Apple is on course to make $18bn in sales in its current financial year by upselling customers to higher NAND configurations on iPhones, iPads and Macs.
According to estimates from Bernstein, a respected Wall Street analyst, Apple enjoys hefty double-digit gross margins on extra GB options of between 75 and 94 per cent.
“The NAND gravy train is running,” said Toni Sacconaghi, senior technology research analyst. “It has been Apple’s longstanding business model to offer consumers a selection of iPhone, iPad and MacBook models at different price points, which differ almost exclusively in NAND storage costs.
“Apple charges an average of $50 for every extra 64GB NAND storage, while raw NAND costs $0.1 per GB for Apple,” he added.
MacDailyNews Take: The price of admission is the price of admission.
Of course, with the advent of ubiquitous 5G connectivity – still years away – the need for huge amounts of onboard storage will decrease; you’ll just get it online on demand. With recurring iCloud storage subscriptions, Apple is cushioned from the coming 5G paradigm shift, but as Kunert notes, iCloud storage “delivers gross margins of 65 to 70 percent, and a storage subscription takes four years to yield the same revenues as [selling] a device loaded with more storage,” so Apple will have an adjustment period as the shift from onboard storage to online storage takes place. The good news for Apple is that this will be a comfortably gradual shift as it’ll take years for 5G to build out and become pervasive.