15 November 2014

Now Apple could truly own the sapphire market.

As has been widely reported, Apple has a long history of controlling and sometimes manipulating any vendor they work with. Those are the perks of being the largest company in the world with a similarly sized ego to match. Their contract terms are often worded in such a way to corner the market on that product and leave rivals scrambling. This was the approach used with GTAT, a solar power company who also had invented a low-cost method of manufacturing sapphire screens.

Sapphie was, for at least a brief moment, the holy grail of touch screens. It could withstand impact from asteroids with barely a scratch and was forcing Corning to consider renaming "Gorilla Glass" to "Monkey Poo". Apple created contract terms that forced GTAT to only sell their product to Apple and to build up infrastructure for whatever Apple needed. At the same time, Apple could set the price and cancel the deal at any time while holding huge financial penalties over GTAT if they did not comply. Basically, if Apple wanted to crush the company they could do so easily. And they did.

Ignoring the fact that Apple just crushed a fairly innovative solar power company that was helping to make us a slightly more environmentally responsible world, they might have done so to outright own most of the sapphire screen market in their battle-to-the-death with the Samsung OLED king.

GTAT was left holding huge loans for building infrastructure for every iPhone that Apple sells. Unfortunately for their long term health, Apple set a price for the product that meant GTAT would lose money on every order. Their investment in the furnaces continued but, behind the scenes, Apple knew that this company was going to collapse. In fact, they made certain of it.

Why would Apple do such a thing? I suspect it was so Apple could purchase GTAT's infrastructure at bankruptcy prices. Not only did they keep the competition from getting this innovative product, they also set themselves in a position to own the manufacturing plants going forward. If the technology proved to not be as useful as expected, they could simply let someone else buy up the furnaces and move on. It was a perfect scenario for the geniuses on that infinite profit loop.

It will be interesting to see in the months ahead whether Apple does purchase part or all of GTAT. No question, there would be a small collection of anti-Apple zealots who would cause a commotion if they did, but the fact is that this is all part of the profit game of capitalism. Apple did nothing illegal. Just the same, if I were a tech supplier considering a contract with Apple, I would shop the competition first.