It's already clear that Apple's (AAPL 0.87%) early move to 64-bit architecture in its A7 processor for the iPhone 5s has given the tech giant a head start on rivals. In transitioning to 64-bit, Apple began laying out the groundwork for the inevitable shift to 64-bit mobile technology much earlier than its peers. And now its looking like Apple may benefit from a similar head start with its big bet on sapphire glass. When Apple financed the Arizona-based sapphire plant operated by GT Advanced Technologies (NASDAQ: GTAT), it wasn't clear if Apple was making a good move or not. But as Apple continues with its big bet, both Samsung and LG are now reportedly exploring the technology. Does Apple have its competitors scrambling to play catch-up again?
Apple already uses sapphire glass to protect the camera in its iPhones and on the home button of the iPhone 5s for Touch ID.
A revolution?
The current industry standard for mobile display is Corning's Gorilla Glass. Corning, of course, has defended its display material against sapphire on multiple occasions. Admitting that sapphire is superior when it comes to scratch resistance, the company has cited a long list of areas it feels sapphire is inferior, including cost, weight, environmental friendliness, energy needed, and resistance to breaking.
But there must be more to the story. Because not only is Apple already investing heavily in future sapphire production, but now LG and Samsung are considering joining the fray, according to GforGames.
[LG and Samsung] might be forced by the industry to reconsider their decision [to not use sapphire crystal in future displays]. With numerous other gadget manufacturers putting a lot of thought into making sapphire glass feasible, and with Apple already operating the sapphire glass processing plant in US, Arizona, LG and Samsung are supposedly going to jump on the sapphire display bandwagon sooner rather than later.
Earlier this month, The Verge related Apple's big bet on sapphire to the supply chain revolution Apple spurred in unibody aluminum design for laptops. Where the potential parallel development of these two supply chain stories differs, however, is that this time Apple owns the majority of the supply process used in this new manufacturing arm for the industry. This means Apple could be the sole beneficiary of the revolution, if it is one.
If sapphire crystal catches on, Apple's head start couldn't be overstated. "Most companies will be left behind as they do not have the financial reserves that allows a company like Apple to invest in a full-scale production facility dedicated to a single material used in their devices," said MacRumors' Kelly Hodgkins, commenting on the sapphire story from The Verge.
Apple's most undervalued advantage
Apple's combination of enormous size, negotiating power, and operational clout could be its most important asset. Apple has more operating clout among suppliers today than ever before. With its massive stream of earnings ($37 billion in the 12 trailing months) and the world's largest cash hoard for any publicly traded company, Tim Cook has some imposing tools at his disposal to stay at the innovative edge of manufacturing and supply.
Of course Apple's transition to sapphire displays also puts it at risk to the opportunity cost of innovation that exceeds Apple's expectations in Gorilla glass. But if sapphire glass works out the way Apple's move to aluminum unibody enclosures and 64-bit mobile processor architecture turned out, Apple may have just given itself yet another operating advantage. And yes, peers may be left scrambling once again.
