Tech firms blame AI for device and console price rises

For years, buyers of tech could rely on a familiar trend - that older devices would get cheaper over time. That now seems to have stopped, or in some cases, completely reversed. Apple and Microsoft's Xbox have joined the firms hiking prices for devices and games consoles which are years old.

They and other tech companies have pointed to the rising cost of crucial components needed to build their machines, laying the blame on AI. Compute-hungry data centres, which power AI, need more and more chips to keep up with demand from AI companies - which means the demand for them is far outstripping supply. Some people have called it "Ramageddon" - as random access memory (Ram), a once-cheap part of any computer, has now shot up in price.

But big tech's Ram woes are failing to gain the sympathy of many consumers facing eye-watering costs for barely-new electronics. Apple has raised the prices of its tablets and laptops by nearly 20%. The news was swiftly followed by Microsoft saying it would yet again raise the price of its five-year-old Xbox Series S and X consoles by at least $100 (£75.70).

The pricing changes, which will take effect from August, are its third in just over a year - and see the cost of a new console be 30% to 40% more expensive than it was this time last year. "Xbox with another hardware price increase? I gotta laugh to keep from crying," wrote one X user reacting to Xbox's console price hikes.

"My favorite hobby is cooked." On Reddit, another user responding to the news said Xbox "may as well just cancel" its upcoming console Helix "because no one will be able to afford it". Investors may not have been too overjoyed, either. Apple's share price took a tumble following the announcement of its price bumps on Thursday.

Yang Wang, principal analyst at Counterpoint Research, called the memory crisis "the most disruptive supply-side event the smartphone industry has ever faced". The iPhone has so far been shielded from price hikes, and Wang said premium phone makers such as Apple and Samsung were "better positioned to weather the disruption". But Apple was part of a wider sell-off of tech stocks , amid concerns AI investment would impact device sales.

And these companies are by no means alone. Nintendo has said it would raise the Switch 2's price globally from September. Valve recently launched its new Steam Machine gaming PC with a higher price than expected , starting its announcement with a long explanation about spiking component costs.

It has already raised the cost of its handheld Steam Deck by 40% for similar reasons in May. Apple's announcement on Thursday, which cited an "unprecedented challenge" with memory chips facing the industry, has been seen by several analysts as indicating that the cost of massive AI investment is finally coming to bear. It is no secret that AI developers are seeking to capitalise on excitement about generative AI tech, claiming it can deliver productivity boosts and help firms make more profit.