1 Terrifying Trend at Apple


I've noticed something at Apple (NAS: AAPL) that scares me. This particular trend is actually only frightening for Apple customers (like myself), while it ends up benefiting Apple shareholders (like myself).

Apple has always been the king of integration. Most of the internal components of any Mac are mostly commoditized, although they're sometimes custom-designed into the system. This means that users have little choice with certain upgrades and have to pay Apple's inflated prices.

For example, Apple has always shamelessly ripped off its less tech-savvy customers with one of the most common computer upgrades: RAM. Let's say you wanted to add 8 GB of memory to a new iMac. Buying this common commoditized component directly through Apple runs you $400.


Source: Apple.com.

How much does an identical module cost (Apple uses laptop parts in the iMac) from a generic manufacturer on popular component site Newegg.com? Just $40.


Source: Newegg.com.

Apple doesn't manufacture its own memory, but simply rebrands modules from Samsung, Hynix, or Micron. So it's literally marking up the memory it offers by 10 times. Apple guarantees compatibility, but is that peace of mind worth an extra 900%? Especially when the generic component is entirely compatible anyway? (I use the module pictured above in my iMac.)

Right now, users who know better are still able to easily swap out memory on their own. The scary part is that Apple is trending even further away from user upgradeability after the initial purchase.

Once upon a time, MacBooks had interchangeable batteries, a benefit for road warriors who packed a spare for extra juice while out and about. Apple ditched those in favor of built-in batteries, although in fairness it did so to better utilize the physical space inside its notebooks, and Cupertino really is making advances in battery technology.

The current MacBook Air designs that were introduced in October 2010 are the first where RAM is not upgradeable afterwards because it's soldered directly to the circuit board, so buyers must forever hold their peace and choose wisely when selecting a model. Apple naturally charges a premium for the upgrade, although not as bad as the tenfold difference we witnessed above.

This is one of the downsides to integration. There are benefits like more efficient use of space through its custom designs, but at what cost?

Some component suppliers themselves are doing quite nicely, particularly those that are playing a part in the mobile revolution. We've recently detailed 3 Hidden Winners of the iPhone, iPad, and Android Revolution for your reading and investing pleasure. Get the free report now.

At the time thisarticle was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple.Motley Fool newsletter serviceshave recommended buying shares of and creating a bull call spread position in Apple. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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