Many users objected to Apple raising device prices to cover AI costs, calling the technology a scam with little consumer value and preferring basics like better batteries, while some hoped for stronger local AI features instead.
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@markgurman current LLMS are kinda useless for autnomous swe work and even as an assistant make inexcusable mistakes due to hallucinations i don't see how pre ai era is worse than what we are living right now
@markgurman But let's be honest. Their entry-level market price was far cheaper than their PC counterpart."
@markgurman Shifting component availability to an ai industry that has yet to show any practical benefit to the masses.
@Michael_Urwin @markgurman Automating insurance overhead from 25% to 10% with AI would be $1T/year as lower premiums.
@markgurman Apple says memory shortage. Evercore says margin protection. Both can be true. A 17 to 25 percent mid-cycle hike does more for gross margin than a DRAM bottleneck explains. The test: do prices come back when supply does. They won't.
where is the irony in poor strategic decisions leading to poor business outcomes?
if they had actually "wanted" on-device and committed to it, I think the inventory situation might be a little better at this point.
in reality, Tim Cook did not take the technology as seriously as his peers and his shareholders will pay the price.
it's just textbook poor vision, but they have a good supply chain, I guess.
@markgurman and spatial reframing
@markgurman No. The irony is that Apple has completely lost its identity through chasing trends and focusing on now failed products (e.g., Vision Pro).
Apple hired Google to be in-charge of their AI, iOS 26 is a fucking mess, and there's still no update to homepods or the Apple TV 4K.
@markgurman Looks like on device AI, on devices you have, suddenly makes sense!
@markgurman Companies should be able to charge whatever they want for their products and people should be able to buy (or not buy) any of those products.
@markgurman It will be interesting when Apple post quarterly results in the new year. The iPhone 18, Fold and M6 updates will be under performing sellers.
@markgurman I wonder if this is why they didn't want it - it's possible they are closer to hardware and didn't see any good outcomes of the datacenter buildout. also in the end it will all be local anyway because of advancement in quantization
@markgurman Sadly there are limited options to opt out.
@markgurman They are making AI cheaper and
At this point, it’s pointless making another iPhone 15% faster with a slightly larger screen.
The compute resources are better off redirected at making exponential gains in Ai for consumers and businesses to use.
@markgurman The honest answer is that this isn't just about apple, it's about what happens when ai eats into profit margins everywhere
@markgurman BS! I understand AI is mainly the cause. But Apple always has sold memory and storage at a premium.. even when it was cheap, now they are going through a crisis? Their profit margins last year in the bilions. Apple could have been less agressive with pricing...
@markgurman Let’s not pretend this didn’t begin with graphics cards and crypto mining though. Gamers have been feeling it for some time now.
@markgurman And we’re just getting started. It will go all over to cars, electronics, software, subscriptions. However it will save a lot of labor costs which are way higher. I stick with the AI.
@markgurman this is the part of the AI boom nobody priced in. the datacenter capex and chip demand always had to land somewhere, and that somewhere turned out to be the price tag in the apple store
@PareshPatel @markgurman Yep. Microsoft, Samsung & Lenovo announced price increases already too.