Apple Announces Forthcoming Price Increases ⇥ wsj.com

Rolfe Winkler, Wall Street Journal:

Apple plans to raise prices on its products to offset the surging costs of memory and storage chips, Chief Executive Tim Cook said in an exclusive interview with The Wall Street Journal.

“Unfortunately, price increases are unavoidable,” he said. “We’re doing our best to mitigate the huge increases that are being passed to us, and we’ve been trying to shield our customers from the increases, but the situation has become unsustainable.”

During its holiday quarter, Apple’s profit margin on hardware was 40.7%; in its most recent quarter, that dropped to 38.7% — a remarkable figure for physical products. It is these high margins that led to analysts like Ming-Chi Kuo to claim Apple would keep prices more-or-less stable and offset the additional costs through its even higher-margin — 76.7% — services business. The launch of the MacBook Neo and iPhone 17E a few months ago convinced some that Apple would hold steady.

That Cook is pre-announcing these increases suggests to me this will not be a modest bump coming with the release of new products later this year. It indicates the current lineup will cost more, and products launching later could cost a lot more — partly because well-funded A.I. companies are pre-purchasing production capacity, and partly because Apple Intelligence features have a new RAM floor. All I know is this — plus the gangbuster sales of Mac desktop models — really throws a wrench in my personal purchasing plans.