It's funny how everyone (especially here on HN) accepted (and expected) extremely high profit margins from software businesses, but now that hardware companies are increasing their margins to match it is suddenly outrageous. The same was reflected in engineering salaries, with software engineering salaries being often a multiple of hardware engineering ones. All this despite the fact that software businesses is arguably much easier, less risky and less capital intensive.

For decades now we have seen the expectations that software businesses (and in particular FANGs) have pushed any hardware margnins to be more and more like commodities, while they were extracting all the value.

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pyrale 7 hours ago | parent | next [-]

This exactly. The software industry has enjoyed lack of antitrust for decades now, and only complains now that others are able to ask any price against them.

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merelydev 6 hours ago | parent | prev | next [-]

> It's funny how everyone (especially here on HN) accepted (and expected) extremely high profit margins from software businesses

Because software you build it once and can resell it as much as you want, a stick of RAM is only sold once.

> The same was reflected in engineering salaries, with software engineering salaries being often a multiple of hardware engineering ones.

Arguably software is much more difficult to build because it is never complete.

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cycomanic 5 hours ago | parent [-]

> Because software you build it once and can resell it as much as you want, a stick of RAM is only sold once.

Yes exactly, and theoretically if there was a functioning market that should have driven prices way down, because the marginal cost to enter the market is so low. However, the non-functioning anti-trust laws as well as the expansion of ip laws as allowed a few enormous corporations to essentially control the market and keep prices up.

> Arguably software is much more difficult to build because it is never complete.

There are hardly any hardware companies where the hardware is ever complete. Disregarding the fact that many hardware products contain some form of software that needs to be updated. In pretty much any field hardware companies need to continue developing new revisions/improvements on the hardware to stay ahead of their competitors, however those revisions/improvements are significantly more complex to put into reality.

	▲	merelydev 5 hours ago \| parent [-]
		> Yes exactly, and theoretically if there was a functioning market that should have driven prices way down, because the marginal cost to enter the market is so low. However, the non-functioning anti-trust laws as well as the expansion of ip laws as allowed a few enormous corporations to essentially control the market and keep prices up. What? Software is not expansive, most of it is free. Its just that the same code can be used by more than one user, unlike hardware. The high profit margins come from economies of scale which is greater than whats possible with hardware. > There are hardly any hardware companies where the hardware is ever complete. Disregarding the fact that many hardware products contain some form of software that needs to be updated. In pretty much any field hardware companies need to continue developing new revisions/improvements on the hardware to stay ahead of their competitors, however those revisions/improvements are significantly more complex to put into reality. Most of the deployed hardware is complete. The RAM in my PC is complete but the software running on it needs to be updated every month or so.

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adrian_b 7 hours ago | parent | prev [-]

This phenomenon of "hardware companies are increasing their markets" is just a consequence of the fact that the memory market is now dominated by quasi-monopolies.

Decades ago, when memory production still existed in many countries, no such margin increases would have been possible.

Even now, this would not have been possible without the US government actively suppressing competition in the memory market, by sabotaging the Chinese memory producers.

The so-called "sanctions" against the Chinese memory producers have started some years ago precisely in the moment when Micron was threatened to lose market share to the Chinese producers (e.g. when Apple was considering to switch to them as providers). Based on the "Cui prodest?" principle, it is extremely likely that Micron was the entity who lobbied the US government to sabotage the Chinese memory producers, creating the environment where companies like OpenAI could successfully drive the memory prices to record levels.

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vkou 7 hours ago | parent [-]

> is just a consequence of the fact that the memory market is now dominated by quasi-monopolies.

And software isn't?

	▲	amarcheschi 6 hours ago \| parent [-]
		If you need to sponsor an event or something, you have to choose between an American big tech, another American big tech, another American big tech, or another American big tech