcing without notifying Apple, people familiar with the matter said. At the same time, Foxconn became frustrated with the growing complexity of Apple products, such as the iPhone 5, which is difficult to make in the volumes Apple needed.

In addition to cutting down on the risk of production issues, Pegatron is also said to have accepted less profit in order to secure orders from Apple. Tim Cook, too, is said to be responsible for the change, as he is more interested in diversification than maintaining a strong relationship with Foxconn chairman Terry Gou.

Despite being a smaller manufacturing partner, Pegatron has a long history with Apple. The company was responsible for packaging Apple's first generation iBooks, and as noted above, began assembling a small number iPhones for Apple in 2011. Currently, Pegatron produces the lion's share of Apple's iPad minis.

Apple's low cost iPhone could bring in huge profits for the smaller supply partner, as it is said to be aimed at untapped emerging markets. Earlier this month, Pegatron announced that it would boost its workforce by 40%, fueling initial rumors that the company would produce the cheaper iPhone.

The low cost iPhone is expected to come with an unsubsidized price tag between $350-$400. Release dates for the device have been murky, with sources targeting both a late 2013 release and a 2014 release.

At the All Things Digital D11 conference today Kleiner Perkins Caufield & Byers partner Mary Meeker published her 2013 Internet Trends report, a 117 slide presentation that covers a range of topics from Internet usage and traffic to mobile device growth trends.

Unsurprisingly, mobile adoption continues to grow. Both Apple and Samsung have experienced enormous smartphone market share unit growth over the past two years, with Apple going from 16% share in Q1 2010 to 22% share in Q4 2012 and Samsung growing from 4% to 29% during the same time period.

Tablet growth has exploded as well, outpacing even smartphone growth. When comparing the first 12 quarters after launch, iPad shipments ramped up three times more quickly than iPhone shipments.

In fact, tablet shipments surpassed both desktop PC and notebook shipments in the fourth quarter of 2012, less than three years after tablets surged in popularity. A similar report from IDC earlier this week confirms the rapid tablet growth, estimating that yearly tablet shipments will surpass notebook shipments by 2013 and the total PC market in 2015.

Other highlights from the report include overall smartphone growth, which is up 28% year over year in the United States and 31% in China, and mobile internet traffic, which now accounts for 15% of total global internet traffic.

Following Tim Cook's appearance at D11 last night, respected Apple journalist Jim Dalrymple has posted his expectations for Apple's WWDC Keynote next month.

It's not clear if Dalrymple, who is known to have excellent contacts at Apple, is passing on something in particular from the company or it's just a summary of what he expects ahead of WWDC.

Dalrymple writes that he doesn't expect a new iPhone or iPad model, largely because the devices are flagship products and would have their own, separate media events. Instead, he believes that the Mac wouldn't warrant its own event -- but an announcement of Mac updates would fit well at WWDC.

The Mac is still an important part of what Apple does, but I don’t know that Apple would hold a special event specifically for a Mac product anymore. If they did, it would have to be quite a spectacular product.

For me, the Mac products fit well with a Tim Cook keynote at WWDC. That’s all I really expect from Apple in the way of hardware at the conference.

Finally, Dalrymple expects Apple to show off new versions of both the Mac and iOS operating systems, which Tim Cook confirmed last night at D11. A number of previous reports have claimed that much of the iOS user interface would receive a Jony Ive-led revamping, with a "flatter" design and fewer skeuomorphic elements.

Last month, KGI Securities analyst Ming-Chi Kuo said Apple's notebook line would receive updates at WWDC, with non-Retina models shipping soon after WWDC and Retina machines shipping later due to production bottlenecks on the displays.

A number of reports have suggested that Apple will introduce new iPhone and iPad models this fall, including a Retina-display equipped iPad mini, as well as a new iPhone model perhaps equipped with a fingerprint sensor.

Hours after Apple CEO Tim Cook's talk with AllThingsD's Kara Swisher and Walt Mossberg, AllThingsD has posted the full video of the interview online. The 81-minute video contains the full interview in addition to the Q&A session that followed. MacRumors provided live updates of the event. Last year it took several weeks for the full video to find its way online.

Steve Jobs was a regular participant of the D conference, having been interviewed on the stage and even appearing alongside Microsoft co-founder Bill Gates. Cook has carried on that tradition by serving as the opening session interview for the past two years.

Among the topics discussed by Cook yesterday:

- Apple Television - There Is a Grand Vision
- Wearables Are Incredibly Interesting, Nothing Great on the Market
- Executive Change Up Has Been "Great", Revamped iOS/OS X to Be Unveiled at WWDC
- Apple to Open Up APIs in the Future, but No Chat Heads
- Apple Hires Former EPA Chief Lisa Jackson to Oversee Environmental Efforts

At this year's annual All Things Digital conference hosted by AllThingsD, Walt Mossberg and Kara Swisher interviewed Apple CEO Tim Cook, where he revealed that Apple is planning to open up additional APIs in the future, giving third party developers more control over iOS.

According to Cook, while Apple will open up more APIs, it will continue to protect customers from the "risk of bad experiences."

Always a fine line, or maybe not so fine. The customer pays us to make choices on their behalf. But you'll see us open up more.

When Facebook released its Home software for Android phones in April, Facebook director of product Adam Mosseri mentioned that the company was in ongoing talks with Apple about bringing Home (and its Chat Heads functionality) to iOS.

According to Cook, while Chat Heads were not the ideal choice, Apple will allow third party apps to take over some iOS features in the future, allowing developers to build better and more versatile experiences.

During the question and answer session, Cook also mentioned that Apple had no issue with porting Apple apps to Android or other platforms should the need arise in the future, though such functionality doesn't make sense at the current point in time. Full coverage of Tim Cook's comments can be found here.

While sitting down with AllThingsD's Kara Swisher and Walt Mossberg at D11: All Things Digital, Apple CEO Tim Cook was asked about the new iOS and whether it was what Jony Ive was working on. Cook confirmed, noting that the change was part of Apple's executive shakeup last fall.

Yes. What we did last fall was change things up — to really ramp up our innovation. The key in the post-PC era for having a great product is incredible hardware, incredible software, and incredible services, and to combine them so you can't tell what's what. The magic is at the intersection.

Cook went on to explain how Apple recognized that Ive had contributed significantly to the look and feel of Apple products over the years and that he could do the same for Apple's software as well. Swisher followed up by asking Cook about collaboration within Apple and whether that was why former Apple senior vice president Scott Forstall was ousted. Cook responded that the goal was simply to tighten the groups within Apple, which echoes his comments to Bloomberg in December.

I don't want to talk about people who aren't there. The whole concept is to tighten the groups even more, so we could spend more time finding magic at the intersection. Now it's seven months later, and I think it's been an incredible change. Craig is running iOS and OS X, which has been fantastic. Eddy is focused on services. It's been great.

Cook also confirmed that Apple is set to talk about the futures of both iOS and OS X at WWDC on June 10, which includes Ive's "more than skin deep" rumored redesign of iOS 7. Cook's full commentary can be found in our coverage, available here.

At this year's annual All Things Digital conference hosted by AllThingsD, Walt Mossberg and Kara Swisher asked Apple CEO Tim Cook about wearable devices, such as Apple's much rumored smart watch, which has been dubbed the "iWatch."

Tim Cook mentioned that he found wearables to be "incredibly interesting" and went on to say that it could be a "profound area." Cook himself is equipped with a Nike Fuelband, but believes that there's nothing "great" on the market, and that wearables are an area "ripe for exploration."

Of course, when pressed on whether Apple will be developing a wearable device, Cook declined to answer, though he did hint that it was an important area of potential development, and that while both glasses and watches had drawbacks, the wrist was "natural."

There's nothing that's going to convince a kid who has never worn glasses or a band or a watch or whatever to wear one. Or at least I haven't seen it. So I think there's lots of things to solve in this space, but it's an area where it's ripe for exploration, it's ripe for us all getting excited about. I think there will be tons of companies playing in this.

I see it as another very key branch of the tree.

I think from a mainstream point of view [glasses] are difficult to see. I think the wrist is interesting. I'm wearing this (Nike Fuelband) on my wrist, it's somewhat natural. But as I said before, I think for something to work here, you first have to convince people it's so incredible that they want to wear it.

With the growing popularity of smart watches like the Pebble, the Jawbone UP, and the Nike Fuelband, rumors about Apple’s own smart watch have ramped up in recent months. Most recently, reliable KGI Securities analyst Ming-Chi Kuo predicted that Apple's rumored iWatch will debut in the second half of 2014.

The watch, which will integrate with Apple's existing mobile lineup, is expected to feature a 1.5–2.0 inch display. The New York Times has suggested that Apple is experimenting with curved glass, and according to a February report from Bloomberg, Apple has a team of 100 product designers working on the smart watch.

MacRumors has full coverage of the interview with more of Tim Cook’s comments on the iWatch.

At the D11: All Things Digital conference in Rancho Palos Verdes, California, Walt Mossberg and Kara Swisher sat down with Apple CEO Tim Cook to ask him questions on a number of topics. The discussion unsurprisingly included the much rumored Apple branded television set and the overall TV experience, which Cook said "could be better."

When questioned about whether or not content deals were holding up the possibility of an Apple television, Cook declined to comment, but he did reiterate that television is an area of intense interest for Apple.

I don't want to go into detail, but it continues to be an area of great interest for us. The product and relationships we've built provide a lot more knowledge than we would have otherwise. And popularity has been larger than we thought, and we aren't marketing it.

Cook again declined to comment when pressed once more about Apple's future television plans, but he did confirm that there is a "grand vision" in place.

After Walter Isaacson's biography of Steve Jobs was published with a passage on Jobs' desire to revolutionize the television industry, speculation about a possible Apple "iTV" ramped up.

Rumors flew about the iTV throughout 2012, but slowed down towards the end of the year as no solid hints about the product materialized, and few additional details have emerged. Most recently, an April rumor suggested that a 60-inch iTV might launch in late 2013.

During the interview Cook also revealed that interest in the current Apple TV remains strong, with 13 million total set top boxes sold all together. Cook's full commentary can be found in our coverage, available here.

MacRumors will be providing live coverage of Apple CEO Tim Cook's interview with Walt Mossberg and Kara Swisher at D11: All Things Digital this evening in Rancho Palos Verdes, California. The interview begins at 6:00 PM Pacific Time / 9:00 PM Eastern Time. Tonight's session marks Cook's second consecutive appearance at D and should offer some insight into Apple's business, although Cook is extremely unlikely to make any major announcements.

Cook's interview will not be streamed live, but we will be updating this post live with full coverage of the session and videos of conference interviews have traditionally been available for viewing soon after the sessions.

The Verge and Engadget will be providing their usual text and high-quality photos live from the event.

Mossberg and Swisher appeared on CNBC's Squawk on the Street earlier today to provide a preview of the session.

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Despite an ongoing lawsuit with Samsung that has led to ever increasing animosity between the two companies, Apple is said to be considering new contracts with Samsung to provide displays for its product lineup. According to Korean site ETNews.com (via AppleInsider), Apple is planning to resume purchasing LCDs from Samsung Display as the company is better equipped to keep up with high demand.

As the thin glass process was adopted to the production of touch screen panels, the related industry is expected to show stiff growth every year - there are very few Japanese or Taiwanese competitors in the thin glass market.

The industry is guessing that one of the reasons Apple decided to come back to Samsung Display is because of the thin glass. Samsung Display’s thin glass vendors have made a very visible growth in the industry, because Samsung Display, unlike LG Display, relies on its vendors for most of the thin glass processes.

Late last year, it was reported that Apple and Samsung would cut display ties in 2013, with Apple instead relying on other suppliers like LG Display and AU Optronics. Apple also cut back on memory orders from Samsung and in April, news hit that Apple would exclude Samsung from the development of its A7 system-on-a-chip, shifting production to Taiwan Semiconductor Manufacturing Company instead.

If Apple is indeed willing to begin mending ties with Samsung, the shift back to Samsung Display comes just as the company begins preparations for both the fifth generation iPad and the iPhone 5S. Reports have suggested that Apple will begin production of the next iPhone in June, with iPad production following shortly after in July.

Earlier this month, Apple filed plans for a relocated flagship retail store in San Francisco, proposing to close its existing store at 1 Stockton Street in favor of the new store three blocks north directly on Union Square. The filing was accompanied by a press release from city officials touting the project:

“Apple’s new store is quite simply incredible,” said Mayor Lee. “San Francisco is the Innovation Capital of the World, and I can think of no better location for the world’s most stunning Apple Store than right here in Union Square. I want to thank Apple for their investment in this City and continued commitment to growing jobs in San Francisco.”

“I’m excited that the company that revolutionized consumer technologies is moving to the heart of Union Square,” said President Chiu. “The new Apple store will highlight technology and design innovation as well as build community at the center of our City’s retail district.”

The proposed store's typical clean lines and heavy use of metal and glass immediately drew some criticism from observers, and San Francisco Chronicle urban design critic John King has now published a critique of Apple's plans highlighting some of the design considerations and the impact the construction will apparently have on an adjacent public plaza and sculptural fountain.

What's baffling is that a company renowned for design innovation has hired one of the world's most acclaimed architecture firms, only to unload a box that would look at home in Anymall, U.S.A.

Worse, it's a box that would displace one of downtown's friendliest works of public art, a bronze fountain by Ruth Asawa that - unlike the proposed polished Apple - could exist nowhere else but here.

King confirms that the architect on the proposed project is Foster + Partners, which has reportedly been taking on a greater role in Apple's retail projects since its involvement with Apple's upcoming new headquarters campus in Cupertino.

In his critique, King takes issue with the all-glass storefront on Post Street that will see direct sun exposure for much of the day, as well as the Stockton Street frontage that will simply be an 80 foot-long windowless wall. Apple's plans also call for a narrow stairway leading up to public plaza behind the store, a plaza that will be reduced from its current size and apparently see the removal of the popular fountain sculpture that has been in place for 40 years.

The fountain was also designed as the centerpiece of the existing triangular plaza along Stockton Street, wrapped in the upward ripple of brick steps. Passersby stop, look, take photographs and smile.

Apple, apparently, has different ideas. A study of the plans shows no sign of the fountain. The broad, inviting steps are gone.

King is not optimistic that the San Francisco Planning Department will require a significant redesign of the proposed project, considering the praise already heaped upon Apple's plans by city officials, but he does hope that some tweaks can be made that at the very least would improve the pedestrian experience along Stockton Street and the public plaza.