Web News: Consumer Electronics Are Getting Gutted

Speaker A: Ah, all righty everybody. This is another edition of the web news and we're going to be talking about the Steam Machine but we're also going to be talking about the broader sort of consumer electronics market at large and how are things are looking today, how things are being affected, how pricing is being affected in real time, which we're going to kind of see with the Steam Machine and what we sort of predict kind of moving forward with this whole kind of RAM pricing, RAM supply crisis. So I mean, I guess I'll just kick things off really quick. So the Steam Machine has been sort of fully revealed. It was revealed months uh, and months ago but now it's been sort of fully revealed. We have pricing, we have bundles, we have everything. If you kind of scroll down here we uh, have a 512 gigabyte bundle and these are, this is Canadian pricing by the way. 512 gigabyte bundle starting at $1,509 Canadian going all the way up to the 2 terabyte with controller bundle and that's for $2,038. Now there's tons and tons of videos out there reviewing this thing because influencers do have their hands on it. They take a look at the performance, how it runs at 4K, how it runs at 1080p, popular games and their benchmarks, all that stuff. So we're not going to get into that stuff because those kind of videos have been done and are well put together. Of course, um, the thing that we're concerned about though is the price of this thing and the potential availability of, you uh, know how this thing is going to go, how this thing is going to launch, how available is this thing going to be in the coming months, how available is this thing going to be in the coming years? I mean let's unpack it. So Mike, why don't you take it away?

Speaker B: Yeah, I think like this is really an indicator for us, right? Like we're not going to be just you know, hammered focused on the Steam Machine. But the reason that we waited for the Steam Machine to do a follow up episode on the consumer electronics market is we knew that this was going to be a very, very strong indicator. Steam is a fairly big company. They're not at the size of like a Sony manufacturer or anything like that, but they're getting there, like they're getting big. And if they're able to pull off, you know, a cheaper M A cheaper machine at a reasonable performance metric then maybe others would. But we're seeing right now that they Just weren't able to. Right, they weren't able to A, get enough uh, supply. So B, they inherently did not want to increase the demand by making it super low priced, um, and subsidized or anything like that. They, they, they when, when they first announced that they said right away not going to subsidize this, this is going to come at cost. Uh, and it seems to be very accurate to what they said. Like if you try to build a PC with the same components it's going to be around that price so that they're not lying to us. Um, and that is exactly what happened. Uh, what that means for the consumer electronics market is we're kind of in a state of constant supply crunch. We don't have components. So and that applies to not just gaming, that applies to hardware for work, that applies to potentially you know, chips for microcontrollers, stuff like that. Like we're, we're not running out of just uh, you know, DDR5 RAM or DDR, like DDR6 RAM for graphics cards and PCs. We're running out of hard drives, we're running out of solid state drives. Uh, we can see that through the market as well. Like if you look at Sandisky, who is a, you know, m, uh, I think they are specifically a uh, SSD manufacturer at this point. They uh, went up in stock value by I don't know, 900% or something like that over uh, the last year or two. And that inherently shows where the value in the market is and where the crunch for us is headed. If a company like SanDisk, who isn't the best part, you know, solid state manufacturer in the world, although I think they own a few good ones, um, has gone up that much you can only imagine, you know, the Nvidia's of the world, they've also skyrocketed. Every hardware manufacturer is skyrocketing. And what I'm kind of upset about at this point is that we're not seeing any reaction to lower that demand or lower or make that supply higher. You know what I mean? Like there's no, as far as I can tell, no light at the end of the tunnel. I think Matt, you were mentioning that like uh, there's a report saying that we're probably going to see skyrocketing prices all through 2026. Nothing in there as far as I understand, said that 2027 is going to be much better. Um, they're just predicting, you know, what they can predict. So 2027 might see that way, which in Turn kind of puts a damper on all electronics for me. Like Matt and I are techies, we talk about electronics a lot. This Steam machine thing seemed cool. I don't like, I wasn't really in the market for anything like that, so it wasn't something that I would probably buy. But I could see how convenient it could be. But at the price of, you know, almost what is it? Double? It's not double a PS5, basic PS5, but it's like considerably more expensive than a basic PS5, which a base PS5 is actually somewhat more powerful than a Steam machine. It just, it's difficult to just get excited about this stuff. Right? Like the consumer electronic market is really, it's really kind of boring to me now. It's just, you know, it's unobtainium. It's either unobtainium too expensive. Um, and the too expensive has a couple different properties where like if not enough people can afford it and buy it, there's a chance that the, like the adoption will be low, lower and therefore like the accessories will be worse. The gate, like the, the ecosystem might be worse for it. People won't be as excited, people won't be talking about it. Like there won't be people, you know, multiple friends playing on um, is just a computer. I understand that. But having like in a, in a console market, which is what they're attacking having ecosystem and having a bunch of people have this thing only helps them to sell more games. Right? So for them it actually would make, would make some sense to subsidize. Now their reasoning for not subsidizing does make sense. They don't want because, because this is a basic computer they can put, put any operating system on. Their worry was if they subsidize it, a business will go out and buy 50 of them, put Windows on it and never touch Steam, uh, because they just have no reason to. Right. So there was some legitimacy to why they're not subsidizing.

Speaker A: Well, their thing is that the Steam, like the Steam machine is a PC still and so there's no guarantee of you purchasing games on Steam and using it as a gaming rig right out of the box. Somebody could take this thing, load Windows on it, use the Epic Games launcher, although who's going to do that? Um, and so they, I mean I, I see their concern maybe to an extent. I do think it's a bit overblown though. Just personally, how many people really are going to go and I mean look right here. Join the. Join the list anytime before June 25th at 10:00am PT. On that date the list will be closed and randomized and you will receive an email with your results shortly after this is signing in to join the list to actually purchase this thing. I mean how many businesses are going to say yeah, I'm going to fleet this thing. They may circumvent this system though. Of course if a business is big enough they might go to Steam or Valve directly and try to get a business deal. Whether Valve would entertain that, I don't know. But you would just go to Lenovo for that? I think you would just go to Lenovo. Lenovo has big PCs, small PCs, laptops. They are used to fleeting things. I don't, I think it's, I think the, the whole people are uh, we're not going to make our money back because to, so to give context to non gamers out there, usually uh, Xboxes and PlayStations are sold at a loss or very little profit. Generally a loss. And what ends up happening is, is because you're locked into the ecosystem, you buy a PlayStation 5 and then you're in the, the PlayStation 5 ecosystem. You will purchase games and then there's deals in place between those game developers and Sony where for in the case of PlayStation and Microsoft has very similar things with the Xbox where there's some sort of exchange of money. So for the sake of conversation let's say it's 10 bucks a game. So I go to the PlayStation store, I buy GTA for a hundred bucks, Rockstar gets $90 and Sony gets 10. I'm simplifying this but for the sake of conversation, but Now Sony got 10. So if the PlayStation 5, the hardware was sold at a loss of a hundred bucks throughout the life of that PlayStation, how what's the chances of me purchasing 10 games to make their money back? Plus I'm going to be paying for things like online access with PlayStation Plus. Maybe I'm going to buy their game pass competitor which is the various tiers above the essential tier of PlayStation Plus. And so there's a whole bunch of stuff in there built in where it's like hey, you know, I'm locking this, this consumer into this ecosystem and so I'm going to make my money back plus a profit of course. And so I'm able to lower the price of the console. Steam slash, Valve has decided not to do this. And so we're getting sort of the brunt of the whole price here. We're getting the sort of component plus a profitability margin built in. That's what we're getting here, we're not getting a subsidized console, as Mike said.

Speaker B: So I do think that they have more, they warrant more like credit for that than not because there is already um, experience with this. Like PS3s were bought in bulk when they became more mature to run data center clusters and to run like folding at home and stuff like that because they had a lot of GPU cores in them at the time, uh, and people figured out how to hack them and put Linux on it.

Speaker A: Well, Linux was actually a, uh, default. You could just do it. There was a lot of literally in the original versions of the os.

Speaker B: Yeah, they removed that though for the reason of uh, uh, they did not want people to buy that because they were subsidizing them. So anyone that bought it for that purpose, they were losing money immediately.

Speaker A: Sure.

Speaker B: So, and, and it would be probably the same thing with this, in my opinion. That's because these things have graphics cards in them, they have VRAM in them. So what I could see happening is if they price them aggressive or like subsidized, like let's say, you know, it costs $1,200 or $1,100 to build it. Uh, well in this case it's like 1500 dollars to build it right now and they sold it uh, for 1100. So a $400 subsidization. Uh, yeah, like people, I could see people buying a cluster of like 10 of them, wiping steamos off of them and then just running some sort of inference like for AI. So they did have that kind of worry and I could see that happening Now. I agree with you that most likely in the initial year where the availability is not going to be very high, that's not going to really be an issue. Uh, because it's like a, it's essentially a raffle. Like you're not going to buy 10 of these because you might not even get one if you uh, like submit, sign, sign up for the wait list. So it's, it's in a weird spot with this specific thing. But it's just, it, it sucks that we're in that situation. Like everything is kind of going towards that. I, you know, I, I've, I've heard rumors of iPhones going up in price, Samsung going up in price. Like phones going up in price for this, this generation. Of course, yeah. And there's no doubt about it, like it's costing them a lot more to make it right and a lot of times it's costing them double amounts because they could like the, the company that's gener, like actually creating the CPUs for them has to charge them exponentially more because if they, if they didn't, that could supply like that, that um, that compute that they could have been doing, could have been for AI and they could be making 10x what they're making on the iPhone chips. Right? Because the AI, the AI chips are the ones that are constantly in demand. So any manufacturing that goes towards something non AI is obviously going up in price exponentially as well due to the fact that they have to balance it out even though it doesn't cost that much realistically to, to, to make these chips. So it's a whole cluster, cluster F. And um, it's like the other thing that it's affecting that I kind of wanted to touch on, uh, is the local inference. Like a lot of people are seeing really cool open source models come out, AI models come out and they're seeing, oh man, maybe we can run these like really nice, you know, opus level models. Almost like GLM 5.2 came out I think a couple weeks ago now. Um, and the testing around it, and I've used it myself, that it's been very good. Like it's a very good model. Like this thing is a beast. For an open source model to run it fully like without, without serious quantization, you're talking like a GPU cluster of like 40, 50 grand. Like that's not feasible. And that's just one. Right? Like that's just one of these models. So like if you were to fleet it out to a company, you're like, you know, a company can afford 40 or 50 grand probably, but like you would need several of them, at least several of these like models running at the same time so that everyone can have access to it at the same time. Um, for a local, for a regular person, like obviously you're not going to pay that much, so you're stuck. And when, when is that going to open up? Well, Matt just had that article up. 2026 is not the year.

Speaker A: Well, I mean I can talk about that. So there, there's a Tech Radar article here, excuse me, that states, uh, uh, memory expert, excuse me, predicts huge RAM price hikes over the rest of 2026. But I'm not buying it, the forecast or the RAM. Uh, and there's a sort of a TLDR here, which I'll just tackle here. Um, so a memory expert has predicted big RAM price hikes this year. They say that we could see hikes of 40 to 50% in Q3 and further 30 to 40% rises in Q4. They predict that 2027 is also going to be painful with a 40 to 45% increase year on year. I, um, think this goes back to the idea that AI is currently seen as more valuable than the consumer electronics market. People are always going to be chasing the thing that looks better for profitability. And so, of course the consumer electronics industry is going to get gutted. I mean, if it needs to be gutted, then it will be gutted. And that's just unfortunately the reality we live in. I've talked to some friends who are more leaning toward the optimistic side, I'll say, where they'll look at other expert reports because obviously all this stuff is estimating and they'll lean more toward the optimistic ones. And I just don't do that. Now, some people say I'm a pessimist for doing that. This is the price, and unfortunately, we as consumers need to face it. These are the prices. Like, this is a PlayStation 5 slim 1 terabyte console with disk drive. This is the Canadian price, $819.99. The PlayStation 5 is years old at this point. This baseline price before tax is more than I paid for the PlayStation 5, uh, on launch day, and I bought the disc version. So unfortunately, these are the prices. And I know that people, you know, like, oh, I can't, you know, I can't afford that, or whatever. Then you can't afford it. And that sounds harsh, but the reason why I say that is this is the reality that we're in and we need to buckle up and you need to get ready. So if you need a phone soon, guess you're going to be saving. And if you can't afford a phone, guess you're not getting a phone. And I tell people that, and they think I'm trying to be. My friends will say, like, you're trying to be too intense. You're being too much of a pessimist. This is the reality that we're in. If they are like we are, we as individuals, even individual companies to some extent, are not going to be able to control the AI spend. It's out of our control. What we can control is us saving for electronics. If you really need the next console, if you really need the next phone, you're unfortunately going to have to save because the price is going to be higher. And you can be thrifty, you can find refurbished, you can find used, you could find deals on different marketplaces. You can, can be thrifty Do I think that it's right that the consumer market is being gutted? Absolutely not. But, uh, this is, this is the reality that we are in, unfortunately. This is the price and that's it. Unfortunately. And I, I honestly do feel bad, like saying that. But at the same time, what else are we going to be? You know, the hopeful few of like, don't worry guys, the price will go down next year and then the next year comes up. Don't worry, guys. I would like to err on the side of caution. I'd like to err on the side of preparedness, where I say we need to prepare for this. You need to, you need to start preparing for the fact that these electronics are going to get more expensive. So you're either gonna have to get thrifty, save up money, and it sucks. And it sucks.

Speaker B: I think there's going to be some side effects of this, um, because I agree with you. Like, I don't think, I don't think the mentality of it's going to get cheaper is the right one right now. Because we have no indications that it will get cheaper other than history. Yeah, like may, like, you know, we know historically stuff does balance out at some point, but like I. Is it next year? Is it the year after? I don't freaking know. Like, who knows? There's no indicators. No indicators. So you have to just buckle up and be ready to not either not buy any of this stuff, which is an option. Like, we don't, we all don't need the latest console. We all don't need the latest phones. We all don't need the latest computers. It's not a necessary thing. Now if your stuff dies, that's a whole other problem. So you.

Speaker A: Well, a whole other problem. But you could go used, you can go old, like a gen old or something.

Speaker B: That's exactly it. And I think because of that, because of that specifically, what we're going to see is a, uh, shift back to optimization and a shift back to longevity. And what I mean by that is right now everything is being pushed to go faster, faster, faster. Let's make these games as fast as possible. Let's not optimize them whatsoever. Uh, let's rely on all this DLSS FSR crap to even it out and stuff like that. You know, everyone's got a nice graphics card anyway. Well, that's not going to be the case for much longer. Like, we're not in that spot. Like it's. The games are not going to be able to continually push Graphics forward if no one is able to purchase the hardware to run those graphics or that hardware is not even made. Like when is the last time a graphics card came out? It was. It's been a long time since a new graphics card came out. So like we're just going to see a stagnation in capabilities. So people are going to shift from just doing unoptimized stuff to optimization to getting the most out of the hardware that they possibly can. Which is what, what's happened before too. Like you know PS3, a lot of, a lot of development at the end of the PS3's lifetime went into optimizing games to run really well on that hardware. So that's just going to extend out to all the latest, all the like, not the latest consoles but like well the latest consoles, not the new generations, not the PS6. That's going to extend the life of those consoles. It's going to extend the life of the PS5. It might even extend the life of the PS4 a little bit because people are still using the PS4. It's going to extend the life of the Switch, it's going to extend the life of the existing hardware. And in the PC market it's going to be the same thing. Applications are going to have to start optimizing for ram. We all know the crazy RAM hungry bullshit that's going on with all of these RAM random CLI tools and Chrome

Speaker A: tabs and all that like browser tabs.

Speaker B: Your browser tabs just go insane. Like I'll have a random browser tab. Just use like 10 gigabytes. All of a sudden.

Speaker A: I've had that.

Speaker B: Yeah, uh, yeah. So there's going to have to be a shift in development towards optimizing for lower quantities. We know with the MacBook Neo that just came out, it's capped at 8 gigabytes of RAM. That thing sold like hotcakes. Therefore if that's the continuous, like uh, if that's the direction that we're going. Cause we can't afford any more ram. Applications are going to have to start supporting lower amounts of ram.

Speaker A: Right.

Speaker B: It's just going to be uh, because of supply, like because of the demand for that type of performance. So there might be some, I'm trying to spin a positive take here a little bit. So your older hardware might last you longer as long as it doesn't break. Um, your older gaming console might let you play more newer games because companies are going to have to develop for it due to the fact that the PS6 probably won't sell super well, or they might not even have the chips to make a lot of them, like, who knows? So there are some ramifications for this, and maybe that will get us to the point when stuff starts to go back down and stuff starts to even out and whatever. So I'm hoping that that's the case. Um, that maybe is the more optimistic take on all this. But Matt's right in the sense of, like, you, you know, if you want a phone for $800, like, that's not going to happen again for a long time, most likely, or you're going to

Speaker A: have to get thrifty.

Speaker B: You're going to have to get, like,

Speaker A: find a carrier plan.

Speaker B: Yeah, yeah. So, yeah, it is what it is. Um, this is an update on the consumer electronics market. I think it affects developers. It affects, you know, consumers, like gamers. It really affects everyone, honestly. Like, if you're a family and you have kids, it's going to affect you, because what are you going to get your kids? Like, if you can't afford $1200 for a console or 1500 dollars for a console, you're going to have to go for the last generation or the generation before. Like, it's. It's one of those situations, like, one of those situations where you have to just adapt it.

Speaker A: And that's. I think that's my message. Like, I'm trying really not to sound negative. What I'm trying to sound is very sort of stern and serious. This is the reality we're in. So prepare for it. If you want to protest against it, like, legally and, you know, peacefully, whatever, if you want to voice your concern and things. I'm not saying that what they're doing is right. In fact, I think it's ridiculous. I think that the consumer market is getting gutted. I hate it. I don't like that. But this is the reality we're in. And so I'm erring on the side of preparedness. If I end up saving $2000 for the next PlayStation and it ends up only being 500, fantastic. I have 1500 dollars extra, and then I'll go buy an extra controller or something and a couple other things or some games or whatever it is. Uh, all I'm saying is that I, I. The one thing I always fear is that when people get a little bit too optimistic with things, they just kind of hope that things will sort themselves out, which is great, but you don't want to put yourself in the situation of the struggle. And when things suck like this, everyone's going to struggle to buy new electronics and things. Everyone's going to struggle. But be prepared. And that is a lot easier said than done. A hundred percent. If you're barely making ends meet, you're, you're in trouble. 100%. 100% you're in trouble. But I think the thing is, is like, is I am, um, I err on the side of. Face the reality that you're in and be prepared as best as you can for that. And there may, and there may not be a good answer here even. I'm going to all sacrifice stuff. I'll buy a phone. A year later, I'll, I'll change my upgrade cycle. I'll skip a console. I'll uh, I skip the Switch 2. I usually buy all the consoles. Switch 2 comes out. I think it's too much. I think the games are too much. I'm out. That's it. And, and so I'm not trying to say this from the position of a rich guy buying everything I did. You, you know, I'll make sacrifices just like that as well. That's all I mean is I, I just be prepared, just be prepared for the situation that we're in and within reason and within the law if you want to fight against the situation that we're in. Totally fair. I'm um, there with you, especially if you have good points. A hundred percent. Because this consumer electronics industry right now is absolutely being gutted. And this sucks. Like this really, really sucks.

Speaker B: Yeah, I don't think there's much more we can really say about it. Um, hopefully it gets better but we can't rely on that.

Speaker A: You can't rely on it. And I'd rather have a bunch of savings saved up and then, oh, uh, everything, everything's fixed.

Speaker B: I'd rather just not buy. I'd rather do what you're doing, Matt. And we're like you're, you're, you're, you're kind of speaking with your wallet on this. And I really hope that people will kind of do the same thing because some of this isn't their fault. Some of this isn't the faults of the companies because stuff is just too expensive. But we only have one measure of actually, uh, like hitting them in any way, shape or form and that's not buying their stuff. Now that hasn't worked very well over the last little while. But at some point there has to be a limit. We'll see, we'll see if we find it. We'll see if the PS6 is the limit. We'll see if the steam frame or the steam box, whatever. Whatever the hell it's called. I can't remember what it's called. It's Steam Machine.

Speaker A: Come on.

Speaker B: Steam Machine. There we go. Yeah, it's. It's just. Yeah, that's something. Yeah.

Speaker A: Uh, yeah, I think that's a sort of more conversational look at the industry. Uh, the consumer electronics industry, the gaming industry, which is obviously mostly in the consumer electronics side of things. Let us know what you think. The future looks bleak and I'd rather have a bunker than to be sitting there being like, man, I hope that meteor doesn't hit me.

Speaker B: Mhm.

Speaker A: Anyway, that's the web news. Goodbye.

Speaker B: Goodbye.