In a new report, Mark Gurman and Ian King of Bloomberg take a look into the pricing strategy of Apple for its latest iPhone crop: the iPhone XS and iPhone XS Max. The Bloomberg claims that Apple is making $134 more on a 512GB iPhone XS variant as compared to a 64GB variant.
This year, Apple has launched a 512GB iPhone XS variant – the highest storage capacity to date that the company has released for an iPhone. The company is known for charging customers a lot more for NAND storage chips than it pays suppliers. Wayne Lam – an analyst at IHS Markit explains that 25cents/gigabyte is what Apple pays for the storage and it charges its customers @78cents/gigabyte. This is why Lam calls storage “the most profitable iPhone feature.”
Bloomberg has come up with $23.68 as the cost of 64GB NAND storage inside an iPhone XS, $66.24 for 256GB, and $132.48 for 512GB NAND storage chip. With these numbers, the 512GB iPhone XS is estimated to make Apple $134 more per iPhone than the 64GB variant. This means Apple is making $107 more in 2018 than the 2017 models just from the storage jumps.
The data from InSpectrum Tech suggests that the market price of NAND flash chips has been dropped by half since last year, but Apple did not reflect any such drop in its pricing strategy. Apple has not deviated from its 78cents per gigabyte pricing since last year. This may be due to the fact that the companies are usually locked into contracts for such components and it may not yet be benefitting from the recent decline in prices.
So far, Apple customers have to pay more per gigabyte as compared to Samsung customers. For instance, a Galaxy Note 9 customer pays 65cents per gigabyte to move from 128GB to 512GB variant.
With the ever-increasing demand for the higher storage on the smartphone due to better cameras, Apple has not only offered 512GB variant, but the user can also opt for company’s iCloud storage at $0.99/month for 50GB, $2.99/month for 200GB, and $9.99/month for 2TB. This means if an iPhone XS or iPhone XS Max owner with a 512GB variant wants to back up its data on iCloud, he will have to subscribe $9.99/month option.
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