Operations provides a massive competitive advantage for Apple. This is the world of manufacturing, procurement and logistics in which the new chief executive officer, Tim Cook, excelled, earning him the trust of Steve Jobs. According to more than a dozen interviews with former employees, executives at suppliers, and management experts familiar with the company's operations, Apple has built a closed ecosystem where it exerts control over nearly every piece of the supply chain, from design to retail store. Because of its volume-and its occasional ruthlessness-Apple gets big discounts on parts, manufacturing capacity, and airfreight. "Operations expertise is as big an asset for Apple as product innovation or marketing," says Mike Fawkes, the former supply-chain chief at Hewlett-Packard and now a venture capitalist with VantagePoint Capital Partners. "They've taken operational excellence to a level never seen before."

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