New Apple hardware was released last Tuesday. Like normal, Gruber had it right the night before. Also like normal, the Tech/Apple blogs covered the release of the new hardware extensivley the day of their release. There were some reviews and a few other commentary posts about the new hardware throughout last week, but not until Sunday, October 25th, did I encounter some commentary from Marco Arment.

Looking back on Marco's blog, I found his initial post to the new 27" iMac last Tuesday.

The 27” iMac’s base configuration is $1699. It has a 2560x1440 resolution and can be used as a standalone monitor from another computer. It’s a new LED-backlit IPS panel likely to have an excellent color gamut, contrast ratio, and pixel response time.

Now, IPS panels are the most expensive form of LCD panels available. They offer the most accurate color correctness (essential for designers, or anyone who works in Photoshop or with other graphc apps). Marco's followup post came yesterday:

The more I think and learn about the curious pricing of the 27” iMac, the more bizarre and incredible it seems.

It has a resolution of 2560x1440, which no other monitor in the industry seems to have (that I can find). 30” LCDs are the same width but 1600 tall. Shrinking 2560-wide into a screen that’s 3” smaller diagonally yields an impressive pixel density, especially given the panel’s still-immense size.

It has an IPS panel. IPS is the best and most expensive LCD type, giving the best viewing angle and the least color- and brightness-shifting as the angle increases in any direction. Nearly every panel on the market, including every laptop panel, is the cheap TN type. (TN panels wash out as soon as you move your head slightly, especially vertically, which is why it’s so hard to find a good viewing angle for your laptop lid while watching a dark movie.) Other 27” TN panels exist (only at the lower 1920x1080 resolution), but I can’t find any other 27” IPS panels.

It’s also LED-backlit.

So it’s a very high-specced, brand new panel that’s apparently not being mass-produced yet (since no other monitors for sale are using it). That must be expensive. How much of the base 27” iMac’s $1700 retail cost does this represent?

The closest existing panel for comparison, spec-wise, is the 30” IPS panel that Apple uses in their Cinema Display. It has the ultra-high resolution and size, but doesn’t compete with the 27” iMac’s panel for brightness, contrast, power efficiency, or color range. It’s overpriced by today’s standards at $1800, but not by much — Dell’s original 30” monitor with the same panel is $1200, and a newer version with better specs (although still not as good as the new iMac’s) is $1700.

A standalone monitor with the new iMac’s panel would be perfectly reasonably priced at about $1500. From Dell. Apple’s only charging $200 more than that for theirs, and there’s an entire high-end computer stuck to the back of it.

When they mentioned on last week’s quarterly earnings call that they expected lower profit margins for a new product, I don’t think anyone expected a change of this magnitude. How are they making anything — or even not losing money — with the base-model 27” iMac?

My guess: a massively successful negotiation with the panel’s manufacturer (most likely LG) to get not only an incredible price on these panels, but also apparent exclusivity for a while. It’s a hell of an accomplishment, and presumably a hell of an effort, for a computer that isn’t even Apple’s most-selling model (or even product line). That raises a more interesting question: Why?

Until we know why the panel is so cheap, I bet we’re going to see a lot of Mac Pro owners buying 27” monitors for $1700 and trying to figure out what to do with the free computer stuck to the back. For new-computer shopping, a lot of people are going to abandon whichever laptop or Mac Pro they were considering and get this instead.

That helps answer the “why” question: Maybe Apple wants to push more buyers away from today’s default system-type choice — laptops — and show them why they should consider getting a fast, spacious desktop instead. And, for the time being, it’s a desktop with absolutely no equivalent in the PC world.

First of all, this article made me very excited on a personal level. I will be the owner of one of these machines by late December, if all goes well. I was excited about the 27 inches of new desktop real estate but I had no idea what the implications of this new display meant - on a technical level.

To followup to Marco's post, Jim Cloudman replied to his post this morning:

The monitor is, by all accounts, the greatest piece of liquid crystal display heaven to ever grace the Earth. Marco Arment touches on a good point, though:

How are they making anything — or even not losing money — with the base-model 27” iMac?

His answer, that Apple scored a great deal from the panel manufacturer, has got to be a part of it. I think another part of it, though, is that the panel manufacturer must be drooling over the fact that this is really the only way to move a lot of high-end panels, and therefore gain access to serious economies of scale, driving the prices down and bringing IPS panels to a more mainstream market.

Not many people are very discerning about their monitor choice. Even many creative types look for a much cheaper panel - $1800 for a monitor, when you can buy a 13” MacBook for $1200 and find a good-enough HP or Dell display with what you have left? IPS monitors are a tough sell.

Now, you have IPS displays in the hands of everyone who buys the 27” iMac. This isn’t something that only designers will use - it’s something that every geek with enough disposable income or company funds will consider. It’s a much bigger market, and it’ll move many more IPS displays. Many sales -> many IPS panels moved -> massive economies of scale -> cheaper panels -> profit!

This is what I love about Apple. Nothing is driving innovation anymore in the PC market - the average computer today has little more capability than a computer from five years ago. Apple, however, is using the brute force of its market share to drive technology forward - by buying the latest stable technology and creating a vast market for it in the time it takes to make an update to the Apple Store, allowing it to mature and develop, while reaping the benefits. Then, the rest of the industry follows suit in a vain attempt to catch them, two years later, not realizing that as long as they keep seeking out the lowest bidder, they keep giving up the chase.

If you combine Marco and Jim's thoughts, they make a very strong case for the reasons why Apple is able to sell a computer of this stature. We, the customer, are the beneficiaries. Another important poing that Jim makes, which I feel need to be emphasized is Apple's ability to be an innovation driver within the Computer industry. I bolded his last paragraph with the hope that you will really take it to heart. Can you think of the last time Dell, HP, or any of the other crapware manufacturers lead the industry in new technology adaptation.