Apple boss Tim Cook says prices to rise due to memory chip costs
bbc.com
bbc.com
The key takeaway for smartphones isn't so much that iphones will cost $150-200 more, which apple customers have shown they can stomach. But that cheap $200 chinese smartphones will need have to hike prices by about the same amount, which will decimate that market.
Hmm. Even if iPhone users can theoretically stomach the increase, they have many other options available, whereas if the cheap $200 phones are the bottom of the market, there's no other real options.
I'm in the ~$450 USD Pixel range atm, and never buy the current flagship or anything. If that increases by $200, I'll look to the used market for the same phone. I really don't care that much about it, and it mostly acts as a fancy 5g modem for tethering. Plenty of younger people are already reverting to more primitive phones or physical media, and I wonder if it's just older addicted richer millenials that'll keep buying at even more than the already idiotic prices.
That's an effect that has always been claimed (younger generations rejecting new tech and going offline/low-tech/anti-...) but it's never been more than a minor very temporary fad. In the mid to long term, younger people are always at the forefront of tech adoption and it would be very surprising if it was different this time.
It issues are: battery life/battery replacement, lack of updates, developers targeting newer devices only.
In Apples case a good solution would be to rollback at least part of the liquid glass UI updates, as it severely affects older devices. Then announce upfront that every Apple phone will be supported for no less than 10 years after the device was removed from the market. That would be good for everyone, except Apple shareholders.
I understand that Apple pricing, compared to inflation haven't changed that much since the first iPhone, but for many of us it really does push the limit. I simply do not get enough value to justify purchasing a new iPhone, or in many cases a second hand one. My perceived value peaked around the iPhone 7 era, everything after is pointless. Apple doesn't really cater to my needs, and that's their choice, I just feel a bit stuck.
My android phones eventually run their course due to excessive physical damage, theft, etc.. but since I've never paid much for them, it's usually not so disruptive to just pay a few hundred and get something used or basic to replace it, or order a new screen and repair it.
It's about what role tech plays in life. The claim that young people are increasingly detoxing and embracing offline life is just not true. More than any earlier generation, being online to stay in touch with friends and the general happenings of the world is integral to most young folks life. The same thing will happen with AI chats.
My grandma rarely uses google in her life. My mom uses it rather often. To my generation it's the portal to knowledge background for most of what I do. (Substitute any search engine for google if you must.) Similar with instagram, instant messanging etc. AI chatbots will go that way too and so will the next trend.
The point was that if there was a time when people who'd otherwise be buying the latest smartphones for relatively mundane purposes—spending arbitrary amounts of money for them—would balk at the idea, that time could be now. Nothing to do with chatbots.
Money is tight, jobs are scarce; for many people on their way into college or even in the middle of what would be their career, there isn't a clear answer to the question of whether the current tech landscape is anything but a threat to one's future or their mental health.
Seems like kind of an anecdote vs anecdote situation where I see people cutting back severely on their exposure and being more frugal or retro, and you don't, which is fine, but I'm not doing anything more than speculating at hypothetical future behavior based on real world conditions and what I've seen.
There's simply not much required from a hardware standpoint to facilitate multi-modal communication patterns if someone's practicing a limited-exposure relationship with tech.
Considering there hasn't really been (to my knowledge) other instances where involvement of media and technology has been remotely as intense as now from day one in a kid's life, it doesn't seem like any prior time period would be as likely to produce a sense of repulsion as now. Sure, I didn't carry my Gen X relative's obsession with television into my adult life, but something like that I'd consider to be a bit of a tenuous comparison to make to the breadth of insidious mind-altering media delivery conduits we're constantly exposed to now.
Id love to know how many of em
I’d love to know how much “plenty” in the parent’s perspective stacks up against just this one individual model line and whether it is at all distinguishable from noise.
> Plenty of younger people are already reverting to more primitive phones or physical media, and I wonder if it's just older addicted richer millenials that'll keep buying at even more than the already idiotic prices.
You don’t sell as many iPhones as Apple does if your market is only as narrow as “older addicted richer millennials” and your most expensive products in your flagship lines don’t fly off the shelves if they’re not already at some level of affordability. Under today’s prices, and this is due to change per Tim Cook’s comments of course, but under today’s prices the iPhone Pro line starts at $1099 and $1199 for the Pro & Pro Max line specifically, which you can get down by trading in an older phone, looking for a deal (prices in the channel are often discounted by $100 or so below Apple’s list price) and can be financed through either the carrier or Apple.
Now you can get that price up to $1999 if you specifically go for the Pro Max 2TB option, but the existence of a 2TB option doesn’t mean that’s the default option for most people. You can also get that price as low as $599 if you forego the flagship models entirely, and again, that’s Apple’s list prices, not necessarily prices in the channel.
I think your frugality is great, and if there’s some young people behaving more frugally, that’s also great. I haven’t upgraded my phone in about 5 years and don’t anticipate doing so this year either, but your remarks don’t read like they were sourced from real observations of either the American or the International markets, and in fact read like an eye-rolling generalization about millennials. Such as this:
> the likelihood seems low that significantly increased prices for effectively the same (boring) product would be absorbed by anyone other than the richest or older established crowd
1) we don’t know what Apple’s prices are going up to yet. They haven’t announced any actual price increases, so we also don’t know how significant the price increase will be. Naturally we should expect sales to be hurt by any price increase, but it’s a bit premature to overstate their significance.
2) their most recent iPhones were not so boring that they didn’t fly off the shelves at a pace Apple couldn’t anticipate because they sold well above expectations, and that is specifically the flagship models. Now it often follows that the following year’s model is more “boring” by comparison, but the view you take their new products is not borne by market evidence.
Apple’s margin targets aside, the prices are rational
Trendy teens and 20 something’s still have iPhones, many just also have point and shoot cameras. This is more of a desire to be present in some contexts alongside aesthetics (of the photos and the gear), than a rejection of having 2 teraflops in their pocket.
It’s important to understand the why
Price go up, demand go down: https://en.wikipedia.org/wiki/Supply_and_demand#/media/File:...
(The iPhone is only a premium brand, not a Veblen good).
Also even if they had pure competitors, demand for high-end smartphones is pretty elastic. People will really just buy fewer phones if they get more expensive.
These announcements have another effect of boosting sales now. Summer is usually a sales slump so selling more now is probably good for Apple.
Also, when software is poorly optimized that implies it is possible to optimize it.
I think we're quite a ways past the point where most people would be satisfied with phones that only do voice, text, and web browsing. People have become quite accustomed to phones that can run arbitrary applications and games. There's quite a sizable population for whom phones are their only computing device.
I can't actually think of the last time that I wanted to (rather than was forced to) use a non-messaging non-browser app on my phone.
I went to a music festival last weekend, ticket has to be on the ticketmaster app which is android or iOS, the official app for the festival has timings and updates for the event which are very important else you will miss stuff that is announced, even safety warnings.
My train tickets were on the app, I needed it to book the Uber as well.
20% off drinks and food if you use the paypal app. You just can't do things without Android or iOS.
Thousands of people parked in random fields, parked in daylight, need to find car at night = Airtag/ map.
Everything is an app these days. It's a lot harder to do everything without such things. You wouldn't have been able to attend without such a device.
Meta obviously don't want that and they've done a sneaky thing to make it useless: if you connect a third party app to WhatsApp, from that third party app you can only chat with other WhatsApp contacts that have also connected the same third party app to WhatsApp. So if you write your own WhatsApp client that runs on this low power phone it will be completely useless because to chat with your friends they would all have to manually connect their WhatsApps to your client, which of course they won't do.
See https://developers.facebook.com/m/messaging-interoperability... - check the `WhatsApp Messaging Interoperability User Experience - Android`
I guess we'll see if the EU lets this stand but my guess is they will.
For all the EU does right, it's amazing that a reviled United States conglomerate owns their entire social sphere. I hope they can change that and show the world a model of how to do so, especially given how high the stakes are.
The age old truism in tech is that it's easier to hyper-optimize a single chokepoint (i.e. the platform) than trust distributed actors to each optimize their own thing (i.e. app developers).
Because optimization takes money. Sometimes lots. And distributed non-platform actors have their own priorities like features.
That's why you get enormous success stories like x86, TCP/IP, HTTPx, and Javascript engines providing increased performance, but the "developers as a whole self-optimize" dream remains a perpetual mirage.
(Outside of gaming console hardware, and even there arguably true before middleware)
"Make this OS and ecosystem more efficient. Make no mistakes."
Not possible since we all "need" AI in our phones
> we just stop throwing away gigabytes for no reward
Personally I might not even mind so much about the memory except the latency from the garbage collection, swapping, etc absolutely kills interactive performance. My TI-85 had a snappier interactive experience than my "modern" phone.
I think a large part of the problem, at least on the embedded side, is that people really just don't have standards for these things should feel. When I tried out the first gen Nest in a store, my first thought was it was a joke and who would actually buy it with 100ms+ jittery UI lag. But lo and behold, people did.
Apple has a long history of not caring about budget-concious consumers. I doubt the wealthy decision makers at Apple and other companies are suddenly going to start caring about them now.
https://en.wikipedia.org/wiki/Alchian%E2%80%93Allen_effect?w...
Toms Hardware just put out an article talking about this, although they focused more on ssd and memory stick makers. The principle ought apply quite broadly though. https://www.tomshardware.com/pc-components/ssds/chinese-make...
iPhone Ultra $1699
iPhone Pro Max $1199 iPhone Pro $1099
iPhone Air 2 $999
iPhone 18 (2027) $899
iPhone 17 $799 ( Same Price )
iPhone 17e $599 ( Same Price )
And there won't be an 18e. Or May be an 18e at $699.
What they have are sweet margins and deals in place that helped them to take some time until the inevitable came to be.
In the other hand maybe all these prices drive folks to program like we used to, conscious of the hardware limitations, without extra slots to rescue from bad programming.
It seems like Apple, of all companies has been about doing more with less memory.
That would seem to have helped in the % of BOM getting wrecked by the supply chain and discipline of developers in its ecosystem.
I don’t understand why this comes up on all of these topics.
Dire need will compel a naked woman to learn to weave her own clothes, but there is no weaving machine for just making more efficient software. (American) Software developers are expensive, now I guess compute will either be expensive, more centralized, or have much more demand from competing interests (vibe coders who are implementing their own bespoke software or abandonware-for-one), and compute-for-code (GenAI) is a whole emergent engineering problem.
Then we hunker down and listen to or read a piece by Muratori, I guess, just practice some of those principles? But what seems to keep happening is that we get stuck by constraints that go beyond just writing more efficient code as a solo contributor on a solo project. That you can predict the efficiency of the code by the application domain suggests that there is a whole big system (of people and processes) above our heads that is not simple for any person or group of people to untangle.
Yes, Casey and friends are 100% spot on.
A big selling point for iPhones is that they are much more expensive than the Other phones, so it is absolutely necessary for Apple to make sure it's phones keep a 50% price luxury bonus, or many will stop buying them.
TL;DR - ultra-expensive iPhones are a feature, not a bug, like ultra-expensive watches
Alongside dark mode, apps should have a “slim mode” that turns off some of the more wasteful features in order to run on older/smaller hardware.
and when android go was thing there were (are?) lighter apps targeting that like google maps go even
Some sites like Google were able to measure the user-engagement cost of slowness and chose to optimize, but they're exceptional. I doubt most businesses know the cost.
No one cares anymore, and I doubt that any hardware supply bottlenecks will improve that. It's not something that anyone care to measure.
It’s certainly possible that the AI companies and their prospects may get a true reality check and then memory prices could cool down in a year or two. If that happens (I personally believe there is a good enough probability), then Apple will come out looking prescient for not getting locked into long term costly contracts.
It remains to be seen for how long the investors in the AI companies are willing to wait for total market capture and/or growing profits.
* when interest rates are declining, that’s a feature not a defect
* when interest rates are rising, that’s a defect not a feature
Southwest Airlines built its business on these kinds of bets.
Why?
I’m just mates with a dude who’s been an Apple hardware engineer for a long time.
https://macmagazine.com.br/wp-content/uploads/2020/11/18-tea...
This image shows it best.
The memory is on the same package as the SoC. (It's not on the motherboard.)
I've just got a new MBP this month, because I expect the prices to rise significantly with the new macbooks in the fall.
It is time to activate the Chinese.
Seriously let ASML sell to CXMT etc.
RAM has become an asset class, like real estate, or orange juice, or cattle, or collectible cars.
It’s wild to see.
I don’t know if there is an options market or a futures market for RAM.
But it seems inevitable.
Imagine the United States hoarding RAM the way that nations of old hoarded gold.
https://ourworldindata.org/grapher/historical-cost-of-comput...
China is increasing their production of DDR5 and SSDs, but much more slowly than it would have been possible in a free market.
The current prices for DRAM and SSDs would have never happened if USA had not started to sabotage the Chinese memory industry a few years ago, presumably because Micron wanted to eliminate their competition.
The US sanctions against memory producers have started exactly when Apple was considering the use of Chinese memories in their smartphones, so Apple had to cancel their plans.
The claims that the sanctions against the Chinese memory producers have anything to do with US "national security" or with military applications are just a big shameless lie.
Military applications are content with older memories, which China can produce in sufficient amounts. The SOTA DRAM modules and SSDs are more important for consumer products and the US "sanctions" have the only purpose of maintaining artificially high prices for the consumer products, which steals money from millions of people all over the world.
Aren’t prices sky rocketing precisely because of excess demand? And they’d collapse in turn if demand disappeared.
My understanding of economics is entry level so please forgive my ignorance. I’m just curious what you mean.
In this particular situation there is a bit of inelasticity of supply because it takes a long time to spin up a DRAM factory and if people believe it is temporary they won’t make the investment
Not exactly. The RAM crisis was sparked by OpenAI contracting with multiple vendors to take vast quantities of raw, unfinished wafers off the market. Wafers which OpenAI had no use for -- they just wanted to starve competitors.
This is different from an "AI is so popular that manufacturers can't keep up with demand" story.
OpenAI and Anthropic are the sleaziest companies that have come out of Silicon Valley in a long time, and that's really saying something.
> they just wanted to starve competitors
A lot of industries got bitten by greed and the sudden deflation of demand and huge unsold inventory post COVID. The reality is the market was overly and abnormaly inflated and consumers who bought the stuff during COVID period were equipped for the next ~10 years in stuff like sporting goods and had no reason to buy new items in the subsequent years.
I do believe we will always need more RAM even if there is a market correction or AI bubble burst whatever you want to call it. It will not destroy AI completely, just cleanup the market. But how much will we need? I guess the chip makers makes their own guesses but don't want to make their company in peril either.
Whales being whales, they will pay the highest end iphone at any price, no question. But the market is not made entirely of whales.
I’m betting that the world is about to hit a wall of inflation.
https://i.ibb.co/s9Mm8w2r/IMG-0743.jpg
This is a graph I made.
It shows:
* the inflation rate from 1971 until 1991
* the inflation rate from the start of COVID 19 until today.
Does anyone notice anything interesting about the graph?
Cherrypicked dates? But I'd like to hear analysis comparing the Nixon shock to the covid shock since one was monetary and one was supply and demand.
Of course!
* In 1971 and 2019, the M2 money supply was flooded. In 1971 by the Nixon Shock, in 2019 by Covid: The amount of US dollars that existed between 1961 and 1971 increased by 100%, the amount of US dollars that existed between 1971 and 1981 increased by 253%. Assets are denominated in dollars and the flood of money that the Nixon Shock caused led to the inflation of the late 70s and 80s. The flood of money that Covid caused led to the inflation of the last six years, 2022 in particular.
* The other factor that contributed was the lack of oil supply. In the 1970s, it was caused by a war in the Middle east. Will we see history repeat again? My bet is yes.
Data: https://fred.stlouisfed.org/series/M2SL
Note that the Fed data is difficult to read in the 70s, you'll want to play around with the length of the time window. It's difficult to read because the supply of money has grown so much.
And the AI data-centers are using the RAM so productively, that they are willing to buy them at any price whatsoever.
So the market is not free at all, the lack of competition is maintained by force.
Already for many years, the prices of various products like smartphones, SSDs and memory modules have been kept artificially high by the anticompetitive measures called "US sanctions".
See analogues in oil booms (then busts).
Apple product got $200 more expensive? Well you made $200 speculating on $DRAM.
Lost $200 speculating on $DRAM? Well at least your Apple product got less expensive.
It had even led to some anomalies where Apple machines were a better price than similar Windows machines.
Yeah, it's a laudable miracle that this $4T+ company could survive this long without raising prices on such razor-thin margins.
Wonder if those costs will increase too as storage price is going up.
Because they were already selling memory at crisis prices when it was dirt cheap.
And now they want those crazy margins again.
Tim Apple has never been one to shy away from squeezing out another dollar.
Regardless of which one it is, I absolutely despise the cartel that is running the US government right now, that created this situation for their crony big tech buddies.
It is part of the global trend to "rent everything, own nothing".
High inequality means that everybody wants to sell to the hyper-rich individuals and corporations. And selling products and services to the working class is a losing money endebour.
So, money accumulation means asset accumulation, that means more renting, that means more money...