Could Apple’s Solar Data Centers Lower Consumer Costs?
If one thing is for certain, it’s that Apple is doing something to benefit the environment. While many companies have invested in solar technology to power their data centers, Apple is the first to make a significant commitment to solar power.
They have big plans for their new data center in North Carolina, using a 100-acre piece of land to create a solar farm. While the green energy crowd will no doubt love this news, will it benefit the average tech consumer?
The Built-in Cost of Data Centers
When we buy a gadget, we pay for far more than the components in a shell. Sure, the average consumer lays down a few hundred dollars and takes home an iPhone. To them, that is the entire transaction: money for gadget. For the manufacturer, however, it’s quite different. Apple has plenty more to worry about.
When Apple sets a price on the iPhone, they’re accounting for more than just the cost of manufacturing, plus a profit margin. They’re accounting for the time and resources it took to develop the gadget. They’re accounting for the marketing campaigns that will go into it.
They’re accounting for the CEOs and other executives who take home huge paychecks. They’re even accounting for potential lawsuits. And yes, they’re accounting for the cost of maintaining their many data centers.
It would seem, then, that the cost of Apple products could decline if they can manage to cut costs on the data center end. That’s one less cost for them to account for, so perhaps the consumer prices will reflect that.
While that checks out on one level, it fails on a few others. As you’ll see, there’s little chance that this makes a difference for consumer pricing.
Apple’s Market Position
Rarely a week goes by where we don’t hear something about Apple’s massive market position. Their profits continue to rise, and with new and exciting products on tap every year that doesn’t figure to slow down any time soon. They gained this market position by selling massively profitable products. It’s doubtful, then, that they lower prices for consumers.
Premium pricing, in fact, has been a big part of Apple’s marketing tactic. They don’t want to be seen as a discount brand in any way. They are a state of the art company, and that means charging premium prices.
New products, then, probably won’t see much of a discount, even if Apple starts to save money. It’s just not in their corporate DNA to discount their products.
Chances are, they’ll just pocket any excess profit. That is, if there is any excess profit. There is one big variable that often gets lost when discussing renewable energy.
The Cost of Solar Energy
The term “renewable energy” might make it sound as though it’s cheaper than other energy sources. It’s renewable, right? So if we can recycle it, doesn’t that mean we get more bang for our buck?
While that works out in a logical and intuitive sense, it doesn’t take into account the reality of many renewable energy sources, including solar power. That is, solar power costs a lot of money.
First, solar plans work best in certain regions. More sunlit regions help produce more solar power. Whenever there is a limited geography, there is a higher cost. Those plots of land become more valuable, and cost companies more when they want to develop on them.
There’s also the matter of processing equipment. Sunlight might be free, but the process of turning that into usable energy is not. It requires equipment that is both expensive to acquire and expensive to maintain.
Using energy from those solar plants will make Apple more sustainable, since they won’t be relying on finite energy sources. That will go over well with green energy groups in the short term.
Apple also stands to benefit in the long term; the price of solar energy has dropped in the last few years, and as the conversion technology becomes more common it’s likely that the costs will plummet further.
Yet given the current high costs of building and maintaining a solar plant, along with Apple’s corporate DNA, it’s unlikely that the average consumer sees the benefits from this campaign.
Joe Pawlikowski is the editor of BBGeeks, a site dedicated to helping BlackBerry users get the most out of their devices.