Apple, Inc. To Earn $3B Extra By Not Launching 32GB iPhone 6

Apple, Inc. To Earn $3B Extra By Not Launching 32GB iPhone 6
<a href="">JESHOOTS</a> / Pixabay

Apple will earn an additional $3 billion in 2015 by keeping 16 gigabytes as the starting tier of the iPhone 6 and iPhone 6 Plus, according to analyst Neil Cybart of Above Avalon (via Business Insider). For most Apple fans, the iPhone 6 and iPhone 6 plus 16-gigabyte models are practically useless, and the mid-range iPhone has four times more storage capacity and is available at just $100 extra. As a result, opting for the extra storage is logical for most consumers.

Master stroke from Apple

Apple has made a remarkable move by offering the 16GB iPhone, knowing very well that most users will choose the 64GB version. So the only objective of the 16GB version is to drive revenue by pushing people to pay an extra $100 for the medium-sized storage.

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The report from Business Insider noted that using the 16GB version of the iPhone 6 and 6 Plus has been a problem for users, as the latest iOS version requires higher disk space for everyday usage. The report noted that the 16GB version could limit simple activities that can be done on the phone, such as checking Facebook.

According to Cybart, since the 16GB phone is not worth using and the 64GB version is available only for $100 more, users will opt for the 64GB version, which will in turn increase the average selling price for the iPhone. With the average selling price shooting up and the cost of storage going down with ramped,-up technology next year the Cupertino, Calif.-based company will see a net gain of $3 billion than if offered a 32GB iPhone 6, estimates the analyst.

32GB iPhone 6 meant a loss of $3B

Cybart estimated that if Apple would have unveiled a 32GB iPhone 6 along with the 64GB and 128GB versions, it would have posted net revenue of $44 billion, and revenue from the 16 / 64 / 128GB models would be somewhere in the vicinity of $47 billion next year. The analyst expects that 30% of previous 16GB iPhone owners will switch to 64GB making the phone the bestselling storage option.

“If Apple upgraded the 16GB option to 32GB without changing the price, then it would have continued to be the most popular tier, even enticing some who had previously paid extra for 32GB to downgrade and buy the lower tier,” noted Cybart.

When it comes to Android devices, many have storage options from 32GB, and most of the Android-powered phones such as the Samsung Galaxy S5 have a microSD slot to support expandable storage.

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