Apple has allegedly cornered the glass capacitive touch panel market, prepaying for 60 percent of the world’s entire capacity in 2011.
The move will leave many other companies fighting for the remaining 40 percent, which is expected to cause component shortages throughout the year and delays.
Apple has reportedly prepaid suppliers Wintek and TPK $3.9 billion for long-term contracts, enough money to cover 136 million iPhone displays or 60 million iPad 2 displays.
Gigaom explains that Apple has done this before:
Prepaying for a bulk, long-term contract allows Apple to control pricing, causing scarcity in the market, which raises the prices of remaining component stock. Apple’s pre-bought parts then give it a price advantage when it comes to production costs, and one that could grow as the contract progresses. It’s something Apple’s been known to do in the past, specifically with NAND flash memory in 2005.
Apple can successfully make moves like this because their devices (as history shows) are almost guaranteed to sell, and sell well. iSuppli is expecting 44 million iPad/iPad 2 tablet sales in 2011, after the company sold 14.8 million in 2010. Even the most radical analyst expectations in 2010 had sales at 9 million.
Result for: price advantage
Video game industry analyst Michael Pachter has said today that he expects the PlayStation 3 and Xbox 360 to receive price cuts again this year, which will lead to the Wii being forced into a price cut as well, in order to keep the remaining price advantage it has over its rivals.
“The Wii enjoyed a $350 price advantage over the PS3 at launch, and a $150 advantage until September. Now, the gap has narrowed to $100, with the feature-laden PS3 a tempting purchase for prospective console households,” says Pachter.
“The holiday Wii sales boost was primarily attributable to a $50 gift card promotion offered by Wal-Mart; while we expect similar promotions at holiday next year, we expect the other consoles to be lower-priced by then, further eroding the Wii’s competitive price advantage.”
Pachter also says that the DSi handheld is most likely overpriced, compared to the iPod Touch, which offers a plethora of free apps as well as better music and video playback capabilities.
“It appears that piracy in Europe and some substitution of iPod Touch games has impacted DS software sales more than we expected, and we have adjusted our estimates for FY:11 to account for further pressure,” said Pachter, noting that guidance had to be reduced for DS software.
Result for: price advantage
In an interview with Kotaku, Aaron Greenberg, group product manager for Xbox 360 has said that the company is confident it’s console will outsell the rival Sony PlayStation 3 for the holiday season, worldwide.
“We expect to continue our price advantage over the PlayStation 3 for a long time,” said Greenberg.
“And we feel confident that we’ll outsell the PS3 this holiday season in North America and in Europe. We’ll do it on a global scale.”
Greenberg cited the across the board price cut as well as a collection of new bundles as reasons for why the console will succeed.
“We’ve seen lifts across all consoles, but the Arcade is doing exceptionally well,” added Greenberg.
The 360 has outsold the PS3 in Japan for five weeks straight and recently outsold its rival in the US for the month of September.
