Economist Herb Stein’s quote ran through my head while I read The Hustle’s excellent analysis of the graphing calculator market. This cannot go on forever.
Every new school year, Twitter lights up with caregivers who can’t believe they have to buy their students a calculator that’s wildly underpowered and wildly overpriced relative to other consumer electronics.
The Hustle describes Texas Instruments as having “a near-monopoly on graphing calculators for nearly three decades.” That means that some of the students who purchased TI calculators as college students are now purchasing calculators for their own kids that look, feel, act and (crucially) cost largely the same. Imagine they were purchasing their kid’s first car and the available cars all looked, felt, acted, and cost largely the same as their first car. This cannot go on forever.
As the chief academic officer at Desmos, a competitor of Texas Instruments calculators, I was already familiar with many of The Hustle’s findings. Even still, they illuminated two surprising elements of the Texas Instruments business model.
First, the profit margins.
One analyst placed the cost to produce a TI-84 Plus at around $15-20, meaning TI sells it for a profit margin of nearly 50% – far above the electronics industry’s average margin of 6.7%.
Second, the lobbying.
According to Open Secrets and ProPublica data, Texas Instruments paid lobbyists to hound the Department of Education every year from 2005 to 2009 – right around the time when mobile technology and apps were becoming more of a threat.
Obviously the profits and lobbying are interdependent. Rent-seeking occurs when companies invest profits not into product development but into manipulating regulatory environments to protect market share.
I’m not mad for the sake of Desmos here. What Texas Instruments is doing isn’t sustainable. Consumer tech is getting so good and cheap and our free alternative is getting used so widely that regulations and consumer demand are changing quickly.
Another source told The Hustle that graphing calculator sales have seen a 15% YoY decline in recent years – a trend that free alternatives like Desmos may be at least partially responsible for.
You’ll find our calculators embedded in over half of state-level end-of-course exams in the United States, along with the International Baccalaureate MYP exam, the digital SAT and the digital ACT.
I am mad for the sake of kids and families like this, though.
“It basically sucks,” says Marcus Grant, an 11th grader currently taking a pre-calculus course. “It was really expensive for my family. There are cheaper alternatives available, but my teacher makes [the TI calculator] mandatory and there’s no other option.”
Teachers: it was one thing to require plastic graphing calculators calculators when better and cheaper alternatives weren’t available. But it should offend your conscience to see a private company suck 50% profit margins out of the pockets of struggling families for a product that is, by objective measurements, inferior to and more expensive than its competitors.
BTW. This is a Twitter-thread-turned-blog-post. If you want to know how teachers justified recommending plastic graphing calculators, you can read my mentions.