[cmiles8]

Apple looks better and better as every day passes. Other players going deeply into debt to build out massive infrastructure, VCs pumping up the model ecosystem that is now a total commodity.

Apple’s just been sitting there with solid cashflow waiting for all this to implode and then have on-device models with their own chips.

Apple will own the end device while the rest of the world is fighting over a pure commodity. It will burn hard and Apple will laugh all the way to the bank.

[throwaway63467]

Isn’t Apple potentially under a lot of pressure due to the DRAM prices as well as having to compete with AI for fab capacity? Before all the price hikes their products were already priced at the top of the market so I would assume that memory getting more expensive will impact their sales or margin quite a bit as they can’t subsidize hardware like AI companies do (they can of course eat into their own margins a bit which I think they already do). So not sure if what happens right now is great for them, if the memory market collapses it will of course be good.

[alpha_squared]

> Isn’t Apple potentially under a lot of pressure due to the DRAM prices as well as having to compete with AI for fab capacity?

I'd qualify this with for now. It's not entirely clear what happens in the event the AI industry implodes, but I do think there will be a glut of memory and hardware up for grabs. It very well could crash the consumer hardware market as a result. The AI obsession and investment has burrowed so deeply across the US economy that I can't think of a single industry that won't be impacted, including agriculture.

[thewebguyd]

> It very well could crash the consumer hardware market as a result

Tbh, I hope it does. Prices are outrageous, and I'm a firm believer in personal computing/having access to powerful hardware, privately and locally, is hugely important.

On a more selfish note, I miss the days of being able to build an outrageously powerful desktop for myself for relatively cheap. For now I'm still holding onto my AM4 motherboard w/ 64GB DDR4 and an aging GPU, praying my 7 y/o GPU holds up long enough for prices to drop again.

[bpavuk]

64 GB! you are lucky :) sitting there with 16GB, a GPU that already shows the signs of strain, and AM4 Ryzen 5 5600G. (MacBook Air M1 equivalent in single-threaded tasks.) apparently the CPU requirements slowly crept up across the line. and then there is looming AVX512. why "looming"? because at some point enough people will move to it that software will require AVX512.

[rbanffy]

Maybe a year from now we'll all be using MI300As and EPYC 9600s to read e-mails. Or Nvidia Veras, maybe AWS will sell some of their Graviton stuff in an effort to offset their capex.

Unfortunately, I don't think IBM Cloud will suffer enough for me to play Tux Racer on my very own Z17.

[sillywalk]

> play Tux Racer on my very own Z17

Interesting. It looks like Debian has a Tux Racer package for Extreme Tux Racer on s390x. I guess it'd be remote graphics, and not accelerated.

[bpavuk]

actually I'm looking forward to that :3 but that requires Claude et al. going bust and HN is gonna kill me if I wish that publicly

[HumblyTossed]

> It very well could crash the consumer hardware market as a result

I really hope it doesn't but I could see this resulting in just a couple "PC" manufacturers remaining when this is all over. Things will never be the same after that, and likely much worse with a couple companies telling us what we can and can't do on our devices.

[bpavuk]

> including agriculture

in fact, agri sees its share of impact now! all of this investment has to come from somewhere, which means that money is getting sucked up into AI from the entire economy. job cuts in tech are part that, part general "de-bloating" of post-COVID tech. retail investors are a lot more likely to invest into AI than any other industry, although there are signs that big players already consider risks of overexposure to AI.

not to mention, agri saw a "bubble" of its own, surrounding Agtech, which peaked at 2021 and has been cooling ever since. scare quotes here because it was nothing like AI bubble

[Someone]

> Isn’t Apple potentially under a lot of pressure due to the DRAM prices

Maybe. On the one hand, if there is a strong ceiling to what users are willing/able to pay for a smartphone (might not be true, with all those people making $$ on the stock market), they will have to cut prices.

On the other hand, if one part gets more expensive, premium phones need smaller relative price increases than budget phones. Certainly, if they are willing to accept lower margins, premium product might get more attractive.

Also, iPhones tend to have less RAM than competitors, so this might hit other premium manufacturers harder than Apple.

[ProfessorLayton]

Apparently RAM and SSD costs have risen so much recently that the bill of materials on the next iPhone could exceed the entire cost of the current one just on RAM/SSD alone [1]

[1] https://images.macrumors.com/t/PtKleXF2po_g3qSuA6VMOE90WEM=/...

[sillywalk]

Interesting. If it's accurate, Apple sure has a nice markup.

Side note: I wished they'd chosen more distinctive colours for the charts.

[randysalami]

Holy hell that’s a crazy image. Can’t even fathom how they will go forward.

[cmiles8]

Yes it does impact all hardware makers and they raised prices as a result. But again remember the financial reality here… DRAM is in short supply because of the demand for models propped up by VC subsidies and infrastructure providers going deeply into debt to buy all this stuff just as folks are realizing we’re on track to over build capacity. So yes Apple gets impacted a bit in the short term but in the long term they’ll gleefully watch it all burn.

[CoolestBeans]

Sure, but DRAM is a commodity and is classically cyclical. This is a particularly large cycle but so long as the historic pattern holds (and there's not a ton of reason to think it won't unless the hyperscalars can go into greater debt indefinitely which given inflation and interest rates they can't) Apple just needs to get through this peak in prices, which they have a LOT of ammunition to do so.

Having to raise prices isn't a great look but when they come out the other side they can drop pirces and get a boost in volume or they can keep them high and enjoy a bigger profit margin.

[doom2]

> Having to raise prices isn't a great look but when they come out the other side they can drop pirces

The fun part is that they can drop prices but they'll still be higher than before the initial price increase, thereby increasing volume _and_ getting some extra profit. Consumers still lose.

[dubcanada]

Let's be real here, Apple does not have to compete with AI for fab capacity, they can outbid anyone if they want. They have more money and longer contracts then anyone else. Apple customers will just end up paying for said DRAM price inflation.

The ones who will actually suffer is Apple 2.0 (presumably a different competing company), start ups, research, companies that are not worth trillions.

[InsideOutSanta]

Apple already had giant margins before and could easily absorb memory price increases. The fact that they did not and instead decided to increase prices shows how confident they are that people will buy their hardware anyway.

[wpm]

They did absorb them, this price madness began a year ago and they only increased prices last month.

[philistine]

Apple has long term contracts for every part that goes in the most complex supply chain on the planet. Do you think they call their suppliers every morning asking for 2 million chips?

Their price increases were a mixture of absorbing some of the increase and passing what they won't on us.

[wpm]

So...we agree.

[blks]

They are, for now; but also Apple is known for making long term price locked contracts and ensuring availability of semiconductors for their devices.

[telesilla]

Couldn't Apple afford to make it's own RAM fab etc at this point and have a dedicated pipeline of parts for its own products?

[SllX]

RAM production is historically not a great business to be in. It’s a mint today, but it’s an incredibly tough business to break into & by the time any hypothetical Apple RAM fab is up & running, it will already be losing money.

To give you some idea, here’s an Asianometry video describing Taiwan’s prior DRAM attempts: https://youtu.be/ehT3U935Pww

[quickthrowman]

Everyone is paying more for RAM these days, I expect Apple to maintain their margins.

[keeda]

Curious, why would Apple want to wait for "all this" to implode? They've had on-device silicon for AI for eons now (in AI-years), so they could have been executing their strategy, whatever it is, all this time, no?

My outsider take is that Apple leadership never really believed in the capability of GenAI, and hence kept pursuing their pre-LLM strategy. An interesting signal about how that's working out now is that their AI org leadership was overhauled recently.

[rawgabbit]

It's like you said, they don't believe there is a viable business yet.

[keeda]

But they already have a billion devices with NPUs doing essentially nothing. I don't see any strategy at all, other than outsourcing a potentially core function to Google.

[rawgabbit]

If you think your competitors are committing financial suicide by borrowing money they don’t have to fund a project with a dubious rate of return, you wait and see.

[HAL3000]

Others are betting on AGI/almost AGI like system. It's a gamble because no one actually knows whether or when it will be possible to create it. But if their bets pay off, they could outcompete Apple. Basically, other companies are going all in on the next card, while Apple is holding back and waiting to see which cards are dealt.

[neaden]

The problem is even if AI ends up being huge all these companies still have to worry about eachother and the Chinese models that are coming out. It's like a dollar auction and it's very possible we are already at the situation where they have all bid more than a dollar.

[dan_gee]

IMO AGI is a bold-faced lie, backed by the age-old American fantasy of free labor. The whole concept seems quite ugly to me.

[dormento]

In other words, the AGI hype kinda depends on AGI never being achieved. Billionaires don't want the worlds fundamental problems solved overnight for a simple reason: there's no money in that.

[dan_gee]

Moreso what I'm trying to say is that AGI is a return to the eighteenth/ninetheenth century fantasy of slavery as a business model.

AGI means cruelty-free robot slaves.

[budsniffer952]

Cell phones are commodities, so how does Apple maintain that cash flow? It's almost like there is more to it than that...

[eppp]

Cell phones arent wheat. It is a pain to switch between OS's.

[corky_buchek]

Cell phones are not commodities

[GiorgioG]

Cell phones may be commodities, but iPhones are not.

[neaden]

Yeah, as an android user myself I switch brands all the time, but the iPhone users in my life all bought iPhones 15ish years ago and have kept doing it ever since.

[rbanffy]

The good thing of the iPhone is that your next phone is just like the previous one, but faster. Some features are added, some change places and some are even removed or replaced, but it doesn't compare to, say, move from a Motorola to a Samsung - they might as well be different OSs. Last time I had to relearn how to use the camera (and I AM AN EXPERIENCED PHOTOGRAPHER!).

[apercu]

I’ve had a few iPhones. Own 2 right now and I completely agree with your sentiment but while the hardware gets faster the software gets slower and worse. ;)

[fragmede]

Wirth's law: software gets slower faster than hardware gets faster :)

[altmanaltman]

No Apple was not sitting there and waiting as if its some grand plan. They tried their VR device which they don't even talk about now. They were late to AI and yes if the bubble bursts they will be at a better position but it's not some grand master strategy. Even inside apple there's been a lot of talk about how badly the company handled AI.

As for laughing all the way to the bank, I am sure memory manufacturers and Nvidia was definitely join them regardless of what happens.

Also comparing Apple (literally one of the largest companies in the world) to a company burning VC money makes no sense.

[njovin]

A better way to frame this might be that Apple tried VR and quickly realized the market wasn't there and moved on.

Compare that to Meta, who went all-in (so much so that they changed the company name) despite apparent overwhelming user apathy toward the product.

The estimates I've seen say that Apple spent ~$10b on their VR program, whereas Meta is in for about $80b.

[Danox]

The Apple Vision is at least two or three generations away hardware wise, it not only has to be several times faster (M8, M9 with a R2 or R3 processors) than what it is. The battery life needs to be better a lot better and it has to be half its current size weight wise.

And the price has to be half as much with all of those improvements. And last but not least the software needs to get even better all of that sounds like iteration over what? 3-4 years.

Fortunate for Apple, the competition is even further away…

[bigyabai]

Meta had more than 10x the install base of Apple's headset. And they shipped real VR that was compatible day-1 with standards like OpenXR; Apple didn't.

If we're being actually honest with ourselves, Apple did not even try to make a VR headset. They tried to carve out a nonexistent niche with AR, and bashfully wrote it off as a Tim Cook folly like the Apple Car or Airpower.

[insane_dreamer]

you saying Vision Pro is dead?

[rsynnott]

I mean… it seems _fairly_ dead.

[altmanaltman]

It would be a better way to frame it if we were strictly talking about VR. But my point was to show Apple is not some infallible genius company, they make plenty of mistakes. Why are we assuming being behind on AI is not a mistake but rather amazing foresight is the issue? We are only considering yeah the bubble bursts and apple is like oh yeah dude we told you hahahaha, but what if the bubble doesn't burst? What if there isn't a bubble and it just evolves naturally into something less exciting and fundamentally useful? Wouldn't it be fair to say Apple was wrong in that case? Why are we congragulating them for a hypothetical right and not worried about the hypothetical wrong, both of which are possibilities.

Yes Meta spent 80 billion sure, but did you know Meta never had a loss-making quarter in their entire history as a public company?

My overall point is that its not as clear cut as Apple is smart for willingly not being good at AI and they will win in the end.

[Danox]

I’m laughing right now, Apple is in a very good position and it was a grand plan because OpenAI, i.e. Sam Altman pitched Apple and got nothing, you cannot tell me going into that meeting with Tim Cook at Apple that Sam thought he could squeeze Apple for 50 billion dollars? Like he squeezed Microsoft?

And what about Google? They probably thought for sure when they met with Apple that they would wipe out that $20 billion yearly payment to Apple every year for the default search position but the best they could do was to come out with a measly $1 billion a year refund both scenarios sound like Apple took it in consideration and determined that it was not worth the price, that does sound like a plan (The Art of War type) when the rest of tech is going crazy over AI.

[stasomatic]

"Feature, not a product". SJ's comment when Apple investigated purchasing Dropbox.

[cmiles8]

VR wasn’t AI.

As for the rest, they’re the only major tech company to not have a serious case of AI FOMO and dumping all their cash into that FOMO. Thats not an accident.

[budsniffer952]

Yeah, VR was very clearly useless, and yet...

Do you even know what FOMO is? The money is being spent in physical infrastructure, not the the metaverse.

[cloverich]

I believe their argument is: What happens to the value of that infrastructure when the value of the models is commoditized or more specifically, when everyone can run the "Good enough" model on their phone or laptop, instead of on Anthropic/Spacex/Google/OpenAI owned hardware?

Its a fair one to make both ways imho. Clearly the compute is being used for value generating purposes. And also clearly higher tier models are becoming runnable on local hardware.

(edit) I think also a comparable argument could be: What happens to the value of all that infra when the model is so commoditized, that Apple can delegate the more compute expensive tasks to whichever service is the cheapest on that day? Is Anthropic still valuable if they need to drop the prices of their models by 10x?

[jen20]

They certainly were not late to AI, unless you narrowly define AI as “LLMs”. See [1] as a single example among many.

[1]: https://dl.acm.org/doi/abs/10.1609/aimag.v19i1.1355

[altmanaltman]

Given the context of this conversation, one would naturally assume we are talking about commercial public-facing LLMs and not AI as a field.

[engineer_22]

I just switched to iPhone and I have to say the UI is so bad. It will be my last.

[classified]

When this bubble bursts, it will take down a lot more people than just those pumping up the bubble. Guess who will be holding the bag when the banks end up with outstanding loans that will never be repaid? There will not be much of a win for Apple when a good part of the economy crashes.

[red-iron-pine]

how do you sell globally relevant numbers of iPhones when no one anywhere can afford one?

you either dilute the brand, or you hope the whales can keep you afloat