As highlighted in a Bloomberg article, the new 512GB storage option introduced in the flagship iPhone XS and XS Max devices could prove to be the most profitable feature for Apple. It is estimated that the 512GB option could make Apple $241 more per phone than the 64GB model and $134 more than the 256GB one, up from $107 in last year’s models.
The numbers estimated by Wayne Lam, an analyst at researcher IHS Markit Ltd., clearly show that Apple is not only tackling the global smartphone industry slowdown by raising iPhone prices but is also generating more profit from parts with higher storage option being the prime example.
“Storage is one of their levers to create more revenue and is absolutely the most profitable iPhone feature,” says Lam. “Adding more isn’t much work for Apple, because it just means swapping a chip whereas when you increase the screen size, you have to completely re-engineer the phone.”
The iPhone uses Nand flash memory to store photos, video clips, and most of its software. The market price of this component is about half what it was a year ago, according to InSpectrum Tech data. But Apple isn’t passing the savings on to consumers: The 78¢-per-gig charge hasn’t budged since last year. Of course, Apple uses contracts to lock in the price of such components as Nand flash, so it may not be benefiting yet from recent price declines.
So even if Apple is able to take advantage of the drop in Nand flash memory prices, it doesn’t seem to be passing the savings on to consumers of its increased storage options.