The monitor is, by all accounts, the greatest piece of liquid crystal display heaven to ever grace the Earth. Marco Arment touches on a good point, though:

How are they making anything — or even not losing money — with the base-model 27” iMac?

His answer, that Apple scored a great deal from the panel manufacturer, has got to be a part of it. I think another part of it, though, is that the panel manufacturer must be drooling over the fact that this is really the only way to move a lot of high-end panels, and therefore gain access to serious economies of scale, driving the prices down and bringing IPS panels to a more mainstream market.

Not many people are very discerning about their monitor choice. Even many creative types look for a much cheaper panel - $1800 for a monitor, when you can buy a 13” MacBook for $1200 and find a good-enough HP or Dell display with what you have left? IPS monitors are a tough sell.

Now, you have IPS displays in the hands of everyone who buys the 27” iMac. This isn’t something that only designers will use - it’s something that every geek with enough disposable income or company funds will consider. It’s a much bigger market, and it’ll move many more IPS displays. Many sales -> many IPS panels moved -> massive economies of scale -> cheaper panels -> profit!

This is what I love about Apple. Nothing is driving innovation anymore in the PC market - the average computer today has little more capability than a computer from five years ago. Apple, however, is using the brute force of its market share to drive technology forward - by buying the latest stable technology and creating a vast market for it in the time it takes to make an update to the Apple Store, allowing it to mature and develop, while reaping the benefits. Then, the rest of the industry follows suit in a vain attempt to catch them, two years later, not realizing that as long as they keep seeking out the lowest bidder, they keep giving up the chase.