Originally Posted by diplication
Why would you think that? I would think they have agreed a contract price on the displays Apple has ordered, and not that Apple was buying the displays on the open market. Did I miss something?
There's more than the component prices that might cause Apple to increase the retail price. Such as simply want to make more profit (they are a for-profit corporation, after all). Regardless of the actual cost, if supply is limited, you can demand a higher price and still find enough people willing to pay it and sell every unit you can produce.
This is exactly what I proposed in a comment on the story about the rumored price hike. If Apple is going to keep producing iPad 2's because they can't get enough screens for the iPad 3 to meet demand, then they also need to create a price differential between the 2 and the 3. Even the the screens cost the same (which is going to be untrue), they'd still charge a higher price for the 3, just because they can.
Since they can only lower the price of the iPad 2 so far before eating too much into their desired margins, they have to increase the price of the iPad 3 to create the price differential.
This also, marginally, supports rumors that there might be a smaller iPad coming in the future, too. If yields and availability of a 9.7" retina display are projected to continue to be lower than demand, then a smaller display, which would likely have better yields in addition to being cheaper, might be an option. So perhaps an iPad 3 while continuing to produce iPad 2 to help meet demand, but in the future the iPad 2 gets replaced by a smaller iPad (or larger iPod Touch).