AI-driven price hikes for hardware are making replacing tech more expensive, but it's not quite a return to the era when a family computer cost the same as a small hatchback. Photo / Getty Images
The cost of tech hardware is marching higher and the culprit is the AI boom. The giant data centres powering ChatGPT-like services and the race to bolt artificial intelligence onto everything require enormous quantities of advanced memory chips.
These include Dram, the short-term working memory in computers and phones, and Nand flash, the storage holding your photos, files, music and cat videos. Chipmakers have sensibly looked at the queue of deep-pocketed cloud giants and decided serving them is more lucrative than keeping your teenager’s next phone affordable.
In June, Apple hiked the prices of its MacBooks, MacBook Airs and iPads by 17-25%. Other computer makers are gradually following suit and the next generation of smartphones will carry a similar price premium.
The numbers are getting silly. Industry analyst TrendForce forecast Dram contract prices rising 58-63% in the June quarter and Nand flash prices 70-75%, as manufacturers shifted capacity towards higher-margin AI servers and enterprise storage.
IDC analyst Nabila Popal told The New York Times this month, “The next two years will be extremely tough for consumer devices like laptops and smartphones.”
This is not quite a return to the era when a family computer cost the same as a small hatchback. But it reverses a longstanding consumer expectation that waiting six months means more gadget for the same money. At best, you can now expect the same price but less storage.
Distant as we are from the world’s tech hubs and hit by the low Kiwi dollar, we already pay over the odds for tech devices. So, what should a sensible buyer do?
First, don’t panic-buy a $2000 laptop merely because someone on YouTube declared Ramageddon was nigh.
Retailers and distributors carry stock bought before the price rises. Clearance models and last year’s machines can be excellent buying.
Second, buy for the job, not the fantasy self you hope to become. If you write, browse, hold video calls and occasionally tinker with a spreadsheet, a premium “AI PC” is probably unnecessary. Prioritise a good screen, battery life and enough storage. Avoid the cheapest configuration if it has miserly memory that cannot be upgraded: 8 gigabytes (GB) of Ram and 256GB of storage may be a false economy for a machine intended to last five years. But do not pay hundreds more for capability you will never use.
Third, repair and extend. A new battery, an operating system tidy-up or an external solid-state drive (SSD) can postpone a full replacement. Where possible, choose laptops with replaceable storage and memory. The sleek, sealed slab is a triumph of industrial design, right up until it needs a $700 repair.
And what about the cloudy stuff? The immediate squeeze is overwhelmingly in physical devices, but online subscriptions are rising, too. Last month, Apple raised iCloud+ prices by 17-20%. A 200GB account now costs $5.99 a month, up from $4.99. Cloud providers point to their own rising hardware costs. But now is the time to consolidate your online footprint. Do you really need three video streaming subscriptions? Is a terabyte of online storage a tad excessive after all?
The practical response to the ratcheting up of tech prices is to keep devices longer, buy refurbished tech, compare the actual specifications rather than the promotional adjectives, and minimise your digital subscriptions.
The AI revolution may be priceless. Your next device doesn’t have to be.