The 16GB iPhone is NOT a ripoff

Discussion in 'iPhone' started by warrior2000, Sep 14, 2015.

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  1. warrior2000 macrumors 6502a

    Sep 12, 2015
    No. Apple is not ripping off anyone.

    You are not looking at the big picture. You are simply focusing on how YOU benefit from getting a 32GB phone for the price of a 16GB. This is short term thinking. Just thinking about saving $100 TODAY.

    Do you think Apple's profits are obscene? Their profit margin is only about 23% the last 2 years. Microsoft and Google have higher profit margins at about 25%. So is Apple really ripping off customers? For every dollar of goods they sell they only make 23 cents profit.

    If Apple made the 1st tier 32GB then many who would have bought the 64GB phone would opt for the 32GB. For each of those decisions Apple would lose close to $100 in profit. The upgrades from 16 to 64 to 128 is almost pure profit. $100 may not sound like much to company like Apple but you need to realize how many phones they sell. Here is theoretical calculation:

    Apple sells about 250 million iPhones a year.
    Apple sells about 35% at the 2nd tier - 64GB
    If Apple moves the first tier to 32 GB they could lose about 40% of the 64GB buyers
    They will lose close to $90 of pure profit from those who decide to get the 32GB instead of the 64GB.

    250,000,000 x 35% = 87.5 milion 64GB buyers
    87.5 million x 40% = 35 million buyers who decide to get the 32GB instead of the 64GB
    35 million x $95 of lost profit per phone = $3.3 billion in lost profit

    Last year Apple made $40 billion in profit. A decrease of $3.3 billion is HUGE. That almost 8% of profits lost.

    But you may say who cares if Apple makes $37 billion instead of $40 billion. That's still alot of money. But you should care. Because if Apple's profits begin dipping, even a little it could damage the company. Just look at late 2012 and early 2013. The stock tanked 45% in a matter of 6 months. Why? Because profits were down. Were they down 40%? Down 50%. No. The profits were down a mere 5% and the stock tanked big time.

    But why as a consumer should I care about Apple's stock price? You should care because the stock price has a DIRECT EFFECT on the quality of product Apple can produce. For most of the top talent that works at Apple, 90% of their compensation is from stock options. So if the stock tanks or is flat their pay will be drastically effected. Because of this many of the TOP EMPLOYEES will be targeted by other firms who can offer much higher pay because of stock options that grow in value while Apple's does not. Bottom line is with a weak stock price Apple will not be able to retain top talent. Without top talent Apple cannot produce the awesome products we all love.

    In addition without the profits Apple cannot support and grow its ecosystem. Without strong profits Apple won't be able to have the money to spend on R&D, acquisitions, and investments in facilities and cutting edge technologies. Other companies like Samsung simply copy Apple's innovations. Apple on the other hand spends BILLIONS in R&D. Companies like Samsung pay very little to run Android on their smartphones. Apple has to invest BILLIONS to keeping iOS running well and improving it every year. Without strong profits Apple would have to cut corners and that would hurt the quality of product.

    The bottom line is the iPhone is a premium product. It will cost more than a Samsung or HTC. Just as a BMW will cost more than a Kia. But you get what you pay for. Is there any doubt that an iPhone is a more quality product than a Samsung/HTC? If so then you should be willing to pay a few more bucks for that quality. And be happy that those extra profits will be invested in R&D/top talent/ect to keep pumping out awesome products.

    Here is a conversation I overheard the other day:

    Concerned Troll: Yo, Tim Cook how is the iPhone sales going?

    Tim Cook: Its going great! We can't even keep up with demand! We are sold out for the next 4 weeks.

    Concerned Troll: Yo, Tim I got a great idea for next year.

    Tim Cook: Lets hear it.

    Concerned Troll: Next year you should give 16GB free to the low end phone.

    Tim Cook: ok......

    The point is Apple can't even keep up with demand when the iPhone launches! Why the hell would they discount their phones by giving memory free for the low tier? This strong demand continues through the holiday season and through Chinese New Year in February. So why would Apple sell iPhones at a discount when they can't keep up with demand for the first 6 months of release? It would be pure stupidity.

    But guess what happens in March when the demand 'weakens'? We see all kinds of deals on iPhones. Last year BestBuy was giving $100 gift cards on all iPhone6 phones purchased. T-mobile and Sprint was doing the same. In other words you could get the 64GB iPhone6 for the price of the 16GB iPhone at launch. The bottom line is if someone is willing to wait 6 months after release they CAN get a 64GB iPhone for $650. They just need to wait a bit until the demand equalizes with supply.

    So if 16GB isn't for you, you have 2 options. Either shell out the extra $100 and get the 64GB phone or wait 6 months and buy the iPhones at a discount. If you can't wait then shell out the $100. And what the hell is $100 anyway? Spread over 2 years thats about $4 a month. Are you going to really die from shelling out $4 more a month for the 64GB model? If so then the iPhone isn't for you. You probably are better off buying a $300 Android phone or a used iPhone. The bottom line is you gotta pay to play. PERIOD. There are tens of millions of other people who are willing to pay.

    Apple is not greedy. Their profit margin is only 23%. They need to make profits to continue to support their awesome ecosystem, retain the best talent, and invest in R&D and new technologies. The demand for iPhone is so high in the first 6 months of release it is UNREASONABLE to expect Apple to 'discount' their top end phones. Those who have a tight budget and can't spend the extra $100 should either wait a few months till discount deals come around or realize that maybe a cheaper used iPhone or Android would be the more responsible thing to do.
  2. Italianblend macrumors 68000


    Mar 21, 2011
    I think we all know it's good for business. 16GB is just a little small considering the 4K videos, live pictures, etc. But we are still buying it.
  3. mattopotamus macrumors G5


    Jun 12, 2012
    tl:dr, 16gb is too small :)

    especially with the way apple handles "cloud" storage.
  4. koulmj Suspended


    Mar 18, 2013
    De-Nile...a River in Africa...

    Just kidding, I know I spelled it wrong, and I did order the 16GB cause I don't need another lump of Memory, and do just fine being data conscious.
  5. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    My point is the 16GB is good for the customer too. Without those strong profits Apple would not be able to invest in new technologies, R&D, and retain top talent.

    If you need more than 16GB just shell out the extra $100 or wait a few months until the iPhones have promotions.

    Galaxy S6 - 32GB $650
    iPhone 6s - 64GB $750

    So for $100 more you get a way better phone and 32GB more of storage. How is that unreasonable? Do you expect a BMW to sell for the same price as a Kia?
  6. edlex, Sep 14, 2015
    Last edited: Sep 14, 2015

    edlex macrumors 68000


    Apr 14, 2010
    4k video eats up about 1gb per minute. Good luck with a 16gb phone.

    ETA: I was recently corrected as 4k using 375mb per minute. Still a lot of memory but worth mentioning the correct amount :)
  7. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    You can turn off 4k video and use 1080p.

    4k is an advanced feature for advanced users.

    And cloud storage is so dirt cheap from Apple ( 99 cents for 50GB) and other vendors that there is no reason to keep these massive files on your phone.

    I know people cry all the time that they don't want their files on the cloud but just on the device. That is stupidity. What happens when their phone crashes? They lose EVERYTHING.
  8. PDFierro macrumors 68040

    Sep 8, 2009
  9. hanser macrumors regular

    Aug 29, 2013
    16gB version is not for people who plan to film a lot in 4k. For those there is the 64gB version.
  10. TommyA6 macrumors 65816

    May 15, 2013
    You're kidding right...
    Apple has $200 billion in CASH! And as far as I can remember, R&D for the ORIGINAL iPhone was maybe $800 million.
    Poor Apple, without those strong profits, they'd only be sitting on $190 BILLION instead of $200 BILLION pile of cash.
  11. edlex macrumors 68000


    Apr 14, 2010
    I know but I feel if you're going to produce an advanced phone with all these memory intensive features Apple should start at minimally 32gb and eliminate the 16gb altogether. Just my opinion and personally I will rarely if ever use 4k to record anything.
  12. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    The iPad Pro starts at 32GB because its a Pro device.
    The AppleTV starts at 32GB because eventually it will turn on a DVR function.

    Again if the 16GB is too little then buy the 64GB.

    I hate when authors think EVERYONE ON THE PLANET has the same needs and usages as they do. Literally TENS OF MILLIONS of users are doing fine with 16GB or storage. My parents are 100% fine with 16GB. They take a lot of pitures but every few months they download then to their computer. Why? One to free up space on their phone but more importantly to BACK UP their photos on their computer and the cloud. If they just left it on their phone they could lose ALL THEIR PHOTOS if their phone crashed or got lost.

    Apple knows EXACTLY whats going on. They have access to HUNDREDS of MILLIONS of iPhones and they can see how much storage space each of these phones have remaining. They are in a way better position to know if 16GB is truly too little storage. And if it is then the market will answer by not buying 16GB phones. But the market LOVES the 16GB phones. Phil Schiller recently said the 16GB is the most popular model.

    Of course some dude on a tech site will say 16GB is not enough. He's a tech-head. Many normal people love their 16GB phone and fine no problem in fiting everything they need in it.

    At this point 4k video is niche. If it takes off then Apple will probablily increase storage in the next iPhone.
  13. mattopotamus macrumors G5


    Jun 12, 2012
    What will you DVR with no passthrough and no tuner? It is 32gb b.c the games.
  14. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    Did you even read my post?

    If Apple's profits shrink the stock price will crash. If the stock price crashes they WILL LOSE TOP TALENT. All the top employees get 90% of their compensation from stock options.

    Do you really want Apple to lose its top employees?
  15. NYY FaN macrumors 6502

    NYY FaN

    Jun 22, 2009
    New York
    16GB is difficult for anyone to work with, no matter what phone it is. 32GB should be the minimum across the board at this time.
  16. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    Apple is thinking about the future. Theorectically they could turn on 4k. If so they could use the extra GB space to download a good 10-20GB of the film and then stream the rest.
  17. mattopotamus macrumors G5


    Jun 12, 2012
    They cannot "turn on" 4K. It requires specific hardware: HEVC decoder and HDMI 2.0. The ATV has H264 and HDMI 1.4.

    Just like people think Sony can "turn on" 4K with the PS4. They would have to release an update ps4 b.c the hardware is lacking.
  18. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    Says who? You? Do you know how all 400,000,000 iPhone users use their phone?

    I know a half dozen people who have the 16GB iPhone6 and have zero problem with the size. When they run out of space they simply upload their photos/videos to the cloud/home computer. This is a good practice. If you just leave it on your phone you could lose everything if your phone crashes or gets lost.

    Uploading photo/videos every 6 months is no big deal. To these people they rather do that because they need to backup their photos on their computer anyway.
  19. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    thanks for the info.

    My guess is the AppleTV will use the extra GB to stream video content.

    Who knows. Regardless the AppleTV and the iPhone are totally different products so we can't expect them to have identical memory configerations.
  20. mattopotamus macrumors G5


    Jun 12, 2012
    Agreed. I use to be someone who would stand up for 16gb b.c of cloud storage; however, I bought into iCloud and that pushes all of your cloud storage to all of your device. Apple wants people to use their services: email, calendar, photos, iCloud drive. They are making 16gb really hard to manage if you also are expected to use their services.
  21. ricktat macrumors 65816

    Feb 18, 2013
    You tell em Tim.

    I would like to have 32GB at a lower price.... but I am willing to pay the extra $100 for 64GB.. SO doesn't bother me.
  22. Four oF NINE macrumors 68000

    Four oF NINE

    Sep 28, 2011
    Hell's Kitchen
    We don't lose ANYTHING if it's backed up to a Mac.
  23. geoff5093 macrumors 68020


    Sep 16, 2014
    Dover, NH
    The reason we are upset is because a base model iPhone is $650/$750. Compare that to many Android phones selling for $400-$600 that actually start with 32GB.

    16GB for many people is not enough, and now that Apple has live photos and 4k recording, that space will fill up even faster. It basically means people NEED to get the 64GB version to have any actual use out of their phone, so now people are forced to pay $100 more.
  24. bbplayer5 macrumors 68030

    Apr 13, 2007

    Way better phone? I think a lot of people would differ on that opinion. Apple's magic lies in their ecosystem with things like iTunes, iMessage, and iCloud. There is nothing about the 6s that is better than the S6 save maybe 3D touch.
  25. warrior2000 thread starter macrumors 6502a

    Sep 12, 2015
    this is EXACTLY how I feel.

    16GB is too small for me. But I have no problem paying the extra $100 for the 64GB.

    I mean just look at the alternatives:

    Samsung S6 - 32GB - $650
    iPhone 6S - 64GB - $750

    So for a mere $100 more I get a way better hardware product, way better software, way better ecosystem and experience. Plus I get 32GB more of storage. Plus when I do trade-in or sell the iPhone it will get at least $100 more than the Samsung.

    IMO, people who are crying about the 16GB phone is like someone crying about the cost of children's clothes.

    Concerned Troll: This isn't FAIR!!! The kid's Levi's Jeans are only $15 but I can't fit them. But the adult jeans are $20! Unfair!

    Store owner: I'm sorry but if you can't fit the kid's jeans you need to buy the adult jeans that cost more.

    The same thing applys to phones. If the 16GB phone (kid's jeans) does not fit your life style there is no point in crying about it. Just buy the 64GB (adult jeans) phone that fits.
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