In the ruthlessly competitive world of technology, where companies rush the latest gadget to market and slash prices to stay competitive, the TI-84 Plus is an anomaly.
Amazon calls the TI-84 Plus a No. 1 best-seller. Texas Instruments says that this year the TI-84 Plus C Silver Edition has become its best-selling calculator, and that the TI-84 is its most popular family of calculators. The TI-84 Plus C Silver Edition is slightly more expensive than the base model, has a color screen, rechargeable battery and significantly more memory.
Even with a 320×240 pixel screen, 128 kilobytes RAM and 4 megabytes ROM, overall the TI-84 line of calculators appears unnecessarily expensive given the components. Apple — which is notorious for high margins on its products — sells an iPod touch for $199 that comes with 16 gigabytes of memory and a four-inch screen with a resolution of 1136-by-640 pixels. That’s a dramatically better piece of hardware with a less significant gap in price.
Electronics almost universally become cheaper over time. But with essentially a monopoly on graphing calculator usage in classrooms, Texas Instruments can charge a premium. Texas Instruments accounted for 93 percent of the U.S. graphing calculator sales from July 2013-June 2014. Casio took the other 7 percent, according to NPD data. During that period 1.6 million graphing calculators were sold, a decrease from sales of 1.67 million during July 2011-June 2012.
Calculators are a small slice of Texas Instruments’ overall business, but a very lucrative one. It’s difficult to determine exactly how profitable calculators are for the company as it lumps them in “other” on its financial reports. The “other” division had an operating profit of 30.8 percent in 2013, making it Texas Instruments’ most profitable division.
“Compared to other electronics this day and age there is very little content,” said Barclays analyst Blayne Curtis of the TI-84 Plus. “Plastic case, small black and white screen, two semiconductor chips. The batteries are even not rechargeable like a cell phone.” He estimates a TI-84 Plus costs $15-20 to manufacture and has a profit margin of over 50 percent for Texas Instruments.
For comparison sake, PC makers have margins under 3 percent. Texas Instruments declined to comment on its costs and profit margins for the TI-84 Plus calculator.
“There are alternatives but TI became the dominant player in school calculators as schools needed to standardize on one design and TI won out,” said Curtis, who follows Texas Instruments for Barclays.
Texas Instruments has been so dominant in part because of its ecosystem around its calculators, which keeps teachers and students happy with services such as 1-800-TI-CARES. Since 1986 more than 100,000 U.S. teachers have partaken in Teachers Teaching with Technology, which offers workshops in person and online to educate teachers on how to teach effectively with Texas Instruments calculators.
Once Texas Instruments had teachers and school districts comfortable with its calculators, offering low prices or cutting-edge hardware weren’t required to run a successful business.
“We have to keep evolving on this platform, but it can’t be innovation for the sake of innovation,” said Peter Balyta, president of Texas Instruments’ calculator division. “While it’s tempting for us to build in WiFi, Bluetooth, audio, a camera, a whole bunch of things, we could do, but teachers don’t want us to. And it’s because we want to have a tool that kids can use in a classroom, on their way home, at home when they’re doing homework and also a tool they can bring in during their most important exam.”
Students don’t need a supercomputer for their Algebra homework, but a more competitive graphing calculator landscape would likely aid students who struggle to pay $100 for a calculator.
Casio wants to compete with Texas Instruments on price. Its competitor for the TI-84 Plus, the fx-9860GII, has an MSRP of $79.99. Its best-selling model, the fx-9750 GII, has an MSRP of $49.99. Despite the lower prices Casio says it still turns a profit on sales of the calculators.
But graphing calculators are a market where price isn’t especially important. Parents — not teachers — end up paying for whatever graphing calculator is required. If you’re asking someone else to buy something, you may not be overly focused on whether they’re getting a great deal.
“To switch over to a Casio, even though we do say it is easier to use, there is a little bit of a learning curve, the system set-ups are just slightly different. That is one thing we do struggle with, teachers worried about how long it is going to take them to learn,” said Amy Chow, Casio’s national training coordinator. The company hopes to convince teachers of its calculators’ merit, so its market share will grow.
Smartphones have steadily eliminated the need for other electronics, be it wristwatches, cameras or flashlights. Could graphing calculators be next? The average smartphone today has gobs more memory and a sharper screen than any graphing calculator on the market. Free graphing calculator apps are available. But smartphones can’t be used on standardized tests such as the SAT and ACT. Schools are understandably reluctant to let them be used in classrooms, where students may opt to tune out in class and instead text friends or play games.
So for now, overpriced hardware and all, the TI-84 family of calculators remains on top and unlikely to go anywhere.