“When Apple unveiled its next-generation iPhones, there was quite a lot of grumbling that Apple hadn’t upgraded the base model of the phone to feature more than 16 gigabytes of storage,” Ashram Eassa writes for The Motley Fool. “As my fellow Foolish colleague Evan Niu recently argued, the whole purpose of the 16 gigabyte model is to push customers to spend a little extra ($100 more, to be precise) to get a lot more usable storage with the 64 gigabyte model.”
“This is good for Apple’s average selling prices and for its gross profit margins,” Eassa writes. “However, there is a much more important long-term implication of this average selling price increase that should allow Apple to significantly strengthen its competitive positioning in future iPhones. ”
“If Apple has reasonable assurance that its average selling prices will remain elevated as a result of the mix shift toward the more expensive 64 gigabyte and 128 gigabyte models,” Eassa writes, “then this means Apple can cram more functionality (which usually means higher production costs) into its phones.”
Read more in the full article here.
MacDailyNews Take: As we wrote on July 4th:
Obviously, 16GB is for a certain target market, one that can live in the iCloud. The problem with that model, however, is that inexperienced buyers and inattentive resellers foist 16GB iPhones on people who really cannot manage to live in the iCloud and therefore could end up hating their iPhone (it won’t update, it’s perpetually packed full and therefore runs poorly, can’t take any photos, can’t download day more apps, etcetera).
Apple needs to ask themselves if the benefits of having a 16GB iPhone (“low” entry price and upselling platform for higher capacity iPhones) are worth the risk of disappointing those who are likely buying their first iPhone. For Apple, the quality of the user experience should always come first.
Apple, please kill the 16GB iPhone! – July 13, 2015