{"id":2861,"date":"2026-06-27T13:56:00","date_gmt":"2026-06-27T13:56:00","guid":{"rendered":"https:\/\/silvybrand.com\/?p=2861"},"modified":"2026-06-27T13:56:00","modified_gmt":"2026-06-27T13:56:00","slug":"apple-consumer-price-increase-ai-big-tech","status":"publish","type":"post","link":"https:\/\/silvybrand.com\/?p=2861","title":{"rendered":"Why is Apple asking me to pay more for Big Tech\u2019s AI obsession?"},"content":{"rendered":"


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Tim Cook recently said price increases were \u201cunavoidable<\/a>\u201d and described the company\u2019s pricing as \u201cunsustainable<\/a>.\u201d The 16-inch MacBook Pro saw its price go up by $300. The 11-inch iPad Air went from $599 to $749. Even the HomePod Mini got a $30 bump to $129. Cook squarely placed the blame at the feet of the AI industry, which is not surprising. RAMageddon<\/a> has already come for your desktop PCs and gaming consoles. The Xbox has seen its price climb nearly 25 percent depending on the model, and Nothing even canceled an entire phone launch. Apple is just the most recent to jack up prices and point the finger at AI<\/a>.<\/p>\n<\/div>\n

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The price hikes are \u201cbasic economics,\u201d says Tim Derdenger, associate professor of marketing and strategy at Carnegie Mellon University\u2019s Tepper School of Business. As the tech industry has raced to win the AI war, \u201cthe price of RAM has skyrocketed because the memory manufacturers have reallocated their production lines to produce new HBM memory for AI data centers and away from consumer DDR5.\u201d And when the cost of components goes up, companies tend to pass those costs on to consumers<\/a>.<\/p>\n<\/div>\n

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But this isn\u2019t some fluke, or temporary supply chain problem. Companies are choosing data center clients over ordinary buyers because \u201cthe same chip earns far more inside an AI server than inside a consumer device,\u201d according to Srikanth Jagabathula, professor of technology, operations, and statistics at the NYU Stern School of Business. Regardless of whether people<\/a> are clamoring<\/a> for more AI<\/a>, and more AI data centers, or not.<\/p>\n<\/div>\n

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Companies like OpenAI, Google, and Microsoft have thrown around unprecedented amounts of money, outbidding companies like Apple for RAM and storage, creating what even Sam Altman has admitted is a bubble<\/a>. This imbalance has led to record earnings for companies like Micron<\/a>, which manufactures memory chips. \u201cThis shortage is not temporary and might extend into the next few years \u2026 And because the increase is lasting rather than temporary, simply absorbing the cost is not a sustainable strategy,\u201d Jagabathula says.<\/p>\n<\/div>\n

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But Apple has posted record earnings for at least four<\/a> quarters<\/a> in a<\/a> row<\/a>, and its margins<\/a> on hardware sales are much higher than the industry standard. Its markups are estimated<\/a> to be between 30 and 40 percent<\/a>, depending on the product. TechInsights<\/em> and The Wall Street Journal<\/em> estimate that it\u2019s even higher on the iPhone 17 Pro, perhaps as much as 47 percent<\/a>. According to TheStreet<\/em>, margins on smartphones are typically between 15 and 25 percent<\/a>. Data on laptop margins is harder to come by, but estimates<\/a> put it between 10 percent<\/a> and 25 percent for most<\/a> of the industry.<\/p>\n<\/div>\n

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Apple is actually among the last of the major tech companies to raise its prices. But why are customers being asked to foot the bill when Apple seems well-positioned to absorb these costs?<\/p>\n<\/div>\n

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Ari Lightman, professor of digital media and marketing at Carnegie Mellon University\u2019s Heinz College, described it as \u201cspot on\u201d to say it\u2019s hard to square Apple\u2019s public financial statements and Tim Cook\u2019s description of its pricing as unsustainable. He said raising prices was \u201cwithout a doubt\u201d about appeasing shareholders who demand constant growth.<\/p>\n<\/div>\n

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Lightman points to Apple\u2019s lagging behind in the AI race, the uncertainty around installing a new CEO<\/a> in John Ternus, and the lack of a hit new product category as putting pressure on the company.<\/p>\n<\/div>\n

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\u201cThere\u2019s a lot of things that investors can really beat them up on,\u201d he said, and \u201cif they\u2019re going to be selling the stock and promoting the stock to large institutional investors \u2026 in terms of being one of the most valuable companies, then they have to tell a really good story.\u201d And that story is one of huge margins and profits even in the face of rising costs and AI-driven supply constraints.<\/p>\n<\/div>\n

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The AI boom is touching almost every facet of our lives, but this week, it came particularly hard for our wallets with the announcement of another round of price hikes<\/a> for the Xbox, and even the Arduino got caught up in the memory crunch<\/a>. I spent hours talking to marketing and business experts, exchanging emails and phone calls, and no one could give me a satisfying answer to why the price of popping up more data centers should be consumers\u2019 costs to bear.<\/p>\n<\/div>\n

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