The reason why Apple still sells 16GB phones

[joeblow7777]

It's simple, really. It's because people still buy them!

Case in point; a coworker of mine has been saying for months that he needs to get a new phone to replace his dying iPhone 5. He's been trying hard to hold out for the 7, but his phone has really had a hard life and it wasn't going to make it. So he bit the bullet and bought an SE. We were talking about it and I asked him what capacity he bought and he said 16GB.

"Oh? A lot of people find that to be too limiting now," I said. He looked somewhat puzzled and replied, "That's what I've always bought." He went on to explain that he doesn't keep photos on his phone, preferring to transfer them to his PC right away. He streams most of his music and says he's selective about what he stores locally. He's a smart guy but he's not a tech enthusiast, and I don't think he's ever given much thought to storage on his phone.

My point is that I think my colleague represents a lot of consumers. Am I trying to say that Apple should stick with a 16GB entry model? NO! It's not going to cost them much to bump it up to at least 32. But I think that a lot of people here forget that there are many people out there who are actually satisfied with 16GB.

 

[GuardsRed Apple]

Sounds to me like he just bought the cheapest price available. As do most consumers...

 

[Channan]

Actually, it would cost Apple a lot to increase the base storage to 32GB, because I'm sure there are plenty of people like me who need more than 16GB but don't need more than 32GB.

If the base model iPhone SE was 32GB, even if the next model up was 128GB for $100 more, I would have saved the money and gotten the 32GB. But because I needed more than 16GB, I spent an extra $100 on the 64GB model.

 

[aKansasKid]

Corporations are large buyers of iPhones, too, and they have no reason to pay for more storage so as to hold their workers' family shots, videos, and favorite music.

 

[joeblow7777]

Sounds to me like he just bought the cheapest price available. As do most consumers...

I don't think that was so much the issue in this case. As I said, he's not a techy but he is a very practical person, and not strapped for cash. He's had his old 5 since it came out over 3 years ago, and I don't think he's ever found the capacity limiting. He really did seem puzzled for a moment when I mentioned 16GB not being a lot.

 

[bufffilm]

Sounds to me like he just bought the cheapest price available. As do most consumers...

Don't forget that we're talking about a $650 phone...not exactly cheap even if split into 24 payments.

 

[Channan]

Don't forget that we're talking about a $650 phone...not exactly cheap even if split into 24 payments.

Well, he bought an SE, which is $400. I still wouldn't call that "cheap", though.

 

[5105973]

He might change his tune when he finds out that with Live Photo (unless he is savvy enough to turn it off) and the greater number of megapixels, he fills his storage up a lot faster than he's used to. That happened to my sister-in-law.

 

[mrex]

It's simple, really. It's because people still buy them!

i quess the real reason is that they can ask much more for the 64gb variant just because they provide the 16gb variant as a basic model.

 

[Applefan4]

To me 16gb was too little and 64 was too much. 32gb would have been perfect, however I was forced to go with the 64gb because of the scummy business model Apple has adopted. Android flagships have 32GB base storage + SD card option. 16gb with Live Photos and 4K video recording is simply trolling at this point

 

[Gav2k]

I've got a 64gb iPhone 6s Plus and I'm using next to nothing. Have my main apps installed etc. I could fit a 16gb but meh

 

[lyceumHQ]

I always had 16gb. I had he 5 for three years and still had 6-7g left. I didn't keep music on it but besides that I used it as normal. I don't back up my photos often or anything 'space saving'

When I upgraded to the 6s I thought I best get 64gb as apps are getting bigger. Pics are getting bigger, 4K video etc etc.

I put some music on simply because I could but have since deleted it because I never listen to it (I have an iPod).

I should have saved myself £80 and got 16gb.

If Apple had made 32gb the base model then I'd not have spent the extra £80 for 64gb. So it may not cost them much in terms of putting a 32gb memory in over 16gb but it will cost them in terms of people not spending the extra £80 for the storage bump.

 

[OneMike]

Most people buy the least expensive option. That's all.

I'd bet 128gb is the least popular as it's the most expensive.

 

[Andres Cantu]

Several reasons actually: people still buy 16GB phones; Apple can sell more 64GB phones by making them look more attractive than if the base models had 32GB; the pennies they save on the extra 16GB add up once you take into consideration the hundreds of millions of 16GB phones they sell.

In the end, it's all about money for them.

 

[eyoungren]

I'd bet 128gb is the least popular as it's the most expensive.

Well, the largest capacity Apple offers is the most popular in my family. We have the iPhone 5, 64GB, we've had the 6/6+ in 128GB and now we have the 6s/6s+ in 128GB.

I always buy the largest capacity Apple offers whenever we upgrade, which is usually once every 2-3.5 years. Last year was different but we still got the largest capacity offered.

It's what I want (I don't care if I actually need it or not) so I get it.

 

[jasie02]

Corporations are large buyers of iPhones, too, and they have no reason to pay for more storage so as to hold their workers' family shots, videos, and favorite music.

No true on my corporate phones I had for past 15+ years.

Always need more.

 

[smacrumon]

I think your coworker probably has a good routine of transferring photos. But from your description, it seems your coworker is still cognisant of the storage limitations in being selective about what they store locally.

It's 2017 next year, we don't really need to be thinking or quoting feeds, speeds and gigs. My view is that Apple should remove multiple storage options for iPhone and proceed with a single storage capacity for each model (6s/6/SE), set at a minimum of at least 128GB, but available at the typical 16GB price. A "shake up", something unique and forward thinking Apple could do to help their customers enjoy their devices even more without the issue that storage limitations can throw up now and then.

For example:

• iPhone 6s - 128GB
• iPhone 6 - 128GB
• iPhone SE - 64GB

Reason for change:

• Storage cost is incredibly inexpensive today and the real cost difference between 16GB, 64GB, 128GB is insignificant.
• It has become unnecessary to quote GB storage figures. It's just like quoting CPU speeds. Pointless, complex to explain to some customers and a carry over from decades past.
• Users don't care about storage capacity figures, they only wish to take video, photos, download apps etc and avoid the "storage full" errors. Errors give some users a negative perception their device is broken and they need to upgrade. Users are less likely to continue with the same brand of phone if their experience has been negative.
• Devices with low storage capacity (i.e. 16GB) require users to think more about maintaining their device storage (by deleting photos etc) instead of just using their device without complication (i.e. the Apple way).

 

[eyoungren]

I think your coworker probably has a good routine of transferring photos. But from your description, it seems your coworker is still cognisant of the storage limitations in being selective about what they store locally.

It's 2017 next year, we don't really need to be thinking or quoting feeds, speeds and gigs. My view is that Apple should remove multiple storage options for iPhone and proceed with a single storage capacity for each model (6s/6/SE), set at a minimum of at least 128GB, but available at the typical 16GB price. A "shake up", something unique and forward thinking Apple could do to help their customers enjoy their devices even more without the issue that storage limitations can throw up now and then.

For example:

• iPhone 6s - 128GB
• iPhone 6 - 128GB
• iPhone SE - 64GB

Reason for change:

• Storage cost is incredibly inexpensive today and the real cost difference between 16GB, 64GB, 128GB is insignificant.
• It has become unnecessary to quote GB storage figures. It's just like quoting CPU speeds. Pointless, complex to explain to some customers and a carry over from decades past.
• Users don't care about storage capacity figures, they only wish to take video, photos, download apps etc and avoid the "storage full" errors.
• Devices with low storage capacity (i.e. 16GB) require users to think more about maintaining their device storage (by deleting photos etc) instead of just using their device without complication (i.e. the Apple way).

Does any of this make a profit for Apple?

Or it is only about benefitting the customer at Apple's expense?

 

[smacrumon]

Does any of this make a profit for Apple?

Or it is only about benefitting the customer at Apple's expense?

Well trying to work out if it makes Apple more profit is a bit difficult to determine. But if the question is does it attract new customers to the platform, and does it delight current customers and retain them for longer, and does it enhance the perception Apple is a forward thinking company, then the answer is yes, yes and yes. Some might say this is a good business decision short, medium and long term.

 

[trifid]

Actually, it would cost Apple a lot to increase the base storage to 32GB, because I'm sure there are plenty of people like me who need more than 16GB but don't need more than 32GB.

If the base model iPhone SE was 32GB, even if the next model up was 128GB for $100 more, I would have saved the money and gotten the 32GB. But because I needed more than 16GB, I spent an extra $100 on the 64GB model.

Actually it costs about $5 more for Apple to put 32GB instead of 16Gb. Remember that we had 16Gb back in 2007/2008, price of SSD manufacturing has gone down exponentially to extremely low cost after 9 years. I'd gladly pay $655 instead of $650 for a 32gb flagship iphone, wouldn't you? And Apple wouldn't lose anything

Check out some teardown estimates:
iPhone SE manufacturing difference from 16GB to 64GB is $10, but Apple charges $100 more:
http://www.recode.net/2016/4/4/11585836/teardown-apples-iphone-se

In this estimate it says the difference in manufacturing cost between iPhone 6s 16GB and 64GB is $17:
http://www.ibtimes.com/iphone-6s-pl...ke-iphone-6-plus-ihs-teardown-reveals-2120667

Now, I know price teardown of Apple products don't include R&D costs and other factors, but we are talking about NAND (SSD) cost, a standard component.

One last thing, it's standard in the industry to ship 32GB devices nowadays, yet Apple stays stuck at 16GB. It's clear Apple is aiming at higher profit margins, beating record-high profits last year. Now, it's nice and cool for Apple to pursue record-high profits, but I think there should be a balance between milking the userbase to no end, and giving away a bit more than usual, and I think Apple is currently unbalanced, and I think the market is finally reacting to this.

 

[eyoungren]

Well trying to work out if it makes Apple more profit is a bit difficult to determine. But if the question is does it attract new customers to the platform, and does it delight current customers and retain them for longer, and does it enhance the perception Apple is a forward thinking company, then the answer is yes, yes and yes. Some might say this is a good business decision short, medium and long term.

Attracting new customers is always good. But getting new and current customers to spend more is what Apple is in business for and is what the shareholders want to see.

If I'm happy with my Apple device and the next Apple device has everything my old one has - why should I buy the new Apple device?

And given that the market is now showing saturation where it concerns phones (almost everyone on the planet now has a smartphone) attracting new customers, while desirable, is secondary to getting the customers you already have to spend more.

I understand what you are advocating, but it's a customer-centric type thing that while bringing Apple goodwill does not make them any money over the medium and long term. Only in the short term. Apple does not make any money off of goodwill alone. Without profit, Apple as a business fails.

Apple keeps the 16GB phone because it forces a choice. And Apple profits either way you decide to go on that. A lot of people are upset with Apple over that. But customers keep buying anyway.

 

[umbrokhan]

16Gb is to less for a 4K video and will fill up in no time.
16Gb is outdated.. if people are not brothered then Apple going to give you old technology again and again.
its 2016 so you have to keep up with the technology. 32Gb should be minimum storage.
front selfi camera should be 5MP and wide angle lens. for year 2016.
don't want a smartphone with 2012 technology.

 

[eyoungren]

16Gb is to less for a 4K video and will fill up in no time.
16Gb is outdated.. if people are not brothered then Apple going to give you old technology again and again.
its 2016 so you have to keep up with the technology. 32Gb should be minimum storage.
front selfi camera should be 5MP and wide angle lens. for year 2016.
don't want a smartphone with 2012 technology.

Then either don't buy an iPhone or move up to higher storage.

Apple doesn't sell iPhones solely based on what the customer believes or wants. They sell based on what makes them the most profit. Just like any for-profit business.

We don't have to like it but Apple is not going to change it just because we think they should.

 

[smacrumon]

Attracting new customers is always good. But getting new and current customers to spend more is what Apple is in business for and is what the shareholders want to see.

If I'm happy with my Apple device and the next Apple device has everything my old one has - why should I buy the new Apple device?

And given that the market is now showing saturation where it concerns phones (almost everyone on the planet now has a smartphone) attracting new customers, while desirable, is secondary to getting the customers you already have to spend more.

I understand what you are advocating, but it's a customer-centric type thing that while bringing Apple goodwill does not make them any money over the medium and long term. Only in the short term. Apple does not make any money off of goodwill alone. Without profit, Apple as a business fails.

Apple keeps the 16GB phone because it forces a choice. And Apple profits either way you decide to go on that. A lot of people are upset with Apple over that. But customers keep buying anyway.

The only reason I can think to continue as per the norm is investors wanting very, very short term profits and they might advocate different storage sizes and complicated line ups.

But I think your reasoning isn't right, it's both customer and company centric in harmony. Customers that leave Apple for two years or more also leave iCloud services, Apple Music, App Store, as well as other Apple devices eg Watch, iPad etc. Lost opportunities in these extra services and products cost Apple more overtime. The last thing Apple wants is to have its customers looking over the other side of the fence and then actually moving to the other side of the fence.

If you're happy with your current device and Apple hasn't persuaded you to upgrade to their new device, they are not doing their job, they are doing something wrong. Gigabytes storage isn't a reason to upgrade, new and interesting features, a new beautiful "to die for" design, a unique new exclusive service are reasons to upgrade.

By Apple keeping storage as a choice and keeping storage low just introduces frustration into their experience. We want to force customers to join Apple or upgrade because of the "must have" features of this new product. We don't want to force customers to upgrade due to frustration. That strategy might work once, but frustrating customers has its limits and I know from people I've spoken to, customers are currently looking over the other side of the fence.

 

[d5aqoëp]

Keeping 16 GB base model for iPhone 7 will cause tremendous loss of goodwill for Apple. See the amount of hate on iPhone 7 rumour articles. Apple has already lost their sheen.

I don't remember seeing so much negativity back when Steve Jobs was alive. There was definite excitement whenever any iPhone related rumour came out. 7-8 years back, iPhone was seen as luxury item. But now it has started to become bare necessity. When people perceive something as bare necessity, it's value is expected to be lower.

So forcing people to pay more for 64 or 128 gb iPhone by keeping lower model at 16 gb will haunt Apple in the long run.