You’re no longer the customer…

Xbox’s next console could reportedly cost as much as $1,800, and the reason has almost nothing to do with Xbox. You are not the customer these companies are building for anymore.

We have been covering the economics of AI on this channel, and this is the part that reaches into your living room. It is easy to get lost in the spectacle of what the technology can do and never ask what it is doing to the price of everything that shares its components.

Here is the truth. A lot of these companies have walked away from consumers, and not quietly either.

Micron shut down Crucial, its consumer memory brand, after a 29 year run. They said it plainly. The data center money is bigger and those buyers can afford more than you can. Three companies control the overwhelming majority of the memory market, and one of them just told the consumer side it was done.

Nvidia is the other example. In its most recent quarter, roughly 91 percent of revenue came from data centers. Gaming was about 5 percent.

So the obvious answer, just build a PC, does not work either. That hardware uses the same memory and the same chips, and it is not getting cheaper.

That $1,800 figure could end up being the floor rather than the ceiling, purely because of scarcity. The thing that would bring prices down fast is the bubble actually popping, and nobody should want the version of that story where it happens all at once.

Look at where the money is going. Venture capital is pouring into AI at a rate that dwarfs everything else, and bank lending is trending the same way. This is a highly speculative market. Nobody is setting these prices by looking at a bottom line and deciding what they have to charge. It is investment, and at some point people come to collect.

I am not saying no company has ever run unprofitable for years and come out fine. But look at the two biggest names here, OpenAI and Anthropic, and you are looking at enormous capital going out the door against a model that has not settled yet. Anthropic’s recent loss number needs context, because a lot of it is tied up in convertible notes that get more expensive as the valuation climbs. That does not change the underlying picture.

The worst case here is not these companies failing. The worst case is the government propping them up because they have become too big to fail.

One more thing. A lot of people were bullish on this because they saw it as a democratizer, and the companies themselves never really sold it that way. It is a force multiplier and a tool, and tools work just as well in the hands of unethical people. You can see that in what has been going on with PHP and WordPress this month.

I would like to be able to talk about this without getting sorted into a camp. That is why the discourse on this subject goes nowhere. People are emotionally and financially invested, and they lose sight of the question underneath it. What is the economic engine actually powering this, and what happens to everyone else when it strains?