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New Delhi: Over the years, premium technology has been steadily improving, but without significant increases in cost. That is starting to change with the advent of artificial intelligence in the design of devices. As computing power increases, so do the requirements for more sophisticated hardware, and consumers are willing to pay for it.
This is what Apple’s latest price hike in India is about. The company has raised prices on various products, such as MacBooks, iPads, Mac Studio, Mac mini, HomePod and Apple TV. The entry-level versions have stayed more or less the same, but the professional versions are much more costly.
In some instances, the price has jumped by up to Rs 70,000, and some premium MacBook Pro variants are now priced at almost Rs 1 lakh higher than they were earlier. The shift has come as a surprise to buyers, especially as Apple is getting ready to roll out AI features throughout its ecosystem.
The reasons for the changes have not been officially disclosed by Apple, but industry analysts attribute the rise to the rising expense of AI-enabled devices.
AI Is Raising The Price Of Hardware
Modern devices using AI need to have more RAM, faster storage, and more powerful processors that can process complex AI models on the device, said Siddharth Maurya, Managing Director, Vibhavangal Anukulkara Pvt Ltd.
“Artificial intelligence gadgets require more RAM memory, storage, and chips, which enables them to execute complicated algorithms on the gadget itself,” Maurya said.
But the problem is that these high-tech parts are not just being sought after by smartphone and laptop manufacturers. The competition for memory and processors between AI companies and hyperscale data centres is also driving up prices throughout the supply chain.
Manufacturers are investing heavily in research and development of AI, custom silicon, software development, and diversification of supply chains, Maurya said. Those investments are slowly being incorporated into the final retail price, he said.
“Alongside the cost of components, the buyers are also paying for future-proof technology allowing using of AI features via software updates,” he said.
More Than Just Hardware
The increased costs are not just due to production costs. Apple is also thought to be setting prices based on the long-term potential of AI and its ecosystem value.
Apple’s approach is a product of years of investment in custom silicon, on-device intelligence and software development, said Rajveer Singh of Thinkarklub.
“The price hike on Apple products isn’t just about specs. It is all about innovation and R&D,” Singh said.
He says that AI features would need years of engineering work and redesigned chip architectures before they would be available to consumers, and would require more memory capacity.
He also thinks Apple’s brand is strong enough to allow it to have some flexibility in pricing.
“If the demand is inelastic and there is no brand equity that is comparable, then Apple has pricing power. Customers aren’t just buying hardware, they’re buying into an ecosystem,” Singh said.
“Yes, costs increased due to AI, but the premium is also due to positioning.”
A New Technology Cycle
The AI revolution has transformed the demand for high-bandwidth memory and cutting-edge storage devices across the globe. Manufacturers of AI servers are competing with PC and smartphone makers for the same components, driving up the cost of premium hardware.
On-device AI capabilities like language models, image generation and intelligent assistants consume significantly more memory than previous generations of computing, industry analysts say. Manufacturers are creating products to withstand these workloads, and that is driving up hardware costs.
Maurya thinks this is the start of a new premium technology cycle.
“From a business perspective, it’s the beginning of the new era of the premium technology cycle, where the ability to use AI would be a key factor,” he said.
The message is becoming more obvious for Indian buyers looking to buy a MacBook or iPad this year. Don’t assume that waiting will result in cheaper prices, especially for high-end models. The changes Apple has made in its latest revisions indicate that AI is not just a software upgrade, but also a key factor in the pricing of its hardware, which may influence the consumer electronics market in the years to come.
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