iPod headaches for Apple compound with sweatshop claim

Stan Beer
Thursday, 15 June 2006 17:39

IT Industry - Strategy

It really has not been a good month for Apple on the PR and legal front and the issues stem exclusively from one product - iPod.

First came the alleged patent infringement lawsuit from Singapore-based MP3 player manufacturer Creative Technology, followed by two counter suits launched by Apple. Then a Scandinavian coalition of three countries launched a bid to break the exclusive link between iTunes and iPod. This was followed shortly after by the US International Trade Commission (ITC) voting to launch an investigation of Apple over the Creative patent infringement claims.

The latest iPod migraine to make its presence felt is an article that appeared the UK newspaper, Mail on Sunday, that described sweat shop factories being run in mainland China by Taiwanese iPod assembly company Hon Hai Precision Industry Co Ltd. According to article, young women from rural regions are being paid just $50 a month, which is half the usual rate, are housed in dormitories and have to pay half their wages in rent and board. What's more, the article claims that the hapless workers are required to do 15-hour shifts.

The sweat shop story has sent Apple into damage control, with the company stating publicly that it is looking into the allegations raised in the article and that the company would not tolerate violations of its supplier code of conduct.

On the bright side for Apple, the Scandinavian countries are a sizeable but not a huge portion of its market, the ITC investigation is a long way from finding in favour of Creative and the sweat shop charges go with the territory for any large manufacturer operating in low cost markets. Then again, the iPod is beginning to appear to be a high maintenance product.