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.
Apple has always charged a lot for storage/memory upgrades to its products – both iOS and Mac. iOS storage has never been upgradeable after purchase and the price deltas were always consistent, even though the jumps doubled in size (e.g., 16GB to 32 GB to 64GB, or 32 to 64 to 128) for the second increment.
Extra Mac memory has always been pricey, too. In the past, almost everyone that I know ordered the base memory configuration and then sourced third party memory (which generally meant pulling out the DIMMs/SODIMMs that were factory installed by Apple. With soldered in memory and/or inaccessible chassis, this is no longer an option for most Macs.
This is a case where I believe that Apple should eliminate the lowest storage/memory configuration in its iOS and Mac products and make the next step up the standard/base configuration. It would simplify the product lineups and make everyone happier. I am an Apple shareholder and I believe that this is the right thing to do, even if Apple loses some revenue.
I would gladly accept a thicker MacBook Pro if I could have user-upgradeable RAM and PCIe SSDs. The current non-replaceability means a shorter cycle of ownership before resale. There is no way I would buy a MacBook Pro with a 5-year old soldered SSD. Nor, could I expect to hold on to my Mac as I do now for 5 to 7 years before selling it (usually for half what I paid for it – still a fair price for the power of the machine). I would think I would need to sell it in 3 years max – probably still for only half what I paid for it. For me, a comparative loss.
Add another shareholder vote in concurrence !
MDN has to get it’s head out of the “US & Silicon Valley” centric paradigm and into the rest of the world. Sorry, but where I live you can often not get reliable internet service over landlines, and there is no cell service at ALL in many places, much less LTE or 4G. That’s true of a LOT of the world. Massive, massive (and mostly unjustifiable) infrastructure upgrades would be necessary to make that viable. Hence the cloud is NOT a solution for a whole lot of the planet — not now, not ever. And remarkably, people still own iPhones in that part of the planet.
It’s also really not news that Apple (and Samsung, and Dell) rip everyone off in the usury costs they charge for memory. And Apple et al prevents aftermarket upgrades by soldering memory to the board. One day, the fact that they’re doing it will catch the attention of legislators, and it will finally stop. Sadly, those legislators can’t even pass regular legislation these days, never mind consumer protection rules.
You can thank me for high prices at Apple. I told Steve to buy low and sell high. It’s why I’m caller Citizen X – X for exxy, or expensive. I have expensive tastes, and have a very expensive opinion of myself. I have been wildly successful in life, so high prices for everything are my heartfelt and sincere gift – to you. Thank you.
Translation: Apple always has and always will gouge customers for memory
MDN take: nonsense. With the amount of data breaches and attacks being announced almost daily now, I don’t think your scenario is going to play out. I never want any of my data in a cloud, I am not sure I’m in the minority.
Someday, quantum computing may become viable. For the backend (not-mobile) part of the equation – the cloud – it may enable unbreakable encryption. Most likely, it will be used first to break the best encryption currently available and protect the most sensitive intelligence, before it is used to enable protection for the public. This is often the progression of new technologies.
Judging from the way Wall Street constantly praises THE CLOUD, I would say you’re in the minority when it comes to cloud storage. I personally want my data on my device or my own local server but I’m old school. Wall Street seems to think everyone wants their data floating around in THE CLOUD. Maybe it’s great for businesses, but that isn’t for me. Heck, for less than $200 I can get 10TB of local drive storage (a WD Elements Drive) which is more than enough. It’s somewhat sad how iPhones don’t support microSD cards, but I’m over that by now. Wishing Apple didn’t charge so much is just a waste of wishes. Simply get more memory upfront and forget about it. System storage is faster and more secure than any microSD card.