Perhaps unsurprisingly, Apple doesn’t go out of its way to pass savings on to to customers.
According to a new report, despite the cost of NAND flash memory halving in price over the past year, Apple hasn’t reduced the cost of its iPhones accordingly. In fact, Apple charges the same 78 cents-per-gif that it did in 2017 — meaning that the iPhone is even more profitable.
As a means of comparison, Apple pays 25 cents-per-gig to suppliers.
Bloomberg notes that, “Apple … charges customers a lot more for this storage than it pays suppliers, and it hasn’t reduced the markups for higher-capacity options or provided a way for customers to add storage later, even though component prices are falling sharply.”
The report points out that Apple charges users $150 to increase their iPhone storage option from 64 GB to 256 GB, and then an extra $200 to increase from 256 GB to 512 GB.
A great profit driver for Apple
Charging more for storage is one of the most straightforward profit drivers Apple has. Today’s report suggests that the new 512 GB storage chip in the latest generation iPhones could make Apple $134 more per phone than the low-end 64GB option.
Unlike the cost of increasing the display size, which involves re-engineering the iPhone, increasing the storage size means just swapping in a new chip.
Given that the overall global smartphone market is slowing down, Apple’s ability to charge a premium (more than any other mainstream smartphone maker for NAND chips) for storage is a smart move.
After all, as the success of last year’s $1,000 iPhone X demonstrated, there’s no proven upper limit yet on what customers will pay for new iPhones.
Source: Bloomberg Business
