UpTrajectory Review
The recent announcements from tech giants Apple and Microsoft reveal a troubling trend: AI-related shortages are significantly driving up prices for popular consumer electronics. As both companies attribute their price hikes to a shortage of memory and storage caused by the rapid expansion of AI data centers, consumers are left grappling with the implications of these increases. With Apple raising prices on devices like the iPad Pro and MacBook Pro by hundreds of dollars, the impact on small business owners who rely on these technologies is profound.
For small business operators, these price hikes could mean re-evaluating budgets and technology investments. If major players like Apple and Microsoft are feeling the pinch, it’s likely that smaller tech firms will follow suit, potentially leading to a ripple effect across the industry. This situation underscores the importance of staying informed about supply chain issues and considering alternative suppliers or products that may offer better pricing. As consumer sentiment turns against AI, businesses should also be prepared to address customer concerns about rising costs and the role of technology in their operations.
“We have never seen a component price increase this much, this quickly.” — Fast Company
Takeaway: Monitor tech prices closely and consider alternative solutions to mitigate rising costs.
From the original item — Fast Company:
There’s no doubt about it: The general public is turning against AI. They are worried it will steal their jobs, destroy the environment, and even kill innocents. And given that two of the biggest companies on the planet have now squarely placed the blame on AI-fueled shortages for forcing them to raise prices on popular tech gadgets and devices, consumers are likely to double down on their loathing for the technology.
Yesterday, two of the world’s largest companies, Apple and Microsoft, announced pricing bombshells: They would significantly raise prices on their most popular consumer electronics. And neither held back on what was to blame for the price rises: artificial intelligence.
First up was Apple, which announced significant price hikes across its Mac, iPad, and Home lineup. As Fast Company previously reported, Apple announced it was raising prices on these devices by an average of $246.67 (per MacRumors).
The starting price of the popular iPad Pro, for example, jumped $200, from $999 to $1,999. The MacBook Pro saw its starting price surge by $300 (from $1,699 to $1,999), and the Mac Studio with the M3 Ultra chip saw an astounding $1,300 price increase to $5,299 (from $3,999). Even Apple’s low-cost devices were not spared. The Apple TV’s price tag jumped nearly 55% to $199 (up $70 from $129).
“We have never seen a component price increase this much, this quickly,” Apple told Reuters, referring to the memory and storage shortage caused by the AI data center buildout boom. “We have shielded our customers from these increases so far, but we have now reached a point where we need to begin raising prices on a number of products, including today’s increases for iPad and Mac.”
Microsoft was up next, announcing that it too would be raising prices on one of its most popular consumer products. Yesterday, the company announced that, effective August 1, it would no longer sell the 2-terabyte (TB) version of its Xbox consoles, and that the 512-gigabyte (GB) model would increase in price by $100, and the 1 TB model would rise by $150. This comes after Microsoft raised all Xbox prices by $20 to $70 last year.
“We hoped another price increase would not be necessary, and we have spent the last several months working with suppliers on options,” the company said. “Unfortunately, console storage and memory prices have increased by more than 2.5x and we expect another doubling by the fall of 2027.”
Apple and Microsoft aren’t alone. Other gadget makers have also hiked prices recently, though they have not specifically blamed the AI-fueled component shortage as the reason.
In March, Sony announced its PlayStation 5 consoles would increase in price by up to $150. Sony blamed “continued pressures in the global economic landscape” for the price rises. And in May, Nintendo revealed its Nintendo Switch 2 price would increase by $50, blaming “various changes in market conditions.”
Of course, the fact that these big-name gadgets are now escalating in price won’t be much of a surprise to anyone who has shopped for external storage or memory in recent months.
Currently, Amazon lists the price of a Sandisk 1 TB Extreme Portable SSD as $189. But if you look at Amazon’s price history tool, you’ll see the company’s data reveals that one year ago, the same device was sitting at just above $77.
Much of that more-than-twofold price increase has occurred just this year as AI data center buildouts continue at breakneck speed, causing storage and memory component prices to surge amid ongoing shortages.
Anyone shopping for a smartphone, computer, gaming console, or hard drive right now is likely wondering the same thing: Is it worth waiting to see if prices drop again?
But no one can answer that question with any certainty. What seems likely, however, is that memory and storage prices will continue to rise into 2027, which means devices that rely on memory or storage are likely to see their prices rise, too.
Indeed, Apple itself phrased its price rises as something that is just beginning. “We have now reached a point where we need to begin raising prices on a number of products . . .” the company said (emphasis added). I’d be shocked if Apple doesn’t raise prices on iPhones and Apple Watches in the months ahead.
Likewise, Microsoft says it expects “another doubling” of storage and memory prices by the fall of 2027. It seems unlikely Microsoft will just eat those increased costs.
The takeaway: AI-fueled price rises are here, affecting even consumers who don’t use the technology. And that is unlikely to change any time soon.