I believe outsourcing can be a symptom of not innovating anymore.

Imagine having to contract out every prototype to a metal working shop — it slows down your ability to iterate because you can’t just go downstairs and try it.

But once you have a design set in stone, outsourcing is cheaper than doing it in-house. These companies specialize in producing parts with economies of scale.

But if you do it for too long, you kind of lose the ability to quickly iterate. Striking a balance is hard.

> But once you have a design set in stone, outsourcing is cheaper than doing it in-house. These companies specialize in producing parts with economies of scale.

Except you need to ship the parts to your factory and still employ QA people who must check whether you got what you paid for.. If the supplier has a bad defect ratio, you must order more parts. It's not as cut-and-dry as you think.

Every time your assembly-line halts, you're paying people for twiddling their thumbs. The more external suppliers you have, the higher the risk.