Upgrading to an iPhone with 64GB of storage will cost you an extra $100, but Apple actually only spends about a tenth of that to pay for the bigger memory chips.
With the iPhone 6s and new iPhone SE both starting with a paltry 16GB, shelling out the extra cash for more space is practically a no-brainer, and that plays right into Apple’s plan to milk the margins on its higher end models.
The latest data from IHS Technology reveals that Apple likely makes an $88 profit off each upgrade to 64GB of storage. IHS analyst Wayne Lam told TechInsider that it only costs Apple about $12 more to build the 64 gigabyte model than the 16 gigabyte model.
Last year the tech firm estimated that it only costs Apple $236 to make the iPhone 6s Plus but the company makes $513 off each handset thanks to the $749 price tag. The cost of components fails to take into account the engineering, software design, test, marketing, spaceships, and other costs that go into making the iPhone.
Tim Cook has criticized product cost breakdowns in the past, saying they’re far from reality. IHS Technology hasn’t done a component cost breakdown on the iPhone SE yet. The firm says Apple’s incurred costs for components changes over the production life of the iPhone’s life, with most components costing more the newer a device is.
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
5 responses to “Apple makes a lot more money when you upgrade to a 64GB iPhone”
I really find it hard to believe that these people know so much about Apple production and supply costs when they’re outsiders. They believe they know more than Tim Cook. They spread their misinformation all over the internet and claim it’s the absolute truth. Why aren’t they divulging the production costs of Samsung or Microsoft if they’re so smart? Why don’t they start breaking down the costs of some of Tesla’s vehicles and see how much profit Elon Musk is making.
These bloggers definitely have a bone to pick with Apple. Certainly, any company finds some ways to make profits. I have no doubt Apple is making profits but still those profits are not enough for Wall Street investors, so I don’t see what the big deal is about. If it was up to the big investors, they’d want Apple to charge a hell of a lot more for their products. This whole concern about Apple making profits seems rather stupid when there are plenty of consumers willing to pay for Apple products without even blinking.
Good points, but Apple never was a typical company. They created products, expensive ones, that people WANTED. Sadly, nowadays they look more like any other company, and they’re upsetting thei customers by charging more for those things people NEED when they purchase a product. This works in the short term, but it’s not a good long term solution for Apple. Pair that with “meh” products of late, and it could become disasterous. Steve Jobs got this right. Don’t listen to Wall Street. Just build the best thing you can and people will appreciate it (and pay for it). Nowadays it’s just too damn MBA textbook like, and that’s not the Apple I prefer.
There’s no “bone to pick,” bonehead. This is an Apple blog. They report on Apple specific news, topics and rumors. They don’t care about the other companies you vomited in that abortion of a comment you spent half your workday composing and neither do their readers. They don’t claim to know more than Tim Cook, in fact they are reinforcing that they don’t. They also aren’t hiding the fact that they make out on the 64GB model hence the lack of a 32GB model. They force you to make a choice, go budget and have to delete photos, apps etc. every so often or fork over the extra $100 for the luxury. If there was a 32GB everyone would buy it and profit margins would shrink.
PS- Sweet username, Tool.
and bears sh*t in the woods…
This low-ball spec and +$100 to the price for a chip upgrade is just shaking the money tree. The salesmen and accountants have taken over the company.
I’m suprised Apple have not found a way to load all the phones with a single chip that has the memory locked down – so they can sell it with 16GB and then sell you a remotely enabled ‘upgrade’ when you realise that 16GB isn’t enough.
I manage perfectly fine with a 16GB iPhone. I don’t have a ton of apps, I don’t shoot a lot of video and I don’t feel the need to carry my entire iTunes media library on my phone.