Explained: why companies are raising the prices of old and new gadgets


Sony this week has increased the selling price of its PlayStation 5 console in several markets, including the UK and Canada, a move that many believe inflation coupled with the current economic downturn is making tech products more expensive. Prices for tech products rarely increase after release, so this rare price increase for a game console that is already in limited supply, hints that there could be a significant increase in prices for gadgets like the iPhone 14 Series launch scheduled for September 7. There are plenty of reasons why big tech companies are raising the prices of their products ahead of the busy holiday shopping season. We explain.


In a report published in July, the International Monetary Fund (IMF) lowered its economic forecasts for the world’s three largest economies: the United States, China and Europe, which are growing slower than expected. The expected slowdown is a combination of several factors like soaring inflation, the ongoing war in Ukraine, China’s slowdown, currency depreciation and tighter monetary policy around the world. The IMF expects the global economy to grow just 3.2% this year, down from 6.1% in 2021. Next year is expected to be even worse with growth of just 2.9%.

Since inflation is a measure of purchasing power, when prices rise, people can afford even less. In the United States, gasoline and grocery prices are at an all-time high. India is also hit by high inflation, but not as badly as some of the other major economies.

Sony actually cited soaring inflation as the reason it raised the price of its console. The Japanese tech major hasn’t raised the price of the PS5 in the US and India yet, however.

Meta, formerly Facebook, recently hiked the price of its two-year-old Quest 2 virtual reality headset by $100. Prices for technology products typically decline over time to maintain consumer interest as component costs decline and software and subscription revenues increase with a large user base.

Nothing, owned by Carl Pei, a relatively new player in the smartphone market, also increased the price of its first smartphone by Rs 1,000 in India. The base variant of Nothing Phone (1), which was launched at Rs 32,999, will now cost Rs 33,999.

Samsung, the world’s largest smartphone and memory chip maker, is offering its flagship-grade foldable smartphones — the Galaxy Z Fold 4 and Flip 4 — at slightly higher prices to India. The Fold 4 and Flip 4 start at Rs 154,999 and Rs 89,999, respectively – the Fold 3 and Flip 3 started at Rs 149,999 and Rs 84,999, respectively. The Galaxy Watch 5 also comes at a higher price, which is Rs 4,000 more expensive than what the company asked for the Galaxy Watch 4.

Microsoft has also increased the price of its Xbox series X and the S series in India. The flagship X-series console, which was previously priced at Rs 49,990, is now selling at Rs 52,990. S-series the price has risen from Rs 34,990 to Rs 36,990. While Xbox Series X/Series S prices remain unchanged in several markets, Indian prices for these consoles have actually increased. Tech companies change prices for a particular market in response to currency fluctuations – the Indian rupee has lost around 7% of its value against the US dollar this year.

Large companies like Samsung, Meta or Sony have the resources to absorb some of the costs and reduce margins while maintaining price stability. The PlayStation 5, for example, is a cash cow for Sony as the game console is hard to buy due to high demand. What pinches companies like Sony is rising manufacturing costs as well as the ongoing supply chain crisis, making it more difficult to source key components such as chips that go into manufacturing. of these sophisticated products. Rising transportation costs and COVID-19 outbreaks and lockdowns in China are also taking their toll.

But not all companies are willing to pass the cost on to consumers. Nintendo, for example, has held down prices for its Switch console despite rising component costs.

‘iPhone 14’ could debut at a higher price

As we head into a busy holiday shopping season next month, all eyes are on how much new iPhones will cost when the new smartphone debuts on September 7. Analysts and trade insiders are already expecting a $100 price increase on the iPhone 14 that will replace the iPhone 13. Apple may keep the price of the standard iPhone 14 at the same level as the iPhone model. last year or keep the price of the iPhone as it is, but even if Cupertino passes on the increased costs to its consumers, this decision will not affect sales of the iPhone.

“The consumer base of [Apple] is very affluent and not affected by inflation or any other global trend,” Sanyam Chaurasia, technology market analyst at Canalys, told indianexpress.com. “Even if Apple raises the price of iPhones, the target consumer of these devices will still buy an iPhone and that’s why we didn’t see any impact on Apple’s market share.”

In India, by the way, the iPhone is becoming the smartphone of choice for young, affluent consumers. Lately, Cupertino has also benefited from the rise of high-end telephones as well as the expansion of distribution networks beyond metropolitan areas in the world’s second largest smartphone market.


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