Does 16gb of flash memory cost $100?

[Chupa Chupa]

My point was that I guess Steve Jobs doesn't want my money. Looks like I'll be waiting for the iPad 3.

1) I'm 100% sure Steve Jobs isn't concerned about any given single missed order since Apple can't fill U.S. orders fast enough and the Euro and Canada launch is weeks away. Apple is on track to sell 2x as many iPad 2s as iPad 1s so if Apple priced the iPad 2s cheaper they would essentially be leaving money on the table. Why would a person or company do that?

2) What are you going to do if the iPad 3s price and storage points are exactly the same as the 2s? Apple typically does not lower price points model to model but rather increases specs & features at the same price point.

3) $100 is a lot for 16B of storage in the abstract but in the context of the extra utility it offers the owner it's modest. For those that don't want or need 32GB they can save $100. For those that don't want to spend the extra $100 they can adopt good storage management habits. You are not w/o choices.

 

[IrishTiger]

+1

They use Apple's special super duper "magic" RAM. Just believe. Just believe.

lmfao!!!

This one made me laugh....like the 32gb version needed EXTRA engineering!

I didn't pick up on the humor until you pointed it out. lol. Thanks for the laugh!!!

My point was that I guess Steve Jobs doesn't want my money. Looks like I'll be waiting for the iPad 3.

Well my point is - and I think everyone else thinks this way too, is that the next iPad is probably going to have a very similar price structure - if not more expensive - so don't hold off because you think you'll get it cheaper. It won't be.

 

[Krevnik]

You just blew my mind.

So, does engineering get exponintially easier? If it's $100 in engineering to add 16gb of storage to an existing 16gb ipad, does it then only cost $50 per 16gb chunk to add 32gb to a 64gb ipad?

This whole engineering and capitalism thing is blowing my mind.

I was wrong, I guess Steve Jobs DOES want my money. Anyone at the Gateway that can tell me if there's any Black 16gig's in stock?

Anyone who says it is engineering costs on Apple's part is blowing hot air.

However, it isn't about just throwing in anothther 16GB module or three either. To fit the memory in the same space, you need to use higher density chips that are more expensive per gigabyte. Without looking up the teardown on ifixit, I'd assume they use 2x 8GB, 16GB and 32GB chips for the flash. If they had access to 64GB on a single chip, they would introduce that on the iPhone 5. The prices on these chips are still coming down, although the 8GB chips are fairly cheap. It isn't uncommon to see higher density chips go for more than double the price of the lower density ones because of the more expensive manufacturing equipment required and the lower demand.

And the average 16GB flash drive is using cheap, slow flash chips. Apple and other Smartphone/Tablet makers are using higher quality flash than you find in the average SD card. You can certainly use the lower quality flash as expandable storage, but it winds up being mostly useful for data where you can simply stream it from the SD card like music. The sort of live editing that iMovie and the like produce need quite a bit of RAM or a fast disk to work with, which an SD card isn't. If performance is something you care about, you wouldn't want Apple using the cheap flash in the devices, it would get noticeable quick.

 

[15danielp]

I'd say that it's because they're margins are fairly low on the 16GB model. If it weren't for the higher margins on the 32 and 64 gig models they couldn't hit that $499 point for the entry model.

This is exactly it. I own a shipping company, and the hardest part is figuring out what to charge my customers. Prices in shipping start of pretty high then taper down as the weight increases. I have very low margins on smaller packages but make it up as the weight increases.

Simply put, Apple doesn't make as much as they'd like on the 16gb model.

 

[cocoseng]

This is exactly it. I own a shipping company, and the hardest part is figuring out what to charge my customers. Prices in shipping start of pretty high then taper down as the weight increases. I have very low margins on smaller packages but make it up as the weight increases.

Simply put, Apple doesn't make as much as they'd like on the 16gb model.

They make plenty on all of their models. That being said, as another poster astutely pointed out, higher models are higher margin and that is true of many different industries. You don't reach critical mass with these types of products without having an approachable price point and then optional "higher" tier versions for the needy few.

This is product strategy and what you see at almost every level of consumer devices.

 

[DIMEZ]

everthing cost more when it comes to apple...just like when you buy ram from them...apple makes money.

 

[reputationZed]

My point was that I guess Steve Jobs doesn't want my money. Looks like I'll be waiting for the iPad 3.

Why would Apple change the pricing model for the iPad3? The low end might start at 32GB next go around but I'd still expect them to follow the $499 / $599 / $699 pricing structure.

I doubt that the $100 difference between models has anything to do with cost. The engineering cost will be spread across the entire line. in the volumes Apple buys flash memory it's a commodity. I'd be surprised if the actual component part difference was more than $20. The reason for the $100 separation is to differentiate the models. If the separation was only $20 how many 16GB models do you think they would sell? The smartest move Apple made was to offer a model at $499. Their not seeing the profit margin on the 16 that they get on their other products but having one model under $500 gets people interested and makes it that much harder for the competition to gain any market share. I'm not saying Apples loosing money on the 16GB but their not making as much profit as they are on the 32GB and the 64GB. From a bang for the buck perspective the 32 and the 64 (disclaimer I have a 64GB) make very little sense compared to the 16GB.

 

[15danielp]

They make plenty on all of their models. That being said, as another poster astutely pointed out, higher models are higher margin and that is true of many different industries. You don't reach critical mass with these types of products without having an approachable price point and then optional "higher" tier versions for the needy few.

This is product strategy and what you see at almost every level of consumer devices.

Yes, exactly. Elementary supply and demand. And their pricing structures are set up mostly for marketing simplicity then for margin consistency.

If the 16GB is a better deal then the 32GB for you, then go with the 16GB. If you think Apple is gouging you, then don't buy from Apple.

 

[melterx12]

Don't forget it's not the same flash memory as you find in a USB stick or SD card. Instead of comparing prices to those, compare prices of actual SSDs. I see that an average 32gb SSD is about $100, so Apple's price is only twice the going rate

Not too bad by Apple standards.

my OWC Mercury Extreme Pro 128GB SSD was $250 which means its ~$1.95/GB. That means that 32GB of SSD storage would be ~$62.50. So going by apple standards $100 extra would make sense.

Granted, Apple does have to market and package the 32GB iPad separately, so that may account for a bit of the money, but not enough to justify an extra $100 up from 16GB.