Tobias Schwarz/Reuters
Apple Inc. has demonstrated an uncanny ability to stay ahead of the game in the fast-moving technology industry, first with its game-changing iPhone, and more recently its category-defining iPad. But while Apple is often praised for its forward thinking and design prowess, some analysts say there could be more to Apple’s front-runner strategy than meets the eye.
Vinita Jakhanwal, an analyst at market research firm iSuppli, argued in a recent report that Apple is using its vast cash reserves to corner the market on liquid crystal displays (LCDs)—particularly those with advanced in-plane switching (IPS) technology, used in the iPhone and iPad—in order to keep them out of the hands of rival manufacturers. “In the era of the iPad and iPhone, the user interface—particularly the display and touch screen—has become the most critical competitive differentiator for tablets and smartphones,” he wrote, citing Apple’s recent disclosure of agreements with three suppliers for an estimated US$3.9 billion worth of components over the next two years.
Apple began selling the iPad last spring and has already sold 15 million of the tablet devices. Meanwhile, dozens of competitors have entered, or are preparing to enter, the tablet market. They include BlackBerry-maker Research in Motion with its PlayBook, Motorola’s Xoom, HP’s TouchPad and HTC’s Flyer, among others. However, if analysts are right, some manufacturers may have a difficult time ramping up production, as supplies of LCD screens are said to be tight. Citing sources, Taiwan-based news site DigiTimes estimates that Apple may have already “occupied” 60 per cent of the market for touch screen displays.
While there are alternatives, Jakhanwal says that supplies of active matrix organic light-emitting diode displays (AMOLED), made by Samsung and LG, are even more scarce. “With Apple trying to invest in assuring IPS supply, and Samsung Electronics having preferential access to small- and medium-sized AMOLED supply, the rest of the smartphone makers are caught between the two giants.”
