While now offering larger storage capacities, Apple still sells a 16GB iPhone, and here’s the real reason why.
With the release of the iPhone 6 back in September, Apple changed up its storage tier system for the first time in several years, getting rid of the 32GB version and adding on a 128GB model. However, the 16GB model remains alongside the 64GB variant.
After seeing this change, many users would simply think that Apple is keeping the 16GB model around because there are plenty of users that just don’t need a lot of storage, and while this may be true, that’s not what Apple is thinking.
The storage tier change also led to other questions, like why the 32GB variant isn’t the base model.
Apple got rid of the 32GB storage tier for the iPhone and iPad, keeping the 16GB model around as the base model, which led to many iPhone users scratching their heads and asking, “Why didn’t Apple just make the 32GB version the base model?”
It certainly would be good for consumers, as they’d be able to spend the same amount of money on a 32GB model that used to be the same price as the 16GB model, but it wouldn’t be a very good business model for Apple. However, that’s not because of the higher cost of building a 32GB iPhone over a 16GB iPhone.
If the company did make the 32GB model the base model, there would be fewer and fewer buyers going for the 64GB iPhones, thus spending less money that doesn’t go into Apple’s pockets.
A 32GB base iPhone model would essentially cannibalize 64GB and 128GB iPhone sales.
The real reason Apple still sells a 16GB iPhone isn’t because they know plenty of people don’t need a lot of storage. It’s to get users to spend more money and upgrade to higher-capacity models.
While there are plenty of users who don’t need more than 16GB of storage on their iPhones, Apple also knows that 16GB isn’t enough for most users, and that’s precisely the reason why they still sell it, so that users will spend more money to get the 64GB version or even the 128GB model.
Furthermore, the reason why Apple got rid of the 32GB is because it most likely took a vast majority of sales away from the higher-priced 64GB iPhone.
If you take the 32GB model away, buyers are only left with the choice between too little storage and too much storage. Most of the time, users are going to go with the more expensive higher-capacity models “just to be safe.”
Yes, the 64GB model is now the same price as what the 32GB model used to cost in the past, making it seem like a better deal overall, since you’re spending $100 less than what you would spend in the past for a 64GB iPhone, but the difference in manufacturing costs between storage sizes is extremely negligible.
Putting an extra 48GB in the iPhone 6 doesn’t cost Apple $100, and putting an extra 64GB in the iPhone on top of that doesn’t cost them an extra $100. It actually only costs Apple a few dollars more to put 64GB into the iPhone 6 as opposed to just 16GB, and if you buy the 64GB model, you just put a lot of money into Apple’s pockets.
More specifically, Apple pays around $0.42 per gigabyte for storage in the iPhone, which means the difference between a 16GB iPhone 6 and a 64GB iPhone 6 is around $20, but you’re paying $100 more for the privilege.
In other words, Apple’s new 16GB/64GB/128GB storage tier is the most profitable storage tier system they’ve ever had.