Every time someone from a tech company has discussed the increasing prices of hardware, they’ve followed a pretty similar playbook. Vague, general references to the global memory shortage, followed by a boilerplate reason as to why the only option is to pass costs onto consumers. It’s why Valve’s confirmation of the Steam Machine’s pricing was so interesting; rather than give an empty, corporate-speak-filled response, as many have done before, it went into refreshing detail about the company’s price strategy.
Take, for example, this excerpt from Valve’s announcement post:
Steam Machine, like our other hardware products, is made up of many components that we source from manufacturers around the world. The price at which we sell our hardware is a direct result of the cost of these components. We felt like we had a good understanding of how those costs might change over time when we first started sourcing them for Steam Machine back in 2023. That understanding was born from the many years of data we all have about the evolution of PC hardware prices – primarily, that it tends to get cheaper over time as new technology arrives.
This last sentence is something that’s all too familiar to tech and gaming enthusiasts right now. Usually, early adopters would pay the most to be the first to have a new device. After a while, prices would come down, as components and manufacturing get cheaper. However, the opposite is currently happening.
Here’s a quick look at some of the recent major price increases, past and upcoming:
- Valve lifted Steam Deck prices by up to $380
- Samsung bumped some of its phones and tablets up by $200
- An Nvidia RTX 5090 graphics card currently costs upwards of $6,000 (after launching at $4,039)
- A PS5 costs $250 more in Australia than it did in 2020
- Nintendo will increase the Switch 2 price by $70 in September
- Nothing cancelled this year’s budget phone due to memory prices
- Apple is widely tipped to charge more for the iPhone 18 range
Why are tech prices so high right now?
As a quick refresher, the major investments in generative AI technology, namely the data centres required to power the technology at scale, have resulted in huge demand for components. Memory and storage are crucial to data centre operations, causing companies to buy up not only existing stock, but also future allocations yet to be produced.
This leads to the next part of Valve’s explanation:
Over the past year or so, that has changed quickly and significantly, most visibly for RAM and storage components. There are a variety of reasons, all of which are affecting hardware products everywhere. The overall effect is that our original goal for the price of Steam Machine is no longer viable. So the prices we’re sharing today reflect the state of the world for manufacturing; or, more accurately, it reflects the price of the components as we’ve secured them over the past 6 months.
Price wasn’t the only thing impacted by all of this: availability was as well. There were periods where we found we couldn’t source some of our components at all, at any price. More than anything else, this has impacted the number of units we’ve been able to produce for launch.
It’s a remarkable level of transparency rarely seen from a tech (or tech-adjacent) company. Valve confirms the problem faced by every tech manufacturer right now: cost and availability.
Apple’s outgoing CEO, Tim Cook, recently claimed that “price increases are unavoidable”. In an interview with The Wall Street Journal, he described the squeeze on the tech supply chain as something he’d “never seen anything like” in his 40-plus-year career, labelling it a “hundred-year-flood” event.
While Cook didn’t elaborate as much as Valve’s statement (unattributed to any individual author), it was a rare show of candour from a Silicon Valley executive. Most of what gets said on public record only refers to broad concepts, likely in an attempt to avoid ceding any competitive advantages when negotiating hardware deals with suppliers. Even Cook’s statement, as enlightening as it was for contextualising the tech industry’s challenges, was scant on specifics.
Conversely, Valve revealed just how much the memory shortage is playing havoc with device launches, in both timing and pricing. When you look at a new phone, PC, or games console on a retailer’s shelf, you likely wouldn’t consider how many months’ worth of components the company had to secure, and at what cost, to arrive at the price indicated on the sticker.
An important distinction to make here is that Valve is a private company. It’s not beholden to appeasing shareholders and investors. Valve’s top priority is keeping its paying customers on board, hence the transparency.
Regardless, no amount of transparency makes it easier to shell out thousands of dollars for a device that would’ve been cheaper just a short few years ago.
The post This might be the clearest explanation of high tech prices yet appeared first on GadgetGuy.
