The "luxury goods" strategy is viable in a direct to consumer play. But does it still apply at the component level? If anything, I'd think there's an aversion to lower volume, single-source boutique parts just because of the fear of supply chain kinks. Maybe there's some marketing case to be made of "you can elevate your product's market position with expensive premium components" but that argument has a lot of moving parts when you're not the only displauy tech on the market.

I wonder if there's a non-margin factor in play. Maybe something like:

* They don't want to be in the "support" business, so by keeping the product line away from hobbyists/small players, they keep their overhead low.

* Their main concern is product secrecy and therefore will only deal with firms large enough to take NDAs and licenses seriously

* Their manufacturing capacity is finite and not easily scaled, so they couldn't actually deliver on a hypothetical millions-of-screens-per-year order.

* Some sort of brand protectionism. I see a lot of "we could probably hack and rig an E-ink display to do something outside its normal sales case" discussion. I could imagine a situation where they ended up-- in the eyes of end consumers-- responsible for the failings of such products. They never said to use their panel as a desktop monitor for playing 60fps video, but they can't stop someone from trying and then bellyaching about it to the world.

Of course, a mandatory-licensing mechanism could help escape whatever tarpit they're in.

I think it does indeed apply to component level, when that component is so user visible. There aren't competitors in this space yet; it's "buy it from them", or don't have it. They aren't selling a luxury good based on a brand (but that is otherwise indistinguishable from their competitors); they have a monopoly.

Again, I think it's...rather a lot of hubris to assume that a company is doing the less profitable thing (and it is an assumption, since none of us have better data than they do).

That said, sure, we can speculate there may be other factors at play.

FWIW, I believe this has been debunked. Volume (when there is a net margin) always equates to greater profit until market saturation. Veblen goods rarely work for niche markets but can work for commodity markets (see cars and watches for examples).

I'm not saying it's a Veblen good. I'm saying that even though the demand drops as the price goes up, it may well not drop so far that it's a loss of net profit to sell at high margin. They do, after all, have a monopoly on the good.

If you're saying that even holding a monopoly, the most profitable price point is at market saturation, I'd need to see something backing that. And also what you mean by market saturation; the cost of parts for an iPhone 11 Pro is estimated to be ~$490. The list price is, what, $1100? You're basically saying that either they've already achieved market saturation, and would gain no new customers dropping the price to $600 (parts + $100 for distribution, assembly, etc), or that they're leaving money on the table. I find both of those very hard to believe. So maybe I'm misunderstanding you?

Then why are there diamond cartels?

You aren't serious right? I mean there is a whole article on DeBeers (https://www.theatlantic.com/magazine/archive/1982/02/have-yo...).