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Yahoo Finance Technology Editor Dan Howley explains how the AI boom is driving up the cost of consumer electronics.
AI, all the advantages and tailwinds, it’s going to make you more productive, right? It’s it’s going to improve your life in so many ways. You say, hold on because it’s also driving up the prices for your everyday electronics. What’s the connection there?
Yeah, I mean, we’ve seen obviously Apple raise prices on its Macs and its iPads. Uh Microsoft raised prices on its surface line of products by as much as $500, $600. That’s the starting price. Uh went from $9.99 to 14.99. It’s a good jump. Uh we’ve seen uh smartphone makers raise prices. Uh there’s been teases as to whether or not, you know, we might see an iPhone price increase and then obviously game consoles have gone up. Basically, the entire industry is is faced with this kind of memory shortage. And this is kind of the confluence of a number of of events. It’s uh a result of uh COVID hangover uh where companies weren’t able to build out factories that they wanted to to uh meet demand that uh prior demand, scaled back on spending and now they just don’t have the uh supply uh chains that’s set up to actually meet current demand. Uh it’s a result of the data center build out. We’re seeing a lot of companies allocate some of those lines to high bandwidth memory. That’s the memory that goes into these data centers. and then oh yeah, they all use something called DRAM uh which goes into our laptops, our smartphones, anything that’s really a computer. And so we’re seeing these different issues all collide at once to create this global shortage. and that’s raising the prices on devices that we buy every day.
just because the shortage stops though, and I mean when it stops, right? This is still something that we’re saying maybe 28, maybe 30. We’ll we’ll still be uh seeing these kind of constraints. but even if it does stop, if prices increase on things like smartphones and laptops, companies may get a little comfortable and say, hey, you know, you guys are cool paying this? Maybe you should just keep paying that for the long term. And that’s when we could start to see these prices really settle in and kind of have new highs for devices that we’ve been paying less for for years.
So if you’re the type of person that goes and you buy or you pay monthly, then it’s not really going to hit you that hard likely, right? Like maybe you’re paying, you know, $10 more a month for a phone. Okay, you can probably swing that. I mean, let’s not talk about how many other subscriptions we have, whatever, but an additional cost, 10 bucks, that might not be the worst. If you’re buying a a laptop or an iPad or or a game console though, those are big budget items. And if you’re going to try to throw all your cash at that at once so you don’t have to make a payment on it, it’s going to be a little touchy. So I think for now, for for things like iPhones, look, it’s August, the next phone comes out next month most likely. You should probably just wait and see what that new price is. and then they still sell the the last generation phone. Uh for game consoles, if you look at something like the Nintendo Switch, I believe that’s still under its original starting price. They’re going to raise that by 50 bucks uh in the coming months. So, you buy that now. Uh if you’re looking at something like a a laptop, those have already gone up in price.
