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My iPhone 15 Pro is three years old and dying a slow death. The battery won’t get me through the day. Everything feels a little slower, and I’m tired of thinking about whether my phone will make it past lunch.
So I went looking for an upgrade. It’ll be the first Apple device I’ve bought since leaving the company three years ago.
I’m eyeing the iPhone 18 Pro… definitely not the Duo. 512GB, because I want room for my photos, music and apps without having to decide what to delete.
$1,399. A hundred dollars more than last year’s Pro at the same storage. Even with the trade-in, I’m still over $1,000.
I expected to pay for a better phone. But then I started reading about the data centers competing for the parts inside it.
My phone is in a bidding war with a data center.
Which is how I ended up using my Wharton classes to buy a phone.
For eight straight generations, from the iPhone X through the iPhone 16 Pro, the entry price for Apple’s premium line held at $999.
That number did a lot of work. A phone could get better every year while the purchase stayed familiar. Expensive, yes. But the same expensive. Almost comfortable.
Last year, the starting price rose to $1,099, with twice the storage. Fair enough. This year it’s $1,199 for the same 256GB. That’s a $100 increase before I’ve chosen anything extra.
When the price holds still, it’s easier to say yes. The moment it moves, I start asking what I’m paying for. (And yes, inflation. I’ll get to it.)
On Monday’s earnings call, Apple CEO John Ternus said “these memory prices are unprecedented, and so that has put pressure on our prices.” Apple’s CFO said the company had reluctantly raised Mac and iPad prices in June. The iPhone followed in September.
Apple hasn’t itemized the AI share of my receipt. You can follow the money back to the factories, though.
AI accelerators use high-bandwidth memory, or HBM. Phones use a low-power kind of RAM. Both draw on some of the same factory capacity. (The 512GB I’m choosing is storage, a different chip.)
HBM is hungry. Micron estimated that for the same number of bits on the same manufacturing process, HBM3E takes about three times the wafer capacity of DDR5, the kind you’d find in a PC. Memory makers are shifting production toward servers.
While factory capacity is tight, more room for server memory means less room for phone RAM.
Economists call this derived demand. You want more of a component because you want more of whatever it goes into. When demand for AI servers took off, so did demand for the chips they need. Phones got outbid.
Last December, Micron said it would exit Crucial, its consumer memory business, so it could supply bigger customers as AI demand grew.
So who pays? In econ class, we called that incidence. It’s who ends up carrying the cost once everyone adjusts.
Even after raising prices, Apple expects gross margin of 45% to 46% for the December quarter. Its CFO said higher memory costs would drive most of the drop from the prior quarter. Apple expects a squeeze, and I can already see some of the cost at checkout.
How the cost splits depends on who can walk away. The side with fewer options tends to carry more of it.
I have options. I could replace the battery or buy a cheaper model. I’m choosing a Pro with 512GB anyway.
I can afford to be annoyed.
Plenty of people can’t. Some Android makers are cutting models at the low end. Worldwide shipments of phones under $100 fell almost 60% in the second quarter from a year earlier. If $100 is what you have, a phone that disappears from the shelf is a bigger problem than a price increase on a Pro.
What does walking away look like when you still need a phone? Waiting.
With phones, elasticity can show up in timing. People still buy, just later. IDC’s preliminary tally puts global smartphone shipments down 22% from a year earlier in the third quarter, amid tight supply and signs that some buyers are holding on longer. In a U.S. survey by Reviews.org, people reported keeping their phones about 32 months, up from 29 in last year’s survey.
I’m at 36, so I get it. A new battery buys time. So does putting up with a phone that’s become slightly irritating.
Fewer upgrades can take some pressure off phone makers’ orders. The factories still have another bidder. I can put off buying a phone while the data centers keep ordering.
Now, inflation.
The math is fair to Apple. The iPhone X’s $999 is about $1,364 in September 2026 dollars. This year’s Pro still starts roughly 12% below that, with four times the base storage.
Look at the path, though. In today’s dollars, that same $999 got cheaper every year, from about $1,364 in 2017 to about $1,068 in 2024. A 22% price cut nobody announced.
Last year’s bump came with double the storage. This year, at the same 256GB, the Pro costs about 5% more than last year’s, even after inflation.
I spent most of my career expecting better hardware to give me more for the money. I got used to that deal.
I’m still going to buy the phone. The trade-in helps, and I’ve run out of patience with this battery.
And I do use AI. I like building with it. I get useful work out of tools that run on the same infrastructure driving this demand.
I’m on both sides of this purchase.
In a small way, every prompt I send is a bid against my own next phone.
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