“While all those new iPhone sales send Apple’ profit forecasts sailing past previous estimates, one big reason isn’t getting much attention: The company charges four times the going rate for extra file-storage space,” Adam Satariano and Ian King report for Businessweek.
“As with previous models, Apple is asking for an additional $100 to double the storage memory on the iPhone 5s and 5c, and $200 to quadruple it to 64 gigabytes on the 5s,” Satariano and King report. “While the cost of smartphone memory has fallen 71 percent in the last four years—to about 60¢ per gigabyte, according to researcher IHS iSuppli—“Apple has never followed the trend in passing along the savings,” says IHS analyst Michael Yang. Apple spokeswoman Natalie Kerris declined to comment… The only way to enhance storage on an iPhone is to buy a new device. That’s a big inconvenience for customers who can’t afford to shell out for a brand-new device. Jessica Boudevin, a writer in Los Angeles with an 8GB iPhone 4, says she’s ‘constantly deleting’ photos, videos, and other files to make room for new ones.”
Satariano and King report, “Apple enjoys a profit margin of about 50 percent on the iPhone, according to Brian Marshall, a senior managing director at researcher ISI Group. Its memory premium extends to the iPad—a 128GB version of the tablet costs $799, $300 more than a 16GB model… Marshall estimates that the mobile memory markup accounted for about one-fourth of Apple’s profit last quarter; Gene Munster of Piper Jaffray puts it at around two-fifths.”
Read more in the full article here.