iPhone Storage is 'Absolutely the Most Profitable iPhone Feature' says Analyst

A new report out this morning by Bloomberg's Mark Gurman and Ian King takes a look into Apple's pricing strategy for the storage capacities on the iPhone XS and iPhone XS Max. Specifically, Bloomberg says that the biggest upsell for the iPhone XS and XS Max is the new 512GB storage option, which will help Apple make $241 more per iPhone than the 64GB option.

iphone xs storage tiers
512GB is the highest storage capacity that Apple has yet to release on an iPhone, and the company charges customers a lot more for NAND storage chips than it pays suppliers. IHS Markit analyst Wayne Lam explains that storage costs Apple about 25 cents per gigabyte, and the company charges customers about 78 cents per gigabyte. Because of this, Lam says that storage "is absolutely the most profitable iPhone feature."

In research compiled by Bloomberg, the 64GB iPhone XS cost Apple $23.68 for the NAND storage specifically, the 256GB cost $66.24, and the 512GB cost $132.48. In terms of revenue, the 512GB storage option is estimated to make Apple $241 more per iPhone than the 64GB tier, an increase from $107 between the highest and lowest storage tiers in last year's iPhone X.

According to data from InSpectrum Tech, the market price of NAND flash memory is half of what it was a year ago, but Apple's storage tiers for the iPhone have not reflected these savings.

“Storage is one of their levers to create more revenue and is absolutely the most profitable iPhone feature,” says Wayne Lam, an analyst at researcher IHS Markit Ltd. Adding more isn’t much work for Apple, because it just means swapping a chip, he adds, “whereas when you increase the screen size, you have to completely re-engineer the phone.”

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 far, though, storage costs customers more on an iPhone than on, say, a Samsung Note 9. Samsung Electronics Co. charges 65¢ a gig to move from the 128GB Note 9 phone to the 512GB model.

With more storage, users can save more photos, videos, documents, music, movies, podcasts, books, and more on their iPhones, without having to worry about deleting old items for more space. Of course, Apple also offers iCloud storage at $0.99/month for 50GB, $2.99/month for 200GB, and $9.99/month for 2TB. This means that if a 512GB iPhone XS or XS Max user wants to back up most of the content on their device, they will need to opt for the $9.99/month option.

In terms of the prices for these new iPhones, which begin at $750 for the not-yet-released iPhone XR and increase to $1,449 for the 512GB iPhone XS Max, Apple CEO Tim Cook has said that the company is aiming to "serve everyone." In an interview with Nikkei, he explained that "if you provide a lot of innovation and a lot of value, there is a segment of people who are willing to pay for it," referring to the steeper prices of this year's iPhone XS and XS Max.

Related Forum: iPhone

Popular Stories

2007 iPhone

Apple Discontinuing This 18-Year-Old iPhone Feature

Saturday February 8, 2025 3:51 pm PST by
The end of an 18-year era is on the horizon for the iPhone. Apple reportedly plans to announce a new iPhone SE as soon as next week, and the device is expected to feature a full-screen design with Face ID, instead of a Touch ID home button. That means Apple will no longer sell any new iPhone models with a home button, for the first time since the original iPhone launched. The home button...
oppo find n5 fingers

World's Thinnest Foldable Phone Launches Next Week

Monday February 10, 2025 3:05 am PST by
Oppo has confirmed a February 20 global launch for its Find N5, which the company claims is the world's thinnest device in the foldable phone category. The phone is expected to be re-branded as the OnePlus Open 2 in the US. The Chinese vendor has been teasing the device in the last few weeks, touting its waterproofing and nearly invisible display crease, and highlighting its thinness by compa...
iCloud General Feature Redux

iPhone Users Who Pay for iCloud Storage Receive an All-New Perk

Thursday February 6, 2025 11:21 am PST by
If you pay for iCloud storage on your iPhone, Apple has a new perk for you, at no additional cost. iCloud+ is the official name for Apple's paid iCloud storage plans, which range from 50GB for $0.99 per month to 12TB for $59.99 per month in the United States. iCloud+ plans already come with multiple perks for free, such as Hide My Email and HomeKit Secure Video, and now there is another one...
m2 macbook air blue

M4 MacBook Air Release Continues to Appear Imminent

Monday February 10, 2025 10:56 am PST by
There continue to be signs of a new MacBook Air with an M4 chip, indicating that we could see the machine launch in the not too distant future. A private account on X today shared the identifiers that the MacBook Air will use, and those identifiers correspond to the M4 chip. According to the source, both the 13-inch MacBook Air and the 15-inch MacBook Air will be equipped with Apple's...
imac video apple feature

Apple to Announce New Products Next Week

Saturday February 8, 2025 10:55 am PST by
Apple has yet to release any new devices in 2025, but at least two new products are expected to be announced next week, according to rumors. Below, we outline the new Apple products that are likely to be unveiled next week. iPhone SE 4 Apple plans to announce the long-rumored iPhone SE 4 as soon as next week, according to Bloomberg's Mark Gurman. The new iPhone SE is rumored to...
iOS 18

iOS 18.4 Will Include These New Features for Your iPhone

Wednesday February 5, 2025 7:15 am PST by
iOS 18.3 was released last month, so the first iOS 18.4 beta should be coming soon. iOS 18.4 is expected to be a more substantial update for the iPhone, with several new features and changes related to Apple Intelligence and beyond. Apple's website suggests that iOS 18.4 will be released in April, following beta testing. Below, we outline what to expect from the update so far. Apple...
apple silicon mac lineup 2024 feature purple

Apple Increases Mac Trade-In Values for a Limited Time

Sunday February 9, 2025 3:53 pm PST by
Apple today increased its estimated trade-in values for select Mac models in the United States, with the full changes outlined below. Apple says the extra trade-in credit for select Macs is available with the purchase of an eligible new Apple device through April 2. The trade-in values increased by between $10 and $50. Model New Value Old Value MacBook Pro Up to $925 ...
Powerbeats Pro 2 Orange

Powerbeats Pro 2 Given to Customer Early, Expected to Debut Tomorrow

Monday February 10, 2025 7:42 am PST by
Apple's long-awaited Powerbeats Pro 2 are finally expected to be announced this Tuesday. Ahead of time, one lucky Walmart customer was able to get their hands on the earbuds early, according to a since-deleted Reddit post over the weekend. A leaked image of the Powerbeats Pro 2 in Electric Orange "My local Walmart had them in the cage," the Reddit user explained. "I asked if I can buy them...

Top Rated Comments

levitynyc Avatar
83 months ago
They should start at 128GB, but there’s a ton of profit in charging an extra $150 for the 256GB model.

64GB in a $1000 device is embarrassing.
Score: 73 Votes (Like | Disagree)
DevNull0 Avatar
83 months ago
Well this means we can give up on ever getting an SD slot.

It truly amazes me there are so many people here who will brag about how great Apple is *because of* their high profits, when the reality is other companies simply aren't as eager to gimp their products in pursuit of the short term bottom line.

Timmy's Apple simply can't comprehend what came so naturally to Jobs, that long term customer loyalty trumps short term price gouging. Apple truly is the new Microsoft and it's only a matter of time before someone comes along and disrupts them.
Score: 42 Votes (Like | Disagree)
nwcs Avatar
83 months ago
From the desk of the “None of us are surprised by this news” department... Margins are put into lots of different components and storage space is the easiest place to stick in a higher margin.
Score: 28 Votes (Like | Disagree)
Sandstorm Avatar
83 months ago
People want the most Innovative storage possible and 'It's Not Cheap to Do That'

/ Tim "greed is good" Cook
Score: 25 Votes (Like | Disagree)
69Mustang Avatar
83 months ago
Apple is the only company using nvme based storage on a mobile phone.

It is going to be more expensive then everyone else using ufs.

Not really surprising news.
No this isn't surprising news. But not for the reason you're alluding to here. The type of storage Apple uses has nothing to do with the topic. This story is about the profit increase on storage relative to last year. $134 vs $107. It compares apples to apples... or Apple to Apple.:D
Score: 11 Votes (Like | Disagree)
D.T. Avatar
83 months ago
I know there will be decries against the evil corporate entity of Apple, but at the end of the day, if I choose to spend my money with them, and get the results I desire - i.e., a device with a terrific ownership experience, solid support, where I'm able to conduct business remotely, capture life with my beautiful family, get educated, be entertained, enjoy communicating, <insert_various_smartphone_features> - I don't care about their profit margin.

¯\_(ツ)_/¯
Score: 10 Votes (Like | Disagree)