OLEDs are already in use for some cameras, cellphones, and portable media players and are prized both for their low power as well as their color. As the display only lights portions of the screen that show more than pure black, the technology not only consumes less power but produces higher contrast ratios than LCDs, which are forced to light even black pixels. No dedicated backlight is needed as with the older hardware.

Despite the radical difference, implementing the technology is relatively simple and may be a drop-in replacement for LCDs, according to Dulaney. So long as Apple continues to use a system with a protective glass cover, it remains possible for Apple to use its existing "sandwich" design, which places a capacitive touch panel just underneath the glass followed by the actual display. Without the need for a backlight, Apple would also have more room for additional components.

Among the most likely additions Apple could make in the free space are a GPS receiver and additional storage, Dulaney explains, though he notes that he hasn't received information confirming any such additions.

Samsung is a potential candidate for supplying these types of OLEDs, the Gartner researcher notes. The Korean company is already producing technology suitable for handhelds and has produced active-matrix OLEDs, or AMOLEDs, that improve on the basic formula of OLEDs with much richer color palettes.

Cost is the primary challenge for Apple but is said not to be a factor given Apple's likely production refinements. OLEDs currently cost roughly twice as much as equivalent LCDs, but the cost of manufacturing the iPhone has decreased since its introduction last year, and reportedly affords an increased profit margin that Apple could use to improve the display. Apple's historical tendency to adopt early breakthroughs makes an OLED a logical choice, especially as the company likes to maintain a reputation for premium products.

This is "a hallmark of Apple," Dulaney says. "They like to put in these new things."

However, the Gartner expert refutes claims by American Technology and Piper Jaffray that a recent and widespread iPhone shortage is signs that this iPhone update is being released ahead of schedule.

There are a number of factors that could affect the low supply, of which a switch in production from 2G to 3G iPhones is just one, the analyst says. Supply issues are cited as more likely and could include allocating too much stock to a non-US iPhone carrier as well as a component shortage. A decision to bump up the release of a new iPhone is "low" on the list of probable causes, he adds.

Instead, Dulaney maintains that a new iPhone is most likely to appear in tandem with the version 2.0 iPhone firmware in June and should arrive before September.