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Tim Cook Says Apple Price Increases Are 'Unavoidable' Due to Memory Costs
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Abazigal
Contributor
In other news, the Steam Machine is getting quite a bit of flak online for costing more than a PS5. It is what it is.
For me, it's a couple of reasons.
1) I have argued in another thread why I feel the iPhone is actually already underpriced once you factor in inflation (ie: the price of the iPhone has actually not risen in tandem with inflation for the past 5 years).
iPhone 18 Pro Max MIGHT end up starting at $1500 Due to the severe RAM / SSD Shortage? Would 512GB work as base storage?
The same thing happened in 2019. I was using the iPhone 8+, I found the 11 pro max to be too expensive (and I wasn't willing to settle for the iPhone 11), and so I just held on to my existing phone. I would use it for 4 years before upgrading to the 13 pro max, and go on to use it for another 4...
forums.macrumors.com
2) I am not really bothered by price increases from what I deem to be discretionary purchases (much as I love my Apple products). If the iPhone is too expensive, I can simply elect to not upgrade for another year (which, if you read the aforementioned link, I have done twice). Millionaires like Chris Evans held on to an iPhone 6s long after it was no longer supported, even though he can well afford to upgrade every year.
It's like complaining that a gucci bag costs too much. There are always alternatives.
3) People are always going to want lower prices. It doesn't make this desire any more rational just because it's in my financial interest to get something for as little as possible. Likewise, you don't run a successful business by giving the customer everything they want. If I can save some money here and there, I will go for it. If I can't, I don't lose sleep over it.
And life goes on.
Dirk Pieters
macrumors 6502a
Couldn't agree more. I went from an iPhone 6 to an iPhone 14 Pro. From a 2019 MBP 15" to a 2025 MBA 15".
I can afford the yearly updates. I just don't see the point. iPhone between 6 and 9 are basically the same device, just that bit faster. iPhone Pro's from the last 5 years have all been similar as well. Just that bit faster. In fact, Apple needs to give them special generational colours to actually separate one generation from the other. 😀
If you use an iPhone for 5 years or so then the monthly cost isn't that much. Put them in a cover and they don't wear. I have no idea what iPhones cost these days and what storage tiers they have. By the time my 14 Pro needs replacing the money needed to buy a new one will be there.
I'm not a green person, but where is the sustainability in buying a new iPhone every year? It makes no sense, for so many reasons.
It is a completely valid argument because you are not under coercion to buy anyones stuff, particularly stuff your livelihood does not depend.
Apple is not selling you insulin. Get a grip.
When you enter a job agreement, you sell your labor for money.
Have you volunteered to reduce your salary? Have you deliberately looked for lower paying jobs?
We do not argue whether certain prices are reasonable (thats a subjective judgement). We argue that under free enterprise, counterparties are free to seek their desired pricing.
What makes you think only you have the right to maximize your personal interest, but counterparties don’t, besides a misplaced sense of resentment.
True, but that applies across the entire consumer electronics industry. Price inflation just hasn’t happened in this industry since 1980, while specs have risen exponentially - it’s kinda the norm to expect this year’s xGadget Pro to be the same price as last year’s model but with 50% extra everything. Of course it means that manufacturer's revenue has shrunk in real terms - but for many years that was more than compensated for by the market ballooning from a niche product in the 80s to an everyday household item today, along with mass-production processes that benefit hugely from the economies of scale. Also, with specs & performance doubling every 18 months as per Moore's Law natural obsolescence drove massive sales.
I think that business model may have been approaching the buffers over the last decade or so as the market matures and saturates - yes, specs are improving but for most common uses of computers and phones they hit "good enough" years ago and progress is slowing. C.f. 6 years between the M1 Air and the M5 Air vs. 7 years between the Apple II and the Mac... As growth tails off, Moore's law starts to struggle and node sizes are increasingly butting heads with 'ye canna change the laws 'o physics" that drop in real-terms prices may not be able to continue and "expected" hardware prices may become untenable.
The AI boom looks an awful lot like a gambit by the tech industry to create a new surge in demand for their hardware & services... I suspect that - after the bubble deflates a bit - prices will stay high and the days of zero/negative inflation on computer hardware may be over.
Great point.
On the other hand, discretionary purchases make life worth living. And that' good for Chris Evans. He may just not be interested in tech. I have some other things I'm extremely cheap about without actually needing to be, because I'm not interested in them and see no benefit.
I would say it's very rational to always want lower prices. Sellers want +infinity for their products, and buyers want fo pay -infinity. Then the market finds a place somewhere in-between where a sale takes place.
Where it gets irrational is when people can see only one side of the deal.
“I think there is a world market for maybe five computers.” - Thomas Watson, chairman of IBM, 1943
Also, the end of the computing industry or the end of progress has been predicted at various points in time over at least the last 100 years. Somebody always finds some angle to be pessimistic.
What I'm predicting over the next 5-10 years is that most AI is going to be run locally and not in data centers. And for that, people are going to need stronger hardware. There's been a relative stagnation in how much memory and storage devices have had over the last decade or so, but running AI locally will change that. Yes, there are shortages now, but those tend not to last forever.
Sorry, where did I predict the end of the computing industry? I'm just saying that price inflation might set in as progress slows and the market gets more saturated.
The problem with local AI at the moment is that all the production capacity is going on data centre stuff so anything capable of local AI is getting rare and expensive. Meanwhile, so much investment has been piled into data centres that they're getting too big to be allowed to fail - so don't expect the industry to start pushing local AI anytine soon - they won't be the ones crying into their beer because nobody can buy their own local AI kit. Plus, if there is a crash, don't expect all that unused RAM, SSD and GPU silicon sitting in mothballed data centres to be dumped on the market - it'll be buried and written off against tax.
And I'm just saying that I've seen lots of "if current trends continue" predictions that were all wrong because current trends didn't continue. There was already an AI stock selloff today, which shows that there can and will be limits.
The current doom and gloom predictions are reminiscent of "we're all just going to be using Java thin clients" ones from around 1996.
Yes, we know what the current problem is. And sure, Apple is totally not pushing local AI by using personal context and running everything that can be run locally, locally, no, not one bit.
There doesn't always have to be a dramatic crash, things can mellow out over time. I've seen several shortages in the computing world that all just ended without a bang. In that context, it doesn't matter if data centers make a fire sale or not.
The issue with data centers being "too big to fail" is that that concept is usually about governments subsidizing companies, but not their facilities.
Yeah no. Hyperscaler effective tax rates are in the mid-teens. Do you think the resale value of such equipment is lower than the value of post-depreciated/book-value tax capture?
When crypto crashed pretty severely some years ago, which miners buried off all their ASICs for taxes?
Would that be the current, bubble-inflated resale value, or the resale value after the bubble has burst and the market is flooded with surplus data centre equipment?
literally any value. because its math.
i get the impression people think "tax writeoff" is some sort of loophole. it is a completely legitimate way of offsetting tax -- because you are literally taking a loss on something. and in fact it is the absolute least favored option to deal with assets.
let's say you buy an nvidia h200 at $50k street price. next day, doomsday hits.
scrapping the unit: $50k capital loss = +$7.5k in tax credit.
selling it to a homeless person for $1: $49.999k loss = $7.499.85 credit + $1 sales = $7.500.85 net.
No, it's corporate accounting practices and tax law which is less math and more underwater chess against stoned monkeys.
I don't recall GPUs being sold for $1 when the bitcoin mining boom settled down...
Well, I'd have to check with a tax expert 'cos that sounds like turning 'capital expenditure' into 'cost of sales' (and that's assuming the hardware was bought and not leased) which will need some accountant-fu & quite likely change the date on which the loss was incurred.
If you're right, though, if I were NVIDIA*, I'd give you $2 so I could bury it & prevent my remaining business being hosed because the market was flooded with cheap product. Again, assuming that I sold it to you outright and not under some complex heads-I-win-tails-your-shareholders-lose leasing contract.
(* Well, I wouldn't, but I'm not a tech CEO...)
You are insistent there must be some voodoo corporate trick where companies they can financial engineer everything into wins. You don't even need to show logically/conceptually how one such example works. All you need to see is the fact that companies lose money, and fail, and go out of business all the time, to see how that is not true.
What you did try to show is just random handwavey things that aren't even consistent.
If you lease an asset, it's no longer yours to dispose or sell.
When you expend capital to buy assets and sell them at a loss -- your bubble scenario -- you are literally losing money. If you destroy them and write them off, you are also literally losing money. There is no magic "heads-I-win" trick here.
Both generate a small tax credit, which is what is supposed to happen, because you lost money!!! If you earn profit of $X in one part of the business and lost money $X in another part you're supposed to receive offsetting credit. You netted absolutely nothing at the end of the year. That's normal and fair!
Cost of sales refer to ordinary goods purchased for resale (like buying a chip to stuff in a chassis sold as a finished computer). Chips used for internal compute or sold as service is PPE. It's tax treatment means that the outcome of write-off is even WORSE!
***
The fact that crypto GPUs were not destroyed is the first point. It is not economically advantageous to destroy and "write them off". The fact that those GPUs were not sold for $1 is the second point. They were worth more than that! The more you sell them for, the less you rely on the tax writeoff, because the tax writeoff is not an advantage!
If you were NVIDIA, your inventory had a real cost incurred in its production (COGS). It's already made. It's done. You already paid the fabs and employee salaries. Selling this inventory for as much money as you can maximizes your economic outcome. There is no world where you net more money by destroying it and writing it off.
I don't know how much clearer this can be.
danbuter
macrumors member
Since it's an intel mac, you likely will have all drivers installed automatically.
Do it. Keep the gear you love out of the waste stream. I ran Xubuntu, a version of Ubuntu with a lightweight window manager called Xfce, on my 2006/7 Macbook for many years. Your hardware can handle much more, so you might look at elementary OS, if you really want something that looks a bit like pre-glass MacOS. There's plenty of other window managers and desktop environments and complete distros to choose from, however. I'd personally just get basic Ubuntu or a Linux Mint, maybe. Since you're new, though, I'd say definitely stay away from anything based on Arch Linux for now. Not because it's not as newbie-friendly, but because a lot of the software you may want (for Arch) is served as third party AUR packages, which, well...
turbineseaplane
macrumors Penryn
Memory costs are one thing..
Why are they jacking the prices on refurbished units, which are not impacted?
It seems to be pure profiteering.
Why are they jacking the prices on refurbished units, which are not impacted?
It seems to be pure profiteering.
Abazigal
Contributor
This is an interesting explanation, though I am not sure how accurate it is.
Apple ratchets up prices, blames the cost of memory
Some Macs are hundreds of dollars more expensive today than yesterday.
arstechnica.com
Not saying there isn't any profit motive here, but I guess that the prices of Apple hardware and refurbs are designed to move in tandem.
I7guy
macrumors Westmere
I think this prevents profiteering by decreasing the gap between refurb and new. Of course the $$$ doesn’t hurt.This is an interesting explanation, though I am not sure how accurate it is.
Apple ratchets up prices, blames the cost of memory
Some Macs are hundreds of dollars more expensive today than yesterday.
Not saying there isn't any profit motive here, but I guess that the prices of Apple hardware and refurbs are designed to move in tandem.