There do in fact exist $100k iPhones marketed for the ultra-wealthy, see Vertu's lineup. Their most expensive phone is $504k, and seems expensive mainly because they bejewel it with rubies, emeralds, and diamonds.
The stats for the phone are not mentioned, however they have GIA documents certifying their use of real diamonds.
Next is basically the same deal but with alligator skin.
Then we get more interesting. Their third most expensive phone is $110 which markets itself as the "World’s first AI agent phone for entrepreneurs". Here are the specs
A side note: "Your strength as a rationalist is in your power to be more confused by fiction than reality". I had also believed there weren't any $100k iPhones, and was not convinced your explanation, and hypothesized the typical reason for such things: economies of scale. But then I sat down, had Claude look up the fixed costs associated with phone production, which turned out to be like $1B, which you could amortize over eg 100k of the richest individuals ($1e9/1e5 phones=$10,000/phone)! So then I figured such a company really ought to exist, I asked Claude if there existed any such phone company, and Claude mentioned Vertu!
Those aren't iPhones, though, and I think the distinction is relevant in the context of the OP.
Reminds me of the Andy Warhol quote about Coca-Cola.
What’s great about this country is that America started the tradition where the richest consumers buy essentially the same things as the poorest. You can be watching TV and see Coca Cola, and you know that the President drinks Coca Cola, Liz Taylor drinks Coca Cola, and just think, you can drink Coca Cola, too. A coke is a coke and no amount of money can get you a better coke than the one the bum on the corner is drinking. All the cokes are the same and all the cokes are good. Liz Taylor knows it, the President knows it, the bum knows it, and you know it.
price ratio from fine dining+private chef to prepack+fast food is ~1.5oom. Same for the price difference between annual new iPhone (~$1000/yr) and pentannual used Android (~$30/yr).
Most of these product categories you list seem to either be around this amount of variance, or luxury goods where the pricetag is the thing you pay for.
The biggest exceptions I see would be private jets, exclusive actually VIP concert stuff, lobbying, etc. And it seems that those types of goods which are inherently scarce, rather than industrializable like iPhones, have such ridiculous prices because lots of extremely wealthy wallets are chasing a small supply. (Private jets might be the exception? I suspect the same dynamic works there but I can't fully work out the details in my head)
fine dining+private chef to prepack+fast food is ~1.5oom
I disagree, I'd be very surprised if a full-time expensive private chef + ingredients + alcohol is only 30x more expensive than fast food.
alcohol is possibly cheating, because it's not really food and an expensive luxury category of its own? (but even there, really, most of the wine all the way at the highest end is like $1000 for bottles you'd consume semi-regularly, and about $10 at the cheap end).
naively, fast food is about $30 a day (fast food is actually kinda expensive, i guess the cheapest things you can do, bulk beans and rice sorts of things, are about one OOM cheaper). i think $1000 a day is actually more than enough to afford an entire person to do skilled work all of the time, although you could push it upwards a bit more if they were truly elite at the thing that they do, but probably not one OOM more.
(accounting tends to get tricky up there because I imagine a big part of the value proposition for your worker past a certain point is a sort of security, access to other commodities/conveniences, connections, etc.)
but to the original point, i do really struggle to imagine how an iphone is meant to provide you more value. i think a lot of what an iphone is supposed to do for you in terms of productivity is better achieved by other means, and it's hard to improve for entertainment at its form factor. as for signaling value, here are two websites that sell phone cases in the $10k range, as a sort of jewelry.
https://caviar.global/ https://leronza.com/24k-gold-luxury-samsung-galaxy-z-fold7/
i guess you could switch between these regularly, as with jewelry, to effectively recover another OOM.
1Time-telling: ~$10 Casio through to a ~$100k Rolex
This is an odd one out: both of them will tell you the time about equally well (as indeed will any phone). The purpose of a Rolex is fashion and/or status signalling.
The transport one includes "a custom Bentley" which is probably also mostly status signalling compared to a Range Rover or Tesla.
Most of the others seem to be material upgrades (e.g. a private chef lets you have tasty food every day, exactly to your tastes).
A $100k iPhone would struggle to set itself apart from a merely "good" iPhone in terms of material quality. (The standard way to scale up computers is usually by adding more computer, which quickly becomes too big to fit in one's pocket.) I suspect the most relevant comparison would be the Rolex: it would do the same job a bit better, but mostly be for status signalling. Currently, nobody wants to status signal with their iPhone, so they choose not to.
I agree that the 100k Rolex (and most luxury goods) are all about status signalling. Even for the private chef, you certainly get higher-end private chefs which give the material upgrade as well as the status signalling.
which quickly becomes too big to fit in one's pocket
This assumes current technology and no innovation
i think compute and networking speeds are honestly enough that most people struggle to take advantage of more of those things (streaming video is about the most data-intensive thing a lot of people do, and what's above that is mostly actual computational tasks), so it would take (significant) additional innovations in figuring out how to convert these things into better experiences in order for this to be tenable. it seems a lot of the time that the line is usually drawn somewhere around gaming enthusiasts (e.g there is a cohort of people who will buy a more powerful smartphone so it can render graphics better so they can game on their phones more enjoyably, same for the display). this could be because economic incentives towards innovations in compute still favor commoditizable things, since compute is more generally useful (for the amount of work you could employ to make phones better for a small contingent of people who would buy them, you could just make some similarly advanced/complex system better for some industrial/trad-tech purpose and make way more money)
Tbf, there is some market for status signaling with customized iPhones in the $50-100k range, though it does look far more unconventional than Rolex
There are three cost sources: materials, design, and manufacturing. I claim that because phones are small and design and requires scale it's just not worth it.
- Materials: Phones have very high $/kg already. At $5,000/kg, you could launch them to space and only double the cost. So unless there's a better battery design made of pure gold, phones can already afford basically whatever materials are optimal. Even a $4 million hypercar costs less per kg than an iPhone Pro.
- IP/design/software is zero marginal cost. It doesn't make sense for companies to spend $10 billion designing an OS for its premium users only. Better to segment on hardware.
- Manufacturing: Assembly just isn't that expensive. As for components, it's impossible to make a phone with chips more than one process node ahead than average. So you get $500 phones that are one node behind, and $1500 phones that are at the frontier and 20% faster, and that's the limit.
I don't really think progress being fast is quite sufficient to explain things. If every tripling in price could get you a 20% better phone, many people would pay for an 81x more expensive, 107% better phone just like they do for private jets. If it became obsolete in a year, the billionaire would have their phone guy replace it every six months. I think it's because a phone, or gmail, starlink, etc. has super high fixed costs, and the smaller market for luxury goods generally means the design will be worse. For food or furniture better quality ingredients/materials can more than make up for it, but consumer electronics can only get slightly better components because most already designed things are within the cost/kg budget of a $1k phone.
Everything more expensive per kg than phones has an interesting way of funding their design costs without scale:
- Military tech like fighter jets, radar systems: Cost mainly from r&d. The military demands highest performance and is a large market, spending 2-5% of GDP on fairly small volume
- Pharmaceuticals: Cost mainly from r&d. Either large scale or literally lifesaving for rich people
- Luxury watches: Practical benefits of a luxury watch are nil but people buy them anyway for status and wonder, essentially paying watchmakers to arrange titanium and rubies into ever more elaborate shapes that happen to tell time.
So my prediction would be that the luxury smartphone business only starts up when lots of rich people have different problems from the average consumer that need a custom device (security maybe?) or subscribe to a status game that results in the phone equivalent of luxury watches.
Asking for a $100k iPhone is like asking for a million-dollar Toyota Prius instead of a million-dollar car.
I disagree, there is no company that only builds >10k smart phones (from scratch, as opposed to taking someone else's phones and adding expensive materials). Sure there are companies that will gold-plate your iPhone, but they're not taking on the risk that innovations in smartphones would cause their luxury product to become worthless (since they can always gold-plate whatever the most recent innovation is).
The $100k threshold of the costs of a Super-Phone would imply that the cheapest phone should cost between $100 and $1k. However, the cost of the most primitive known phones is between $10 and $100, potentially implying that the most luxurious phones should cost $10k instead of $100k. Additionally, we had Jon Haidt's allies recommend basic phones to kids (and to adults?) due to potential problems caused by smart phones.
I don't think that the ratio from most expensive to least expensive is a constant as you are using it, I'd be very surprised if this ratio is the same for various different goods and services.
I’m not quite sure how unequal the world used to be, but I’m fairly certain the world is more equal (in terms of financial means) than the world was, say, in the 1600s.
There are many things that enormous wealth allows you to buy that’s out of reach for middle-class American consumers, like yachts, personal assistants, private jets, multiple homes, etc. You can frame these things in terms of the problems they solve e.g. private jets solve the problem of travelling long distances, multiple homes solves the “problem” of wanting to go on vacation more often. Note that the problems persist across wealth brackets, it’s just that the ultra-wealthy have different methods of solving those problems. While the ultra-wealthy might solve the problem of “vacation travel” using a private jet, those without extreme wealth might travel using commercial airlines. The ultra wealthy introduce novelty into their lives by purchasing multiple homes, while everyone else goes on vacation and stay in a hotel or similar.
If you cluster goods and services based on the problem they solve, most seem to be available at wide range of prices, with the higher end being around 2 or maybe 3 orders-of-magnitude greater than the lower end. For example:
I have low confidence that the difference between the lower- and the higher-end of goods/services to solve a problem is precisely 100x to 1000x, but I’m very certain that it’s orders of magnitude greater and not 1.01x to 2x greater.
However, you do get some products/services which do not exhibit this behaviour: Even the wealthiest man in the world will use the same iPhone, play the same video games, read the same books[1], and watch the same movies[1] as a middle-class American. What gives? What is the underlying factor that means some goods and services have 1000x range in value, and others have basically no difference? Put plainly: Why are there no incentives to build a $100k iPhone[2]? I have some hypotheses about the constraints:
Option 1 seems a little fishy to me. I’m not sure, but I doubt there’s nothing Apple could do to put more high-end features in a $5k iPhone. $100k does start to push the limits, but $1k seems low considering the frequent critique of iPhones. And there’s a very wide range of non-technical features (different colours, different sizes, various customisations) that are present in other high-end luxury goods (cars, watches, jewellery, etc) but aren’t present in iPhones.
Option 2 also doesn’t quite sit right with me. It seems okay on its own, but I don’t see why iPhones would have this dynamic but not watches, furniture, cars, etc.
One third option that I think is closer to the truth:
Consumer technology regularly experiences game-changing innovations, much more so than cars/furniture/housing/etc. So under option 3 we’d expect to see that goods or services with a very small financial range (like iPhones) to be things that are undergoing rapid innovation and change (including but not limited to tech products).
This hypothesis seems to hold up: laptops, smartphones, internet services (like YouTube, Netflix, Gmail, etc), Starlink, all have a very small financial range, some of them you can’t buy a more expensive variant even if you wanted to.
Our hypothesis also predicts that goods/services which experience little innovation should have a wider range of prices. One example of this would be gas-powered cars, which have been stagnant for several decades[3]. There have been improvements in comfort, efficiency, and safety, but I’d argue that these improvements stem more from increased demand for these features rather than previous inability to innovate in these features. Most recent innovation in cars have come from changing preferences, rather than static preferences which undergo more thorough innovation.
I suspect there’s something deeper here which might be empirically useful. If hypothesis 3 is true, then we could use the range of prices for a given product/service as a measure of the innovation in that field: A narrower range of prices means that there’s much more innovation. And this could be impactful, as it gives a way to measure how much the economic market expects a field to be innovating. It would be foolhardy to try sell a $100k iPhone if you suspect a competing product might be released that has significantly better features but with a lower price tag.
The large price associated with luxury goods effectively serves as a bounty for someone to come along and innovate.
We can also make some empirical predictions from this. Smartphones during the 2000s and 2010s underwent a lot of innovation, but they have become stale in recent years: every black slab of glass is nearly identical. I suspect the luxury smartphone businesses take a while to boot up, and it’s possible that new battery technology could cause a resurgence in smartphone innovation. So I’d predict, in the next ~10 years or so, we’ll either see a luxury smartphone business start up[4] and stays in business, or we’ll see significant innovation in smartphones (something like 10x better batteries or other components).
Thanks to Jasmine Li, Jo Jiao, Desiree J, Jay Chooi, and the MATS 9 blogging and writing channel for reviewing drafts of this essay.
I'll note that books and movies might be a slight outlier here: centi-millionaires absolutely can pay or sponsor creative professionals to produce work that they specifically wish to exist. This might be explicit (contracting a director to make a specific film), but more likely this is implicit (funding a film studio, sponsoring an artwork, organising meet-and-greets with powerful donors).
If you google, you can find example 100k iPhones [1, 2] but I've never seen anyone who could afford a 100k iPhone actually using one.
You might debate the precise duration of the stagnation, but the past 20 years of gas-powered car innovation is certainly less impressive than the last 20 years of mobile phone innovation.
one that produces a smartphone ~10x more expensive than the most popular iPhone