Tim Cook Says Apple Price Increases Are 'Unavoidable' Due to Memory Costs

[Abazigal]

They’ll still be making money, just not at the profit margin they had before. I would actually have some sympathy for a mom and pop store, not a trillion dollar business like Apple. I’ll never defend this nonsense, why not excuse them just charging $10,000 for an iPhone next. The only message they’ll understand is people not buying their products in droves, then the prices will come down.

Apple isn't perfect, but they are not run by idiots either.

Apple, like any rational company, would be pricing their products based on a profit-maximising principle. At any given price, Apple projects they will sell a certain quantity of said product, and earn X profit from each unit sold. Costs go up, margins fall. Price goes up, margins improve, but Apple may also end up selling less as a result (or maybe sales hold steady, iPhones are famously very price inelastic based on my observation).

Granted there are other considerations (eg: more iPhones sold mean more service and app revenue), but considering that other phone OEMs will be facing the same pricing pressure and will likely have to raise prices as well, I don't think there is really any other alternative that users can flee to. I mean - let's say people complain about iPhones getting more expensive, and you expect them to...opt for a competing Android brand that...also costs more? 🤔

The question then is - how much of this estimated price increase would Apple then pass on to consumers so as to continue maximising profits. It won't be 0%, that's for sure. 😛

 

[TVreporter]

Market cap is not cash on hand.

I find it hilarious people think I was being serious …

 

[svish]

Disappointing to hear but with the current memory shortages and pricing anything could happen. Hopefully there won't be price hike on the current models. Expecting all new Macs to be costlier by maybe around $200. iPhones could be costlier by $100 for the base storage and higher memory variants might be more by $200.

 

[Shirasaki]

If Ed Zitron is correct, all the big “AI” companies are primed for catastrophic failure.

I wish that catastrophe happen sooner than later. Let AI bubble burst.

 

[AssassuN]

It’s not. Just think about it, they don’t want to increase prices. Sales will take a hit.

PlayStation did it multiple times already for this same reason and sales have tanked considerably. Microsoft can’t even manufacture Xbox Series consoles now because they were already eating like 200 dollars on each Series X sold. This is a huge mess overall and implying they can just eat the cost is wishful thinking.

Is that a myth then that Apple has super high margins on their products?

Consoles are not a good comp since they’re intentionally sold at a loss to bring people into the ecosystem. That’s why Microsoft and Sony monetize their online services, to offset the losses on the hardware.

Apple from what I know already markup their products considerably over their cost of manufacturing. I mean just take a look at how expensive it’s always been to upgrade your RAM on your Mac.

 

[oober_freak]

Another way this BS AI wave is screwing me over. I don't want to use AI, I am okay to be left behind in life, at work and online. I love to use my own brain and I don't intend to stop. Just let me enjoy my new iPhone next year without screwing me over.

 

[novagamer]

Is that a myth then that Apple has super high margins on their products?

Consoles are not a good comp since they’re intentionally sold at a loss to bring people into the ecosystem. That’s why Microsoft and Sony monetize their online services, to offset the losses on the hardware.

Apple from what I know already markup their products considerably over their cost of manufacturing. I mean just take a look at how expensive it’s always been to upgrade your RAM on your Mac.

Apple’s margins in the modern era are around 37%. You can do the math on the price increases and assume Apple can get some scale discount but it’s going to be rough for macs. They will eat some costs for iPhones but I don’t see it happening for half a terabyte of RAM.

The difference is that people will still buy them; I’m going to pay basically whatever asking price is for the net Studio because I need it for my research work. No end users need a Playstation.

 

[capamac]

With Apple and Samsung being the only two real players in the smart phone game.. Prices are going up on both brands. If your escaping to Samsung because Apple is to expensive, good luck.

I switched from iPhone to Samsung A17 this year. The A17 is a $175 smartphone, new. Apple doesn't have anything that competes at this price point.

 

[Rychiar]

Not surprising. I’ve been telling people if they want a Mac with a higher memory capacity to buy now before prices go up.

My guess is that Tim Cook is doing this as cover for John Ternus so that he doesn’t look like the “bad guy” at his first major product announcement as CEO raising prices. Cook described the increase in demand for RAM as a “100-year flood.”

How? They’re not selling them lol

 

[Dark_Omen]

Apple’s margins in the modern era are around 37%. You can do the math on the price increases and assume Apple can get some scale discount but it’s going to be rough for macs. They will eat some costs for iPhones but I don’t see it happening for half a terabyte of RAM.

The difference is that people will still buy them; I’m going to pay basically whatever asking price is for the net Studio because I need it for my research work. No end users need a Playstation.

Half a terabyte of RAM?

Most people have 8-16 GB in their Mac. Half a terabyte is 500GB.

 

[Charlie Bonesx]

How? They’re not selling them lol

Sure they are. You can still get 96 GB of ram. You just have to wait for it


There’s also the refurb store

 

[dredlew]

It’s not. Just think about it, they don’t want to increase prices. Sales will take a hit.

PlayStation did it multiple times already for this same reason and sales have tanked considerably. Microsoft can’t even manufacture Xbox Series consoles now because they were already eating like 200 dollars on each Series X sold. This is a huge mess overall and implying they can just eat the cost is wishful thinking.

You can’t compare an Apple product with a PlayStation or Xbox. Apple has the highest profit margins in the industry. They have so much margin on the consumables (memory & storage) alone, they could literally make it free/sell it at their cost (which was way lower than industry’s cost before) and they would still make a healthy profit on the device itself.

The only reason why they’re not doing that is because the shareholders demand the same or higher profit margins. It’s not enough that the company makes money. No, it always has to make more money. It’s profoundly stupid.

 

[novagamer]

Half a terabyte of RAM?

Most people have 8-16 GB in their Mac. Half a terabyte is 500GB.

Right. And the Mac Studio will have it as a very, very expensive option.

My point is the memory prices are going to change for the next few high end products.

 

[superarijit]

Apple is raising its prices to offset the high cost of memory and storage, CEO Tim Cook told The Wall Street Journal. Apple is no longer able to absorb the increased prices and will need to pass some of the cost on to consumers.

"Unfortunately, price increases are unavoidable," said Cook. "We're doing our best to mitigate the huge increases that are being passed to us, and we've been trying to shield our customers from the increases, but the situation has become unsustainable."

Cook did not say which products will get price increases or how much pricing will go up. The iPhone 18 Pro and iPhone 18 Pro Max coming in September could be more expensive than the iPhone 17 Pro and iPhone 17 Pro Max. Prices on iPads and Macs could go up in the near future.

Apple already raised the price of the Mac mini from $599 to $799 by eliminating its lowest-tier model. Apple has also eliminated several higher-tier Mac mini and Mac Studio options.

Growing demand for memory and storage chips from AI companies has led to chip shortages and higher costs. The Wall Street Journal suggests Apple will need to increase device costs "substantially" to maintain its current profit margins given the cost of memory chips and SSDs. Research firm TechInsights claims Apple will need to make the iPhone 18 Pro around $270 more expensive to keep its existing profit margin.

Apple is struggling more with memory chips, but storage chips are also an issue. "There's less supply at a time when consumers want devices and the memory guys are passing along huge price increases," Cook told The Wall Street Journal. Cook said Apple will use its cash to increase memory supply, but he did not give details on what that means.

Apple does not plan to create its own memory and storage factories. "We can't do everything," Cook said. "We know what we're good at."

While memory chip makers like Samsung, SK Hynix, and Micron are increasing production capacity, much of that added capacity will prioritize server chips. Demand for consumer-device chips is expected to continue to outpace supply. At the same time, Apple needs to increase the DRAM in its devices to support new AI features. Cook likened the memory shortages to a hundred-year flood. "I've never seen anything like it in any area in over 40 years," he said.

Apple is one of the largest purchasers of memory and storage worldwide, but it is likely reluctant to make the same deals AI companies do. Those deals involve signing multi-year agreements with a large cash prepayment.

Multiple companies have already raised their prices, including Samsung, Microsoft, Sony, and Dell.


Article Link: Tim Cook Says Apple Price Increases Are 'Unavoidable' Due to Memory Costs

Tim Cook Says Apple Bonus Increases Are 'Unavoidable' Due to Price Increases​

 

[Smartuser]

Apple isn't perfect, but they are not run by idiots either.

Well according to these forums...

Apple, like any rational company, would be pricing their products based on a profit-maximising principle. At any given price, Apple projects they will sell a certain quantity of said product, and earn X profit from each unit sold. Costs go up, margins fall. Price goes up, margins improve, but Apple may also end up selling less as a result (or maybe sales hold steady, iPhones are famously very price inelastic based on my observation).

Granted there are other considerations (eg: more iPhones sold mean more service and app revenue), but considering that other phone OEMs will be facing the same pricing pressure and will likely have to raise prices as well, I don't think there is really any other alternative that users can flee to. I mean - let's say people complain about iPhones getting more expensive, and you expect them to...opt for a competing Android brand that...also costs more? 🤔

The question then is - how much of this estimated price increase would Apple then pass on to consumers so as to continue maximising profits. It won't be 0%, that's for sure. 😛

It's an optimization problem, for sure. The optimum isn't going to be at no increase or at a price increase that's 1:1 the cost increase.

 

[Smartuser]

My dissertation in 1997 specifically pointed out the non-linear nature of failures when a neural network sees an input condition that was not in the training set. You call them hallucinations now which is a good name for them.

They have their uses, but you can't trust them. Or at very least trust but verify.

Yes, I know hallucinations exist. This changes absolutely nothing about the fact that there's a high percentage of very vocal scorched-earth anti-AI posters here and on other forums who see no advantage whatsoever in any use of AI, ever, even outside of LLMs.

 

[dredlew]

It is not inevitable. Apple’s products defy Wright’s Law. Instead of getting cheaper, they’ve gotten more expensive since they were introduced nearly 20 years ago. Even with greater capability and a RAM and storage shortage, there is no way we should be paying these outrageous prices that we have been.

Well, technically, they have gotten cheaper since Apple products were introduced. Which ones are you talking about? Apple is way older than 20 years.

 

[Yamcha]

I'm glad I got the MacBook Air M5 at a discounted price.

 

[DocMultimedia]

Nothing unexpected. Basic economics.

 

[Smartuser]

Facts. Furthermore, some of the people in that army are laughing at the sheer audacity of the AI pumpers who can't see the writing on the wall. "We just need more compute, bro."

There's no AGI coming, no matter how many glorified GPUs Jensen Huang sells. "AI" is the biggest financial fraud in history. This whole thing has made clear the need for market regulation and also has exposed how many shameless "tech journalists" are paid shills.

I'm not under the impression that the "scorched earth" opponents of AI have a deep understanding of why LLMs will probably not lead to AGI and the related scholarly discussions. They seem to be more emotional than anything else.

Hype phases are perfectly normal. I've seen many, among them "Java on thin clients is the solution", VRML, the dot-com bubble, etc. etc.

 

[Roadstar]

Isn’t it such a wonderful time to be an Apple user in the EU. No new (major) features, but this one we’re absolutely guaranteed to get.

 

[ronno]

Apple has lowered prices in the past with new models.

New Models with inferior functionality and worse cameras?

 

[ronno]

They make $3 billion a week in profit so obviously gonna have to raise prices to keep afloat.

 

[Smartuser]

They make $3 billion a week in profit so obviously gonna have to raise prices to keep afloat.

As long as they make a penny of profit, people will post that they must not raise prices.

If they'd make a loss, people would post that they need to lower prices to sell more, which makes more money.

 

[Smartuser]

New Models with inferior functionality and worse cameras?

Yes, you got it. They started with the Apple I and since then, everything has only gotten worse with each new model.