Apple’s iPhone6S upgrade might be showing how far the outfit has moved from being aware about what is happening in the market.
The entry-level edition of the phone comes with just 16GB of storage which contains pretty much all you would need for songs, movies, photos, and apps if you had bought the phone a couple of years ago.
Storage prices have been falling dramatically over the last couple of years so the cost to Apple of having storage that is more meaningful is minimal. Yet the iPhone 6S comes with features which need shedloads of storage.
Obviously, Apple thinks you will reject the entry-level phone and buy something a little more expensive, but that defeats the purpose of having an entry-level phone. First time buyers in Apple’s Walled Garden of Delights are going to have a terrible experience, dump it and never come back.
Apple should be thinking long term with an entry phone and not sell something that does not really work or show it up.
Leaving the entry-level unit at 16GB of storage rather than 32GB drives higher profit margins in two ways. It reduces the cost of manufacturing the $649 phone, which increases profit margins on sales of the lowest-end model. It pushes many people who might be happy with a 32GB phone to shell out $749 for the 64GB model.
A 64GB flash storage chip is more expensive than a 16GB flash chip, but it’s not anywhere near $100 more expensive, so pushing people up the chain increases not just revenue but profit margins.
But it is a moot point if Apple needs more cash and this sort of approach which seems them milking users for no good purpose is going to make it less popular than Microsoft. What is weird is that the extra costs of giving the user something worthwhile are minimal.
Apple might be the market leader in smartphones, but there is no guarantee that it will remain so.
The smartphone market is shrinking and areas like China which were supposed to keep it alive are contracting. This means that Apple is going to end up competing on spec with much cheaper android phones.
Killing the 16GB phone and replacing it with a 32GB model at the low end would help create satisfied customers, positive press coverage, and goodwill. It would hold a reputation for true commitment to excellence, and a demonstrated focus on the long term. These were the reasons people claimed they bought Apple products.
Now it is getting harder to see it doing more than squeezing cash out of customers for no real reason.