Most people will walk into the store and buy the cheapest iphone. If they reduced the 16gb to $100, and sold the 32gb for $200, most would still buy the 16gb because for the casual user 16gb is enough.
Not because 16GB is enough, but because $100 is the cheapest.
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I'm perfectly OK with 16GB being the base model. What I am not OK with is being price gouged for the upgrade to 32GB. It's probably a $10 difference at the absolute most in cost for Apple. So given even Apple mark-ups a $50 difference in price is more than reasonable. $100 is just fleecing.
I still think the 16GB should either be killed on given away at this point. Maybe free on contract.
Start at 32GB. If anything everything will be getting bigger, especially when they really start moving to 64bit and people always demanding more megapixels. A 16GB phone will fill up in no time.
For the 16gb that's just for people who mostly use it as just a phone and emailing.
BBut for us who use these things like laptops, videos, pictures, all sorts of apps, 16gb is nothing.
Especially when it comes to the iPad, but iPhone as well. A friend just bought the 64gb iPhone not too long ago. He has 2gb free.
Also as the updates for iOS come, the bigger it will get and the more space it will take up.
IPhone has always been bare bones, but as they get closer and closer to have all the bells and whistles of an Android phone, the more space iOS will take up.
Right now ios takes up about 4GB (or close to that) so an iPhone 5s will have about 12GB free. Since the phone is pretty much empty as far as functionality you have to start downloading apps. Take a few pictures. Before you know it in a couple of days you have about 6GB free.
The more features apple adds, the bigger it will get.
My LG G2 takes up about 8GB out of the box, but there are only a few apps I downloaded because it does everything without installing much.
Since my phone has no expandable storage, it came with a minimum of 32GB. So I had about 24GB free for a phone that was cheaper than an iPhone 5c.