Price hikes aren’t Apple’s fault. But their severity is

By my count, Apple’s flirtation with affordability lasted a total of 113 days. I hope you enjoyed it.

The MacBook Neo was announced on March 4, shocking customers and PC makers with its bargain price tag of just $599. The company widely known (albeit slightly unfairly) for its expensive products had finally learned, almost 50 years after its founding, how to sell a bargain.

But what can be learned can quickly be unlearned. On June 25, Apple took down its webstore for a short while and, when it came back online, customers saw to their dismay that prices across the iPad, Mac, Apple TV, and HomePod lines had risen dramatically. The Neo went up from $599 to $699, but that was the least of it: the iPad Air went up by $150, the Mac mini by $200, and the MacBook Pro by $300 (or more). The entry-level Mac Studio went up by a startling $500.

Apple didn’t do this on a whim, of course. In a press release, the company justified the hikes by saying it had “never seen a component price increase this much, this quickly. 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.”

It’s hard to find fault with the core of that argument. The escalating RAM crisis has seen consumer tech prices rise relentlessly across the industry, yet Apple customers have (as I’ve discussed in previous columns) been almost completely insulated from the situation. We’ve been spoiled. But did we deserve to be punished this severely when the price rises finally arrived? That’s debatable.

The MacBook Neo’s 16.7 percent rise may be justified because the profit margin on products in that category tends to be tight; if the cost of the RAM doubles or even triples, there’s very little wiggle room in the rest of the spec to absorb that increase, and you can quickly find yourself selling at cost or even at a loss. But it’s hard to view the 25 percent bump on the Mac Studio with M4 Max, a premium product set up for low volume but very high margin, as anything other than greed.

We should bear in mind, too, that Apple hasn’t been “shielding” us from price rises out of the goodness of its heart. It simply had the market leverage to insist that suppliers prioritize Apple products when allocating components. Losing a contract with Apple is such a catastrophe that the company can insist on preferential treatment, and thereby maintain its margins without having to raise prices. The fact that Apple has now raised prices so dramatically doesn’t mean that it couldn’t cope with low margins any longer, but rather it indicates that it didn’t want to put up with low margins at all.

More than almost any other company in the world, Apple–with its fat reserves of cash and enviably high margins–had the capacity to take the hit on this one. Putting the prices up at this moment and to this extent was a choice.

Perhaps, however, it was a smart choice. Partly because the RAM crisis doesn’t show signs of abating any time soon. One memory manufacturer said last week that the situation may not start to ease until 2028. The prospect of coping with slimmer margins for 18 months or more must have seemed rather unappetizing.

But it also speaks to the executive moves inside Apple Park. He may not like things this way, but one of the company’s biggest stories this year is Tim Cook himself, and his looming resignation from the CEO hot seat. By announcing the big price hikes now, Cook puts his own face on the policy decision, as ever proving himself willing to look bad for the sake of the company.

The last thing John Ternus would want, upon taking the helm in September, would be to announce price changes doomed to be unpopular with customers and shareholders. Instead, he gets to avoid all blame for the new prices, then play good cop and announce cuts when the market turns a corner. Or play the morally neutral cop: sit back and quietly enjoy these prices becoming the new normal without it being his fault.

Five-dimensional chess, or overthinking it? Who can say. But no matter what happens over the next couple of years, the one thing you can guarantee is that Apple will always find a way to make money. It’ll take a lot more than a long-running components shortage to stop that.

Welcome to our weekly Apple Breakfast column, which includes all the Apple news you missed last week in a handy bite-sized roundup. We call it Apple Breakfast because we think it goes great with a Monday morning cup of coffee or tea, but it’s cool if you want to give it a read during lunch or dinner hours too.

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