This is just a small thought that came to me, I'm sure it's been said, so forgive me:
Apple sold: ~140 million iPhones, 70 million iPads in the last year.
Scenario: Apple drops every 16GB model from their iDevices, bring every price point down one step (ie: iPad 32 now $499, 64 $599 etc).
In earned revenue, Apple loses $21 billion. Not to mention the small but additive cost of the NAND bumps, which is about $0.50GB according to iSuppli. So Apple increases the cost of materials for their iPads.
A fair proportion of purchasers wouldn't have paid for the 32GB upgrade anyway, so Apple didn't lose any revenue from them. So that takes away from the $21b. If we make a quick assumption that half of all iPads are not the base storage, then that puts us at ~$10b lost revenue. Increased cost of production stands at 105m devices * 16GB * $0.5 = $840m. It gets a bit muddier when considering the other tiers since iPhones and iPads don't share the same tiers. But for the sake of simplicity and since a 128GB is always a possibility on the iPhone, we'll pretend both iPhone and iPad are equals.
Per 128GB device, 64GB is free
64, 32GB free
32GB, 16GB free (but we already counted these)
More assumptions: 5% of sales are the 128GB. This should climb a little since it's cheaper. I know I would bite, so, let's be aggressive and say it climbs to 10% of total sales. Leaving 40% for the 64GB model.
10% = 21m devices * 64GB * $0.5 = $672m
40% = 84m devices * 32GB * $0.5 = $1,344m
So this puts the total cost at: $10.5b in lost revenue, and $2.856b for a grand total of $13.4b in lost revenue and increased cost (accounting-wise, you can't count it as such, but just for simplicities sake we'll ignore that).
That's all assuming the pricing scenario above. What of alternative changes.
Apple could change the pricing tiers, such as reducing the $100 steps to say, $80.
Apple could give all a price drop (contract free price). Starting at $449 for the iPad and $100 for bumps.
The above assumes nothing of the change in consumer decisions. Would most never consider anything but the base model? What if you decide to use the discount to buy the cellular model of the iPad, more accessories, AppleCare? And all those new buyers who think the storage bumps is all they needed to get in the Apple Garden.
But this is the march of progress. Storage sizes will naturally increase through higher media consumption and larger app sizes, etc. We'll all repeat this story with the 32GB models.
/random discussion thought I wanted to share on my weekend
And yes, I folded the iPad 2 in as a current gen device.
Apple sold: ~140 million iPhones, 70 million iPads in the last year.
Scenario: Apple drops every 16GB model from their iDevices, bring every price point down one step (ie: iPad 32 now $499, 64 $599 etc).
In earned revenue, Apple loses $21 billion. Not to mention the small but additive cost of the NAND bumps, which is about $0.50GB according to iSuppli. So Apple increases the cost of materials for their iPads.
A fair proportion of purchasers wouldn't have paid for the 32GB upgrade anyway, so Apple didn't lose any revenue from them. So that takes away from the $21b. If we make a quick assumption that half of all iPads are not the base storage, then that puts us at ~$10b lost revenue. Increased cost of production stands at 105m devices * 16GB * $0.5 = $840m. It gets a bit muddier when considering the other tiers since iPhones and iPads don't share the same tiers. But for the sake of simplicity and since a 128GB is always a possibility on the iPhone, we'll pretend both iPhone and iPad are equals.
Per 128GB device, 64GB is free
64, 32GB free
32GB, 16GB free (but we already counted these)
More assumptions: 5% of sales are the 128GB. This should climb a little since it's cheaper. I know I would bite, so, let's be aggressive and say it climbs to 10% of total sales. Leaving 40% for the 64GB model.
10% = 21m devices * 64GB * $0.5 = $672m
40% = 84m devices * 32GB * $0.5 = $1,344m
So this puts the total cost at: $10.5b in lost revenue, and $2.856b for a grand total of $13.4b in lost revenue and increased cost (accounting-wise, you can't count it as such, but just for simplicities sake we'll ignore that).
That's all assuming the pricing scenario above. What of alternative changes.
Apple could change the pricing tiers, such as reducing the $100 steps to say, $80.
Apple could give all a price drop (contract free price). Starting at $449 for the iPad and $100 for bumps.
The above assumes nothing of the change in consumer decisions. Would most never consider anything but the base model? What if you decide to use the discount to buy the cellular model of the iPad, more accessories, AppleCare? And all those new buyers who think the storage bumps is all they needed to get in the Apple Garden.
But this is the march of progress. Storage sizes will naturally increase through higher media consumption and larger app sizes, etc. We'll all repeat this story with the 32GB models.
/random discussion thought I wanted to share on my weekend
And yes, I folded the iPad 2 in as a current gen device.