“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.
SEE ALSO:
Apple, please kill the 16GB iPhone! – July 13, 2015
Depends on who use the 16GB iPhone.
My powerusers friends would commit suicide with the short USB cable included in the iPhone 16GB on their first day with it.
But my mother and my girlfriend are very happy with 16GB iPhone : a thousand aac songs, 30 to 40 basic apps, many mail accounts, few iBooks, hundreds of photos and plenty of space left to air update.
While true, I think AAPL should have made 32/64/128.
I limp by on a work 16GB iPhone 5, and I can’t wait to get the 128GB 6s. But if you can make it work, fine.
Agreed. But I’d also like to see a 256 GB option by now. I’d also like something more reasonable for pricing, reflecting the recent steep drop in Flash/SSD costs.
This is a non-issue.
People don’t accidentally buy Fiats when they thought they were getting a Mini Cooper.
It many be a non-issue.
But people DO unknowingly buy a 16GB iPhone because they have no fuckin clue why they need more storage.
Source: My Mom, her husband, my wife (tried to) Assorted friends
Hmm. I’d call myself a power user and I’m on a 16 Gb iPhone. I have no problems or worries. I don’t have a lot of apps (why? you can only do so much with a real-estate limited device), I have quite a few songs, email, a few photos. I view an iPhone as a communication and productivity device, so I’m all about using it for what it’s good at to benefit me.
If I want to take high quality photos, I have a DSLR.
If I want to code, write, or edit photos, I have an iMac.
if I want to do the above mobile, I have a MacPro.
Erm, that would be “MacBook Pro.”
… and I love the word “I.”
The basic problem here is Apple’s strategy to please the Street with high margins. Consumers and their needs do not figure much in this equation. Squeeze the base as much as you can. I know people who can’t upgrade to IOS 9 and are hating their iPhones since they have no money to buy 64GB iPhone 6s. When will Apple wake up to the reality that it is the users and not the WS that makes Apple great. Lower margins to give better technology and storage for Heaven’s sake!
Who are these people that can afford a $659 phone but not a $750 one?
Spend the extra and enjoy your phone, you’ll most of it back when you come to trade it in.
Most of the commenters above – and especially the suits in Cupertino – should read the “Mac Daily News Take” over and over until it sinks in….
I also have happily had the 16 GB iphone 6 for a year now. I sync to the Mac and then thrown out old pictures and recycle playlists. I know some people want to keep all their photos, all their music, all their apps handy. Different strokes for different folks. As far as margins, I also own some shares so I see this as a positive, not some evil plot.
Honda puts a 4 cylinder in their CR-V and with a few options you get out the door near $28,000, yet they sell a Zillion of those things because they know people are stupid enough to pay for a taller Honda Accord with a little more room. As long as people act stupid, even Apple will treat them stupid. I wonder who wants to keep their voter base stupid to stay in power.
I’ve run on 16gb since my first iPhone, a 3gs.
But I upgrade mainly for each improved camera generation, and with more pixels and 4k video on the iP6s, it seems logical to go with 64gb when my contract comes up after Christmas.
Chasing specs. Increase specs and people (and developers) will raise their needs, and then 64GB won’t be enough. When does it end? Space is not the problem. Proper user education is the need that must be addressed.
The 16GB iPhone doesn’t give you 16 GB of useable space,The OS, the non-negotiable apple Apps and the swing space required for upgrades all subtract from the nominal chip capacity.
Even the Windoze new phone is coming with 32Gb
And they’re flying off the shelves! /s
Keep in mind that newer Apps can use App Thinning so the size of the Apps can be smaller. An iPhone doesn’t need to keep iPad extras so that might help the space issue. While 32GB would be better than 16GB, there are some people who just need a “phone” and use a few extras so it wouldn’t matter to them if they had 16 or 32, they wouldn’t use the 32GB.