Apple Charges iPhone Customers A Lot More for Storage Than It Pays [Report]

The most lucrative feature of Apple's new iPhone XS is its Nand storage chip, reports Bloomberg. The new iPhone XS models come with up to 512GB of storage, 64 times what the original iPhone had. To get 512GB of storage instead of the base 64GB, you'll need to cough up an additional $350. It's here that Apple is making some serious profit.

Despite a significant drop in the price of storage. Apple is not passing those savings on to its customers.

Apple Inc. 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.

IHS Markit estimates that it costs Apple about $0.25/gigabyte but it charges customers $0.78/gigabyte. That means the purchase of a 512GB iPhone XS makes Apple about $134 more per device.

"Storage is one of their levers to create more revenue and is absolutely the most profitable iPhone feature," says Wayne Lam, an analyst at researcher IHS Markit. Swapping a NAND chip is little extra work for Apple says Lam, unlike increasing the screen size which requires re-engineering the device.

More details in the full report linked below...


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