Jul 4, 2011 09:00 GMT  ·  By

For those wondering what are Apple’s plans with the $51+ billion it has in the bank, there’s an insightful analysis about this on Quora, a continually improving collection of questions and answers created, edited, and organized by everyone who uses it.

Resembling Wikipedia in a number of ways, Quora acts as a cache for the research that people do looking things up on the web and asking other people.

When knowledge is put into Quora, it is there forever to be shared with anyone in the future.

Almost any public space on Quora can be edited by anyone who knows how to improve it. People rate the different answers so that the best ones can rise to the top.

Recently, we came across a piece titled ‘What would make sense for Apple to use its $51+ billion in cash for a strategic acquisition?’

With 214 votes and counting, the knowledgebase article in question thoroughly explains how Apple uses its cash hoard maintain a decisive advantage over its rivals.

“When new component technologies (touchscreens, chips, LED displays) first come out, they are very expensive to produce, and building a factory that can produce them in mass quantities is even more expensive,” the article explains.

“What Apple does is use its cash hoard to pay for the construction cost (or a significant fraction of it) of the factory in exchange for exclusive rights to the output production of the factory for a set period of time (maybe 6 - 36 months), and then for a discounted rate afterwards,” it adds.

According to those who’ve looked into Apple’s strategy, this yields two advantages:

1. Cupertino has access to new component technology months or years before its rivals.

2. By the time competitors catch up in component production technology, Apple can source those parts at a lower cost from the already most-experienced provider of those parts

This synopsis, likely 0 accurate, also explains why Apple charges premium for its products.

The reason?

“…they are literally more advanced than anything else (i.e. the price premium is not just for design).”

When the product line is no longer premium, the products become cheaper to produce than competitor equivalents.

This brings in yet more money, “which results in more ability to continue the cycle.”