The Rundown - Apple Is Blaming AI for Price Hikes — Here’s What Happens Next (ft. Mark Gurman)

Episode Date: July 5, 2026

In today’s episode we talk with Mark Gurman, Editor at Bloomberg, about why Apple is raising prices, what it could mean for demand of their products, and some ways that Apple is trying to get around the memory supply shortage causing all of this. We also touch on the revamped Siri that is launching this fall and what to expect from John Turnes when he takes over as CEO.

Welcome back to the rundown, interview edition. Today, I am talking to a returning guest, Mark German. Mark German is the editor at Bloomberg and one of the most plugged in people when it comes to Apple. So in today's episode, we're talking all things Apple, including why Apple is raising prices, why they waited so long to do it, why they're pointing the finger at the memory makers, and some ways that Apple is trying to get around the memory supply shortage causing all of this. We also touch on the revamp series that is launching this fall, and what to expect from new CEO John Turnus when he takes over later this year.

And finally, we also did a few minutes on the NBA at the end. Mark is a huge Laker fan, and we got into his takes on LeBron leaving the team. So, yeah, this is a packed episode with a ton of information. I think you guys are going to love it. So let's get into it. All right, guys, today we are joined by returning guests, Mark German, managing editor at Bloomberg. He covers the tech beat. He's the most plugged in guy on the planet when it comes to Apple.

Mark, welcome back to the rundown. Thanks for having me. Appreciate it. Good to be back. I'm so happy you were able to join us today because there's so much to talk about when it comes to Apple, especially since the last time we talked back in September. We got to start with the price hike news because that was the main story last week. Apple raising prices across the board on their products like iPads, Macs, Vision Pro, Apple TV, going up 15, 20, some cases 50% on some of their products. I think a lot of people expected price hikes to happen,

maybe not by this much. The market was definitely surprised. Apple stock dropped 6%. Were you surprised to see prices go up by this much? Wasn't surprised about the prices going up by that much. Wasn't surprised about the timing. Wasn't surprised about the products hit. I guess wasn't surprised about any of it across the board.

The memory shortage situation is real. Apple wasn't going to pay the price for consumers and for the industry forever. They're not going to do any. anything ever that will sacrifice their margins. So they needed to hike the prices to meet that and retain their corporate average margin, which is often between 45 and 50%. And so that's why you saw $100 to $300 to $500 price hikes on iPads and Max. You saw the same on Apple TV and Home Pods.

You saw the same even on the Vision Pro. The price at 3500 is already controversial, so jacking it up to 3,700. clearly is a satisfy the margins play, even on a product that's sold in very low volume. So this is entirely about retaining margins. Yeah, the price hike on the Vision Pro is the most insulting to me. I'm like, no one's buying a $3,500 Vision Pro. No one's going to buy it for $3,700. But I do want to follow up on the margin story and the timing story here.

So you brought up margins on the latest earnings report. Apple's product gross margins came in at 38.7%, which was actually down from the 40.7%, 40.7% from the previous quarter, so they were already starting to feel a bit of the margin squeeze. Now, Apple's margins are still better than industry average. But I guess I'm curious in the timing, though, right? Why did Apple decide to do it now? Because these memory shortages have been happening for about a year now. Other companies have raised prices like Sony and Nintendo.

Why do you think Apple waited until now? They wanted to avoid the demand softening for their products for as long as possible. And what this really is going to impact are sales in the enterprise, business, government, education channels. The bulk purchases, a computer going up by $100 isn't going to make a person refrain from buying the machine or at least most people. So you're still going to see some demand softening on the consumer side, but it's really on the government and the enterprise and the school side sales are going to get the impact here. So they held off as long as they could. they felt that their procurement teams were going to be able to get the situation resolved, that they were able to find memory elsewhere, use new suppliers, negotiate different deals,

but that just did not work out. But kudos to them for holding on as long as possible. There have been a lot of people who are saying that Apple has, you know, X dollars in cash in the bank that they should take out debt to avoid these price hikes. But that's just not something a business run the way Apple. has been run for 30 years is going to operate. So this is just the classic playbook from Apple and how a financially prudent business is going to be run.

Yeah, we know that Apple is not going to sacrifice margins ever. They've never really done that. But I do want to talk about what's happening right now between Apple and other tech companies. They're doing a lot of finger pointing at these memory companies. Right now, the memory industry is kind of dominated by Micron, SK-Hinix, and Samsung. It's kind of like a doopoly, whatever the word is for a three person monopoly.

But there's a lot of finger pointing here. But then these memory companies are pointing the finger right back at Apple, right? They're like, well, Apple squeezed them hard back in 2022, 2020, 23, when there was a downturn in the industry. What do you make of that? Is this going to be a situation where whoever can kind of paint the best picture end up winning this? because it's also like a political story here now. Maybe they're all going to be trying to carry favors and talk to politicians to try to get one side or the other to kind of do what they want to do. I think at the end of the day, consumers just care about what they're paying for these products.

And so I think the political component here, people don't really care about that. I think that the back and forth, the PR standpoint, between Micron and Apple and Samsung and SK-Hinex, consumers don't really care about why that's happening or how that's happening. they see AI as the blame here. And I wrote about in my latest column on Sunday in Power On that this memory shortage is bringing home the true cost of AI for people for the first time. Apple has 2 billion plus devices in use,

billions of customers. People understand now for the first time what the drawbacks of these gigantic data centers are, the need to get all that power, the need to get the information, Nvidia chipsets that use all this memory and these SSDs and what have you. So I think this is really an implicit indictment on the AI era. That's the big deal here, not the PR battle and certainly not the political ramifications.

Yeah, I saw what you wrote. It was a great piece. I highly recommend people subscribe to your newsletter power on. And the way I kind of described it last week was like it's kind of like the first time we've seen like an AI tax on products that people buy all the time. It's like pretty much like a line item now on a receipt where it's like a two. $200 price like that's pretty much because of this AI boom. And it's going to sting.

And I'm really curious to see if there's going to be any significant impact on Apple's revenue. Obviously, Apple doesn't think it's going to be enough to where it's going to, you know, impact volume significantly. But we'll have to see what, you know, I saw a report that Apple's, you know, potentially lobbying the Trump administration to potentially use RAM from the Chinese memory company CXMT. And I guess I was thinking could there? be a future word, depending on how long this memory shortage lasts, people are saying it could last

two, maybe three years? Does Apple do like a split system where they sell their international devices with the memory from China? Because that memory is blacklisted from the U.S. government right now. And then they sell the U.S. devices with memory made by the microns and Samsung's of the world. Well, Apple already sells different skews into China. So they already do have a split in units between the rest of world and China. So that process is already in place. So it would not be surprising to me if they went down that road. If you remember, they tried to do this four years ago in 2022 with a Chinese memory supplier. And there were a lot of China Hawks and the administration at the time really up in arms about that. Obviously, that was during the Biden tenure.

and we're back in, you know, obviously in the Trump tenure, which Apple and Tim Cook have a much better relationship. So it wouldn't be surprising to me if they eventually went down that road. I do think, though, it would add some layer of complexity to the supply chain. I do think that there would be a little bit of a PR headache for Apple if they did go down that way, and I'm sure that everything is on the table, as Tim Cook said, to try to figure out alternatives. that's not high up on the list, I would say, the Chinese memory suppliers. Gotcha.

Yeah, I mean, they're just getting squeezed so hard right now that, I mean, I imagine every options on the table like Tim Cook said. So that's one of the options that I saw being floated around. I was just curious to see what you were hearing. But it all depends on how long this shortage lasts, right? If it was like a six-month thing, which we've seen in the past, right, these memory shortages are boom and bust. It can be a six-month-to-a-year cycle.

This one looks like it's going to be going on for a while now. I think that's what's unique about this one is like how it could last for two, three years. This could definitely last for two or three years. I agree with you. You know, I do find in a vacuum that these price hikes on the Mac and the iPad are kind of minimal. We're talking 15 to 20 percent. They could have been higher. And if this continues, I would not be surprised if you see another price bump again.

I think the, the worst commentary that I've seen out of this memory situation. and the price hikes are people who are clearly Apple shareholders, clearly people who are in Apple's pocket that are saying the prices are going to come down eventually. The genie is out of the bottle, so to speak. That's not happening. That's actually what else is going to be. My next question is that Apple never said these were temporary, right? These are price hikes.

And you got to, I mean, Apple has done a pretty good job. I have to give them credit for not raising prices for the last few years, especially on, you know, in fact, they lowered prices of the MacBook Air when that one came out a couple years ago. So Apple's on a pretty good job with that. And I guess they're using this as an opportunity to raise prices. It's a good story as well. They can kind of blame the memory companies. And then these prices are going to be locked in moving forward.

These price hikes are something that Apple has been looking at and trying to do for years now, given the large inflationary pressures happening in the United States and elsewhere right now, ethics had wins, currency fluctuations and what have you. So this was a perfect storm for Apple to. take advantage of and finally do these price likes. Now, if it wasn't for this memory shortage, which they have still have done them, I think it would have been more over time and tied to major upgrade cycles of these products and redesigns. But this idea of doing a broad sweep of price changes across nearly every product in the portfolio at one time at these percentages

once in a lifetime. Yeah. Well, we'll have to see what happens. I mean, Apple didn't raise the price of the iPhone 17, crucially, right? They didn't raise the price of the Apple Watch or AirPods or things like that. Obviously, doesn't take any RAM or anything like that. But obviously, the iPhone does. A lot of people are guessing or predicting that the iPhone 18 is going to see a price hike. I think it's just pretty much a guaranteed at this point. What do you predict them?

You famously predict that John Turnus was going to be the next CEO. You got that right. What are you thinking is going to happen for the iPhone 18 price hike? with the base model, with the pro model, and then obviously you have the fold coming up as well. I think there's going to be $200 price increases on the pro phones. I do. So I think the new pro phone will likely start at $1,200. And the max will probably start at $1,300.

And the foldable phone will likely start. If I were to just pull a number out of my hat, probably $2,200. Yeah, I mean, that's, that's, I mean, that's, I think that's, that's going to be, that's going to be tough, but we'll see how the market reacts to that. Do you think that Apple is just going to keep the price of the, like usually whenever the new iPhone comes out, they drop the price of the previous generation by a hundred bucks or so. Is there going to be a situation where they just kind of keep the price the same of the iPhone

17 moving forward? No, oh, I don't know. I don't know. I don't know at that level of granularity right now. We're still a couple months out from the product launch event. I would imagine those dropped by $100 still in order to sort of spread the pricing out. I'm very curious what they're going to do with the iPhone 17E, given that we already established that the margins are the margins,

and they're going to stick to that. I mean, I could see the 17E price go up from $599 to $6.99. I would be shocked if they brought that up to $7.99, maybe $7.49. but you're going to see some meaningful price jumps on the iPhone. But it's interesting. I find the iPhone price increases actually to be the least interesting of all the price increases because the mass majority of people buy these devices on installment plans and they buy them like on subsidies and carrier trade in promotions and what have you.

And carriers are going to want to continue to lock people in so they're not going to get rid of those promotions. They're still going to be able to get the iPhone for free or a few. $200 or whatever by trading an old model. But at some point, someone's going to have to pay for these price increases, and it's certainly going to not be the carriers, and it's not going to be Apple. It's going to be the consumers. So I think that what you're going to see are peripheral things see price jumps in order to allow for these things to continue to exist. So you already saw this with T-Mobile the other day. They damned up prices pretty significantly on the carrier plans. So I think you're going to continue to see peripheral pricing, accessories, carrier plans,

interest rates on installments. Those are all going to get adjusted. That's a great point. And as a long time, T-Mobile customer, I did get that email. And I saw that the prices were going up. And that might be a consequence of the AI boom when you think about it because iPhone prices are going up. So these carriers have to raise prices in order to justify the subsidies cost of the iPhone. I mean, that's a great point right there. Moving on from the price-like stuff, because I think that's going to be very interesting to watch what happens with that stuff. I'm really curious to see what those earnings look like over the next two quarters. Moving on from that, I want to talk about the other big thing that you've been writing about.

You wrote about the revamp Siri, right? I think that's one thing that a lot of consumers have been kind of keeping an eye on. You know, you've been using the beta version of it. You called it good enough, which, I mean, hey, that's probably the best anything anyone's ever said about Siri. Do you actually... It works. Sorry, go ahead. It works as advertised.

I've had every iPhone since the original. I've had the first phone with Siri, the iPhone 4S, back in 2011. And this is the first time where Siri is meeting the actual use cases. Anything you throw at it, it's going to answer you properly, thanks to the underlying model change with the Gemini engine underneath it. So they did a great job. It's nowhere near as featureful, nowhere near as functional as chat, GPT. But I would say for 95% of people, it gets exactly what you need it to do.

The biggest feature, part of it is called World Knowledge Answers, WCA, that's, I guess, the internal name. But essentially, most people use AI for search. And it's much better than just Google Search or Yahoo Search or Bing or what have you. And they did a really nice job on the web search component of the new series. So I think it's going to be a success for vast majority of people. And for everyone else, you have Chad GPT and Cloud. Well, what I wonder, though, is it like too late, though? Because, like, the Siri brand is so like, it's like a laughing stock.

A lot of people just default use Google or chat GPT now. Can Apple kind of rebuild that trust of getting people to actually take Siri seriously? because they fumbled and dropped the ball so many times in the past? They dropped the ball so many times in the past, but at this point, they really seemingly got it done. I've been using it pretty extensively, and I think that they did a really, really nice job on it. I have no complaints on Siri AI.

I think they nailed it. I really do. I'm excited to try it out. I actually installed the beta version. I don't usually install the beta. stuff, but I mean, I've heard good things from you and others, so I might install the beta version on my iPhone. I want to, I want to then wrap up here. Tim Cook, given the keys over to John Turner's, right?

You predicted this was going to happen. Last time you were on the pod, Tim Cook's kind of, you know, the transition is happening at a pretty interesting time for Apple, right? We obviously have the memory hike stuff, which we know about the AI stuff. I don't think they've kind of landed the plane just yet. What's the overall AI strategy? what do you think is the most important thing for John Turnus to get right when he takes over? Is it going to be just establishing like that I guess it's an opening question. What does he have to get right for him to kind of build confidence from consumers and

more importantly from investors in the market? I think the products have not been exciting for several years now. I think Apple's been a company that's been more focused on financial engineering than hardware engineering and product engineering. I think it's a company that's lost a bit of its design soul and its ability to surprise the market with revolutionary new products and initiatives. And it really has felt like IBM and Microsoft over the last several years under Tim Cook. And as an Apple fan, it's been a bit disappointing. There's been so many positives under Tim Cook's tenure. there have been new products, but nothing that's lit the world on fire in an extremely long time.

And I think part of the decision for putting John Turnus in charge is a recognition not only by Cook, but Apple board members and whatnot that it needs some of its product juice back. And so I would say across the board, that's what we're looking for from Turnus. Continuity in some places, but a bit of a different approach on product development. I wrote a couple weeks ago that Apple needs to completely revamp its design team, bring in a new design leader, not have junior people running the design situation there, bring in the best designer you can from wherever in the world to get things shaking into the right direction, and really bring us some revolutions.

You know, there was a time when Apple was redesigning iPods and iPhones every year or two, even, you know, more frequently than that. The iPhone has looked the same for half a decade in a row until the air and the 17 came out, and they finally have these new phones coming out later this year that are going to have new form factors like the foldable and the 20th anniversary phone next year. But everything else has really lingered and gotten long in the tooth, the Mac, Apple Watch, the AirPods,

and you're seeing a company that no longer has design at the very center of everything. And so I fairness needs to bring that back to some extent. Do you think it's going to be the glasses? That's going to be like his main, like splash that he's going to make. I know they're working on his glasses. And you also reported that the head of that,

who was leading the designer that Paul Mead recently left to go work for opening eye. So like, I mean, that's a challenge that Tarnas is going to have to deal with now. Well, the other challenge, you know,

obviously design and product development is at the top of the list. The other big one is being able to retain key talent. And he's already lost some, some big names. Paul Meade, the vice president in charge of the vision group, which means charge of the vision pro, smart glasses, air pods with cameras, everything that's vision related. That's out the window. He's out the window at OpenAI helping run hardware engineering there under Teng Tan and Evans Hanky.

The third thing being, of course, AI. Yeah, I mean, I'm really curious to see what he does. It's an interesting time for Apple and we'll see how the market reacts. John, Mark, I appreciate you coming on. Last word, I know you're a big Laker fan. We got two, three minutes, however long you need to take. Give me your opinion on how you feel about the Lakers, about LeBron, not resigning with the Lakers.

That news broke just a couple of hours ago. Where do you think LeBron's going to go? And what are the Lakers going to look like next season? I'm happy for LeBron. I'm a huge LeBron fan and a huge Laker fan, also a big Luka Donchich fan. I think that the Lakers' ownership and management has completely destroyed the back end of LeBron James' career. I think they haven't put him in a position to succeed.

And I think given his talent, combined with some of the other guys they've had, Anthony Davis in recent years, and some of the elite coaching staff like Frank Vogel that they had and whatnot, they've really just put him in a bad position. And he did the right thing by leaving because someone with his... talent should be supported like someone with his talent. And so I hope for him he goes to an organization that will do that. You think he's going to go to Golden State? A lot of signs are pointing to Golden State, but I wouldn't be surprised either if he went to

Cleveland. I think it would be weird if he went to Golden State, especially right after the 10th anniversary of the 16th title and all that. Cleveland would just be a terrific way for him to end his career. I think it'll be a hard decision for him between Cleveland and Golden State. Yeah, as a huge LeBron fan myself, I wouldn't be mad if he went to Golden State, but seeing him finish his career with Cleveland would be pretty poetic. So we'll see how that plays out, and we'll see how the Lakers do next season.

I mean, it's a tough Western conference. It just gets harder and harder. So Luca's good, but, man, he's going to need some help. Hopefully the Laker organization can do something to help him out. As a Rockets fan, though, I hope it's not better than the Rockets. I mean, we're a mess ourselves. So we're kind of in the same group here, Mark. Both ownership groups are just a mess.

Well, here's what I'll say, and I'll leave you with this. If the Lakers weren't able to properly give LeBron James the support supporting cast he needed, I don't know why we should believe they'll do that for Luca. That's a good point. Well, if you ever want to start an NBA pod, I'll talk to the people over at public. You can talk to Bloomberg. We'll do a co-NBA pod once a week. Let me know.

You got it. I appreciate it, Mark. Well, hopefully I'll have you on sometime in the fall to talk iPhone. You got it. Well, all right, guys, hope you enjoyed that conversation with Mark German. I got to say, it's been a chaotic couple weeks for Apple stock. Shares tanked 6% last week following the price hike news, but then bounce back this week making up for all those losses and more.

In fact, Apple is now within $100 billion of overtaking Nvidia to be the most valuable company in the world again. So now the market doesn't seem to think the price hikes will hurt the company too much. But let me know what you guys think. Are you still bullish on Apple with everything going on, or does the memory crunch plus the brand new CEO have you wanting to wait this one out? Drop your thoughts on Spotify and YouTube.

While you're at it, consider giving us a five-star rating as well. All that engagement really does help us out, and it helps other people find the show. Just an FYI, in case you're new here, we post a new episode every day throughout the week breaking down what's happening in the market, so definitely get subscribed to the podcast if you haven't already. Thank you guys so much for listening, watching, and comment. shout out to Mike for all the work behind the scenes. And we'll see you guys back here tomorrow.