Posted by cainxinth 3 days ago
This, however, isn’t shrinkflation. This is supply chain, demand, and uncertainty.
This has been happening in the USA way before 2001:
> In 1967, the Fair Packaging and Labeling Act (FPLA) was enacted to ensure that consumers had enough information to make an informed choice between competing products. The Act requires each package of household "consumer commodities" included in the FPLA's coverage to have a label that includes the net quantity of contents in terms of weight, measure, or numerical count (measurement must be in both metric and inch/pound units).[10]
* https://www.stlouisfed.org/publications/page-one-economics/2...
* https://en.wikipedia.org/wiki/Fair_Packaging_and_Labeling_Ac...
> In fact, it was the humorist Art Buchwald who was among the first to sound the alarm. In a column entitled “Packaged Inflation” published in 1969, he lampooned the growing tendency to conceal price increases. Tongue in cheek, he praised American industry for “devising new methods to make the product smaller while making the package larger.”
[…]
> In late summer of 1974, for example, Woolworth’s offered a packet of pencils at its back-to-school sale for 99 cents – same price as the previous year. But as a sharp-eyed reporter at The New York Times observed, the packages only contained 24 pencils, six fewer than the previous year. The same strategy affected packets of construction paper (24 sheets, not 30).
* https://mikesmoneytalks.ca/shrinkflation-is-an-economic-mons...
And in recorded history for centuries:
* https://archive.ph/https://slate.com/news-and-politics/2022/...
It most certainly is shrinkflation. It's rising input costs decreasing the product quality.
You'd be surprised how economically iterate average people are. I had highschool colleagues who couldn't calculate VAT/sales tax out of a price on the whiteboard.
Sure, people have heard of the word inflation, they know this word exists, but they won't be able to explain how it works and its effects throughout the economy.
I simply don't know the specifics because that was 70 years ago and I wasn't around back then. I do feel confident that I could eventually produce a good answer (or perhaps even a great answer), but I'd have to do some homework in order to produce that answer.
But without that homework, it's just not something that I can relate to because my present perspective does not include it.
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Meanwhile: If you asked random people on the streets of Anytown, USA about what they feel about price of a Big Mac or rent today compared to 5 years ago, it might be rational to expect to get some pretty direct and sometimes livid responses.
A "good salary" (or at least the median) used to be $5000:
* https://en.wikipedia.org/wiki/File:Median_personal_income_af...
* https://en.wikipedia.org/wiki/Personal_income_in_the_United_...
As the 'dollar has lost value' people have demanded more dollars in their salary. (Whether the two have kept up with each other is a matter of debate/concern.)
The same happens when someone mentions something about the Average income as opposed to the median income. The average income is meaningless if the top 1% keep going up while the rest of the system stays the same. The average would look like people are earning more money when they're not.
Same thing with Market economics and the price of items. If I got a choice to sell a boner pill for $1 to a million people and $1 million to one person, those are equal value propositions. So whenever a corporation raises prices, they don't care how many customers they cut off as long as the remaining ones are whales. That's particularly sharp with all the AI costs being shoved into the pipe.
So, that is to say, you really shouldn't just produce a single number about anything and treat it as some benchmark across the world.
Note: some single item shocks can lead to broad inflation (eg: oil) but that effect takes awhile to play out.
* Google's upcoming folding phone is going to have less RAM than the current model.
* Motorola has both increased the price on their Razr flip phone and downsized the minimum storage
* Sony reduced storage on the PS5 Slim
...
So when the tub of ice cream decreases in size from 64 ounces to 60, 56, 52, and finally 48 ounces while the price stays the same (or even goes up), then:
That's not necessarily shrinkflation; that might instead be a result of having learned that consumers didn't need so much ice cream.
I just want to buy it in half-gallon sizes again. I don't care if it costs more :)
Find a locally owned ice cream parlor, and asked for a hand-packed half gallon.
But at those kinds of quantities, their prices are 50% more than the higher-end store brand at the store that's near my house. The hand-packed treatment then literally doubles that price. We're now at 300% cost and we haven't factored travel expense yet.
Besides, if I kept their ice cream at home, then I think that would tend to lessen my enjoyment of sitting down and enjoying a proper sundae at their shop -- and that's not something I wish to ever diminish in any way. :)
I could be wrong, but I'd bet that my local ice cream parlours would decline that request - unless you can show that you're e.g. a restaurant and can commit to a certain order frequency, they're just going to tell you to buy as many 19oz "pints" as you need for $40/4. (A discount over $12/each.)
They're even happy to package it with dry ice and ship it internationally. They've offered this service for as long as I've been aware of the world around me (several decades, so far).
They make the ice cream in-house just as they have always done, and they offer these services to anybody.
And while this ice cream place that I'm familiar with certainly does charge plenty, I've got to ask: What's wrong with your own ice cream place, my dude?
Upside, they stock very good quality ice cream. And their prices are about the lowest in town.
So you got me curious enough to try to call up my three local ice cream places.
Spot 1: No phone number on either Google Maps or their website.
Spot 2: This was the spot I had in mind with my previous comment - indeed, they do not sell by any quantity larger than 473ml pints (I typo'd previous comment - 16oz, not 19oz pints.)
Spot 3: Happy to report that they will sell by the 3 gal bucket (or half bucket) for $150/$75, respectively.
re: Spot #2 and your "what's wrong with" question - this is a trendy place that opened about a decade ago, and I expect they're just not interested in taking lower margins or complicating their offerings - it's simply "take it or leave it" on their pints.
The one I'm familiar with wants about $60 for a 3-gallon tub, which is positively cheap compared to $150.
I should make a point to stop in there again soon and get a chocolate soda or something.
When the changes are done precisely during a time of huge increases in the prices of all kinds of memory devices, it is hard to believe that this is a random coincidence.
See Apple as an example, who really doesn't care about telling you the newest phone has 12GB of ram. It's literally not even mentioned on the tech specs page.
I know Apple is escaping it due to their large contracts but I’m honestly not sure how at this point. They must have pre-purchased multiple years of memory or otherwise have a really insane contract.
But what’s puzzling about that is, why don’t other manufacturers have the same kind of deals? It’s not like Lenovo is a low volume supplier.
Obviously, the iPhone sells in volume unmatched by other devices. But still…I’d have to ask why other high-volume brands like Samsung have wildly expensive laptops.
It just seems like the other companies are asleep at the wheel and don’t have any passion for their strategy, to the point where a tiny company like Framework is overperforming just by caring a little bit. Sure, they can’t beat Apple on raw value but they at least they put together a laptop with a respectable trackpad and a CNC body. Where is volume leader Lenovo?
It's not like designing your own part is free, but Qualcomm charges a very healthy margin on top of their manufacturing costs.
Apple also invests in designing the tooling and processes used on their manufacturing lines.
For instance, they cut way back on how much CNC time was required to produce the Neo.
If lenovo is buying a billion chips a year, why can’t they lock in like Apple?
You can't lock in prices forever, though. The more volume and stability you have, the more a vendor will be willing to enter long-term agreements with you. Lenovo has less volume than Apple and is not in as great of a financial position, so they don't have as much leverage.
The bigger factor is that Apple already had more margin in their products. The price premium for RAM upgrades on Apple laptops is large, as everyone knows. They could absorb more RAM price increases without being forced to raise retail prices.
In the consumer space, I recently bought a Sonicare toothbrush, and the number of models and combinations is staggering. 1000x plaque removal, 750% plaque removal, it's ridiculous.
So Dell, Lenovo, et Al end up trying to address every niche except the focused product catalog niche.
If you want a PC and your favorite brand
is missing something that a competitor has,
it's easy to switch
Like Dell Vostro, their "small business" line. Versus Latitude, their "business" line. What on earth is uniquely needed by a "small business" versus a... regular business? Why not introduce a third "large business" line? Maybe a "sole proprietor" line too?
It can only be explained as a psychology play. The dizzying array of options is designed to, I suppose, make you feel like Dell surely has the exact right laptop for you, even if that is bullshit.
It doesn't entirely make sense to me from a psyche standpoint either -- I have no idea why purchasers would possibly feel anything other than anxiety and analysis paralysis. But whatever!
My vague recollection is that Latitude were nice business laptops; coming with all the enterprise goodies, replaceable parts, service manual, next-day onsite support available and also the enterprise usual costs, lack of sexy displays, and slow model turnover.
Vostro was a lot closer to the Inspirons (sold for personal use); I think just badge engineering a couple selected Inspirons to have a bit longer of a product cycle and better parts availability.
Re: analysis paralysis, that's a real issue. I try to find some feature that really narrows the field and then it becomes easier to decide. If I required a wired ethernet port, memory slot(s), and a specific cpu family, it narrows the field a lot; then I can figure out from what's left. For laptops, off-lease entrerprise refurbs are pretty price competitive with new models targetted for personal use; then it's really a matter of what's available, and how they differ ... and then looking at the units with specific damage/defects to see if the compensating price drop makes sense; personally, I'd take several dead pixels for $100 off, cause I don't do pixel peeping work anyway.
Dell also had the Precision line, which was very posh. These cost a lot more.
The Vostro line eventually showed up. They were noisier, and lighter/flimsier, less-expandable, and harder to work on. But they did cost less to buy.
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I would never buy a Vostro computer for myself. I think that buying cheapness as a primary feature is dumb. Given a choice between good/better/best, I tend to pick "better." I like being able to get what I think is a better design, even though it generally costs somewhat more. I don't want the cheapest car tires, the cheapest hand tools, or the cheapest PC.
But the company chose to operate as cheap-at-every-expense. The Vostro line was a perfect fit for their buying proclivities, so that's what they started buying. (I didn't like that, but those decisions were above of my paygrade.)
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Was Dell wrong for offering several different classes of computer back then?
Are they wrong for doing so today?
Why? Why not?
(Remember: In the insatiable quest for the bottom dollar, the company kept buying Dell computers. We could have began giving those dollars to one of their competitors instead, but we did not do so. This suggests that the model is not bullshit at all: After all, they are in the business of selling computers, and we kept buying them.)
Given a choice between good/better/best
What I and others have always questioned is how far beyond that Dell goes. It's not good/better/best; it's Vostro/Alienware/Precision/Inspiron/Latitude/XPS/etc... which all have their own array of models and internal good/better/best subdivisions.
We could have began giving those dollars to one
of their competitors instead, but we did not do so.
This suggests that the model is not bullshit at all:
After all, they are in the business of selling computers,
and we kept buying them.
Which variables helped? Which hurt? Was the dizzying model lineup a pro, con, or neither? The only thing we can conclude from the facts you presented is that the proliferation of Dell's models was not a dealbreaker for your particular company.
Dell has a lot of other things going for them. Namely, their name. They have been around for ages and their products are... fine. Nobody ever got fired for buying Dell. PCs are commodities; by definition one PC can't really outshine or outprice another too much on any technical level because they're all using the same core components. So name really matters. I think that is the overwhelming reason why people buy them, not "I love that they sell 100 different laptop models at any given time."
No, there's really not. I've already explained the main variable here: Price.
The other driving variable, which I left to implication, was inertia.
We didn't have a CIO. Nobody from Dell or HP was taking anyone from this company out for golf outings, dinners, strip clubs, or nose beers. We merely bought and used computers, with perhaps 50 desktop systems at peak that slowly rotated over time as needs ebbed and flowed.
We could have switched to HP or Acer even some box-builder with a non-English name instead, and maybe we would have done so if Dell hadn't introduced cheaper products. Who knows. That version of reality never happened.
It sure seems like the introduction of the lower-cost Vostro line strengthened our inertia. I don't know if that was good or bad for us, but it was almost certainly better for Dell this way than in some alternate reality where it went in some other direction.
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Anyway, I looked at Dell's laptop lineup after I read your previous comment. It's a damned mess. But I'm not sure that this mess qualifies as 70 or 100 (or whatever) base models: It's plainly evident that there's a lot of overlap within this list. :)
Dell and Sonicare do not have that luxury. They are competing with other PC vendors and other toothbrush vendors.
The strategy is to produce so many models that you appear to serve every price point and need without requiring the user to shop around. You can find something in their lineup that fits your budget or requirements if you look long enough and you don't feel like you need to go looking around at competing vendors as much.
Having may models isn't a high cost because they share so many parts. I bet if you opened multiple Sonicare toothbrushes they'd share many main components like batteries or motors. Dell has a few laptop and desktop lines but they're different combinations of parts within a shared chassis.
Lenovo controls less of the stack than Apple: CPUs (Intel/AMD), BIOS, operating system, etc. While ostensibly Apple and Lenovo are both selling personal computers, Lenovo is in a (sub-)segment of the market that is commoditized with Dell, HP, etc.
If you need to run Windows and associated (Windows-only) apps, what's special between Lenovo/Dell EMC/HP/etc? How much of a difference is there between Coke and Pepsi?
A lot of vendors hitched their wagon to the Wintel duopoly, and now they're all riding (or being ridden) herd.
More importantly, if you have a locked in price you can sell your products for more profit - or you can sell the things that you have locked in and not have to make the rest of the widget at all. Sometimes someone will give you a good deal to buy out your locked in contract.
Apple is #4 in PC volume but they certainly make up for it with their smartphone volume.
And of course, they have a lot of service revenue to pad the balance sheet.
By the numbers, Apple is a smartphone business that has a casual side hobby of also being the #4 PC maker. Their PC sales are ~3x less than Lenovo's, but their smartphone sales are 10x their PC sales. There's plenty of commonality so the massive smartphone business surely helps with supply on the computer side of things as well.
Apple’s only structural advantage should be their custom silicon, but I don’t think that’s a cost advantage as much as it’s a performance and battery life advantage. Apple is still buying huge dies from TSMC and designing them custom themselves which is not cheap. Lenovo shares the cost of designing an Intel, AMD, or Qualcomm chip with dozens of OEMs. Same deal with software: I wouldn’t be surprised if macOS costs more per unit for Apple than Windows costs for Lenovo considering all the employees Apple hires directly to develop it.
Apple in theory should be paying a pretty similar amount of money to make the rest of their systems. They don’t make camera sensors, displays, keyboards, DRAM chips, or anything else themselves.
Right, I'm just saying they could afford it if it came down to that. They also have enormous margins on their higher-end systems, so they've got plenty of room to lose some profitability before it comes down to that.
Apple also makes healthy margins on its hardware products.
They do this for their own reasons but it's helping them in this crisis. They can simply accept lower margins in the short term, in the knowledge that in the long term these price fluctuations even out.
From the perspective of the producers Apple are a consistent purchaser with deep pockets. AI companies may be willing to pay more for RAM in the short term, but Apple is a safer customer. The current AI bubble may or may not burst, but people will keep buying iPhones regardless. The producers do not want to freeze Apple out because Apple is their hedge against the bubble bursting.
Lenovo may not be a low volume purchaser but they are not at Apple's scale nor are Lenovo's customers willing to pay the premium that Apple's customers are.
Also, their computers have been getting more storage/RAM competitive as time has gone on. Literally just by time passing and prices staying the same.
Lenovo is beyond Apple’s scale when it comes to PC sales. They are #1 in volume. Apple is #4. Apple sells more iPhones but Lenovo does also own Motorola which is not nothing. We can also look at Samsung: a wildly high volume company who has their own production lines of major components like RAM and displays but they still sell their 2026 laptops at eye watering price increases.
Apple literally buys displays from Samsung.
- 4TB Samsung Pro 990 SSD for $150 (now $940)
- 64GB DDR kit for a laptop $180 (now $700)
- 64GB DDR5 CL30 kit for a desktop $200 (now $950)
- 9800X3D/5070Ti PC $1800
- 2TB Samsung Pro 990 $95 I think? I honestly don't even remember why I bought this
It's really depressing now. Normally at this point in the NViida product cycle we'd be expected a 50x0 Super series. I think it's all but confirmed we won't see those until next year. I think the 50x0 series will last a lot longer than the 40x0 series.
So it's going to be interesting to see what happens when this hits phone makers who also need RAM. There certainly won't be a RAM increase this year and there'll likely be a price bump. Apple may be able to absorb this to some degree because of anyone I expect them to have long term contracts.
Still, Apple has temporarily delisted the base 16GB Mac Mini and removed the 512GB Mac Studio so they aren't unaffected.
But I think this SSD/RAM price hike has basically killed the Steam Machine, which is sad. Valve obviously didn't lock in long-term contracts before announcing it. Woops. The Steam Deck is also a hard find as a result.
We've seen an almost unprecedented price hike on the PS5, which is an almost 6 year old console at this point. I wouldn't exxpect a PS6 before 2028 at the earliest.
We've had RAM price spikes before, usually because of supply crunches (eg years ago I seem to remember a fire taking out one of the major suppliers).
I honestly don't expect any of this to get better until we have an increasingly likely global recession and the AI bubble pops. OpenAI and Anthropic may not be able to cash out in time to avoid all this.
If seemingly the "same" product -- in this example say 'MacBook Pro' base model for current year -- delivers less goodness, less value compared to its price year-on-year. If the price appears to stay more or less the same but the product is made weaker in service of higher margins for the seller. THAT would typically qualify as shrinkflation ... in my understanding.
This is more objectively measurable in comsumer goods where you can see the packaging being tinkered with over time so consumer thinks they are getting the same SKU but this year's packaging has less of the product tghan last year's, at similar price point so it doesnt register as price inflation.
We just changed that minimum to 10TB last week and it was specifically the RAM prices that forced us to re-calculate that value proposition.