Segmenting based on storage — or why 32GB costs $100

Why a 32GB iPhone costs $100 more

Apple's updated iPod touch lineup separates 16GB, 32GB, and 64GB capacity models by $50 price increments. That's new for Apple in the iOS device lineup. Previously for the iPod touch, and still for the iPhone and iPad, capacity models are separated by $100 price increments. There are some other factors, like iPhone 5c vs. iPhone 5s pricing, or iPad Air vs. Retina iPad mini pricing, or iPad Wi-Fi vs. iPad cellular pricing. However, for the most part, Apple chooses to segment devices by capacity. So, is that a good thing or a bad thing?

First and most importantly — it has nothing to do with storage capacity. If you focus on storage capacity alone, and get stuck on component cost for NAND Flash vs. iOS device pricing models, you'll totally and completely miss the point.

Apple's current strategy demands three (or more) models of each iPhone and capacity is simply how they've chosen to differentiate them. Conceivably it could be something — anything — else. Capacity just suits their margins and our buying patterns.

Let's back up for a second. There's an old cliche about most products being segmented into lower-, mid-, and high-end. Many consumers understand products in that way as well. Lower prices get us in the door, and make products more accessible to those who truly can't afford more. Median pricing is what, as the name suggests, most people end up buying. Premium pricing exist for people who either aren't concerned about money or who need a premium feature enough that they're willing to pay for it regardless.

Appliances, cars, food, almost everything has examples of staged pricing, including consumer electronics and Apple.

"Starting at $199" is psychologically important. It's not the model that makes Apple or any manufacturer the most margin, nor is it the model that offers any consumer the most features, but it lowers stress and gets the buying process begun. From there, both the up-sell and the bargain hunting begin. The higher the model, typically the better the margin. The deeper the discount, typically the better the deal. Apple does few sales. Black Friday is typically it. Resellers often, especially these days, do far, far more. The margins built into the prices, the ones that increase from low to high end, build in a buffer for sales as well.

It's tempting to think those who buy the highest end subsidize those who buy the lowest end, or that capacity-based segmentation subsidizes all the rest of the technology that's consistent throughout the platform. Possibly that it subsidizes the operating system and software like iLife, iWork, etc., all of which are now given away "for free". (Apple currently chooses not to monetize customer attention or data to subsidize those things, or the hardware.)

Perhaps a better way to look at it is that Apple, as a vertically integrated provider, has the luxury of thinking in terms of the overall device, including hardware, software, and services. The goal for a company like Apple is, when you combine all models together, to get to an Average Sale Price (ASP) around their targeted margin. Some pay more, some pay less, some pay in the middle, and depending on how the product mix works out, Apple either hits or misses that target.

Capacity — how many gigabytes of data storage an iPhone, iPad, or iPod has — is just an easy way for Apple to market low, middle, and high end versions of their iOS devices. It's easy because everyone understands 64 is bigger than 32 is bigger than 16. More money for more capacity is easy for Apple to do and for us to buy. Check out refrigerators, television sets, cars, pasta — almost any consumer product, however. You'll quickly see similar patterns.

Sure, Apple could segment based on screen size instead, and theoretically charge $50/$100 more for every additional inch in diameter. They could segment based on processor speed, and theoretically down clock the low end and ratchet it up $50/$100 for every upwards bump. (Personal computers have segmented based on processor speed for years.) Apple could segment based on build quality, and theoretically use cheap plastic for the low end, good plastic for the mid-range, and metal for the high-end. They could segment based on any number of things, including camera optics, co-processor dependent features, color (Black MacBook anyone?), RAM, and more.

No, 16 or 32 or even 64GB of extra NAND Flash storage almost certainly doesn't cost $50/$100 at Apple scale. The small, medium, and large iOS devices cost plus or minus that much. The low end is simply there for people for whom price is one of the most important features, and the premium for those for whom money is a lesser object.

Note, because internet: Please don't confuse me offering my understanding of how this stuff works for justification or even agreement. However, build quality, processor speed, feature sets, etc. are not things I want Apple segmenting on within the same product line. (They already do the last two between product lines.) Offering just one model of each device at the median price point would certainly be simpler but would likely hurt sales.

Years and years of storage based segmentation has shown Apple that $100 increments based on storage capacity is a model the market can and will bear. Scratch that — the market will reward with astronomical amounts of money. That doesn't make it right or wrong, sane or insane, comforting or maddening. It just makes it what it is. And Apple likely won't change it unless and until we all agree on something better.

If you have any ideas on what that something might be, let me know!

Have something to say about this story? Leave a comment! Need help with something else? Ask in our forums!

Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

More Posts



← Previously

Adobe plans to double down on Lightroom and Creative Cloud in light of Apple's Aperture announcements

Next up →

Deal of the Day: Versio Mobile Skin Case for iPhone 5/5S

Reader comments

Why a 32GB iPhone costs $100 more


I really want 32GB to become the minimum storage option in the future. Then add 64GB and 128GB as the other two. 16GB for a flagship phone is downright embarrassing when you don't have SD card support.

8GB on any modern phone is even worse. SD cards are the floppy disks of the mobile age. Cloud is the future. How capacity evolves when online is almost indistinguishable from local will be interesting to see.

Fusion iCloud drive :)

Even though I want to agree with you about cloud storage, as someone that uses OneDrive a lot, I just can't justify my music collection in the cloud until att brings back unlimited data. I have a 32 GB and I have about 8GBs left, I can send my pics to the cloud, and I do, so technically I could delete them all, but then I can't access them to text them, email them etc. not like you could on android, or WP. I'd want 32GB the minimum as well.

Sent from the iMore App

Cloud storage is nice and all, until you have no access to your cloud storage due to lack of carrier coverage or poor signal. Or maybe you've hit your mobile data cap for the month. I do use Dropbox, mostly for photos and documents, but that's why generally I still prefer local storage on my device (especially my music).

It doesn't necessarily have to be an SD card (tho those are still handy in certain cases), just enough internal storage to where I don't really worry about whether or not I have room for everything. That's why I splurged and bought a 32 GB iPhone 5S instead of the 16 GB (64 GB is way more than I'd personally ever need).

And I totally agree with PureView; I think 32 GB should be the new minimum capacity too.

If that was a subtle dig at Android, it failed. Any phone with 8GB is probably $200 unsubsidized and so you can't expect much for that price. Also, SD cards are fine for storing music and videos. Apps take barely any space, save the nav apps, so SD cards work fine for most users who need 80GB+ with an outlay of about $50.

Cloud storage? Please. Most data plans are terrible.

I think Rene referred to the 8GB iPhone 5C and iPhone 4 (sold till last winter) models. No, they are/were not priced at USD 200, but rather at the top end of the market.

No, I do not get either why people buy these things. Either these folk are a little bit dumb, or they simply do not do anything with their phones -- in which case they might as well buy a USD 100 feature phone with a superior battery life and reliability, and use the saved money to buy a tablet or something. Or they might buy for the price of a 5C a top-end Nokia WP with a superior screen (not to say also larger, of course, and thus amenable to modern smartphone usage scenarios), superior camera, longer battery life and a build quality that withstands accidental dropping. Oh, they would also get twice the warranty (24 months) and location services that actually work.

They might even get a good HTC with sufficient storage for that same money.

But no, they get the crippled down 8GB iPhone or, dear God, some silly Samsung. I do not get this stuff any more. I do not understand the rationale people use to make these buying decisions. Good products no longer sell. Smartphoneas have become the new desktop PC: The better product you make, the worse off you aref... and, in coverse, the more you dare to rip off and screw up the customer, the more you are rewarded.

They buy the phone because it looks nice. There are a lot of people who are very slow to adopt new habits and can spend years just getting used to using basic features of their new phone. If all you do is check email and browse the web, 8Gb is fine.
For those coming from a random candy-bar phone an 8Gb iPhone is a major upgrade

Exactly, cloud is the future but what if you're in a congested city or in a isolated area with bad cell coverage and no WIFI? Well, you're SOL for the most part. This isn't just an Apple thing but most device makers charge a premium on memory.

But a class 10 card is just fine for storing music, picture or other media.

Cloud will never be the future. It will remain as an option, but the majority will always prefer local storage over cloud. There are just too many risk and hassles involved with cloud storage.

For mobile devices cloud storage of anything large is a problem because of expensive and limited data plans that many have to deal with.

As Analog Sprit said above, Cloud storage of all your media, music, videos, etc, is great IF one has access to LTE for retrieval of all that material. Unfortunately, not everywhere has that fast data access available, so that cloud storage is useless to those of us in those non-LTE areas, at least when we are using our devices out in the wild, and of course you have the matter of data caps which severely limit how much and often users can access their own data. Internet access at home and via wifi is a different matter.

I don't expect cloud storage to evolve that far in my lifetime. Damn physics! It will take radically new tech, not evolutionary, to have full high bandwidth coverage EVERYWHERE, and why would carriers ever bother to achieve it unless it was simply a side benefit of the tech itself? There's no money left on the table for providing coverage in remote or difficult (underground) areas.

Though there is a lot to be said about cloud connectivity and syncing, a totally-cloud based future sounds very dystopian. We have the technology now to produce devices with ample local storage cheaply; I don't think the consumer should give that up lightly.

Right, cloud is the future. How so, we pay way too much for data, cloud is open to hacking and if a service decides to change its TOS, closed down, etc you are SOL and you know it.

Their is no justification for a 32GB iPhone to cost $100 more, flash is flash and it doesn't cost $100 to double the space. Apple charges it because they are greedy and people will pay it and you know it.

No, you're thinking about it all wrong.

The baseline iPhone, is 32GB, and it costs $299 (on contract). Apple, realizing that for some people price is important, takes a margin hit on the 16GB models, and lowers the price by $100, and to compensate, raises the price on the 64GB version $100, despite the cost differential not being that high.

If you really want Apple to charge the actual price difference, you'll see the price of the 16GB phone go UP, not the price of the 32, and 64 versions come DOWN.

Floppy disks of the mobile age?! You must be kidding, 128GB SD card is extremely affordable and offers a ton of storage for music, videos and photos and all for approximately the same price Apple offers an additional 16GB of storage to your iPhone

1. Windows 8.1 already does that with OneDrive, and I wouldn't be surprised to see Microsoft bring that to Windows Phone in the future.

2. SD Cards are not the Floppy Drives of the Mobile Age. They are an important component for device interoperation especially when you're using something like an iPhone which interfaces poorly with other vendor devices. Have fun using AirDrop with an Android Tablet.

Cloud Storage is nice, but when you have a 300 MB 1080p video to move to another device, the SD Card swap is often much more economical (Data use when you are not at a WiFi Hotspot) and Faster (Swapping an SD Card is much faster than uploading that to the cloud and then downloading it on the other device).

As for price, it makes no sense at all that the phone costs $100 more, except that people are paying for it so why not get the highest profit margins that you can get. There are Android phones that rule their market segment (like the Galaxy Note) which have no issues charging less for much better hardware (internals) than is in an iPhone, along with 32 GB Storage and an SD Card.

I'm not interesting in starting a fan debate over which phone is better BTW (so those itching to get into that can just move along, please).

The justification for the higher price is profits, and your argument breaks down a bit once you move past the 32GB SKU and realize it's the exact same when you get to 64 GB. Other vendors charge, generally, a $50 higher cost when they double storage at the lower ends (16 to 32GB, 32 to 64GB, for example) and that's still giving them a lot of profits compared to what the higher storage componentry costs them. They do this without an issue because it's still a net win for them, while making their prices more competitive/attractive.

Apple is simply fortunate to have a good brand and devices/software that do not compete with any others in the confines of their ecosystem, so consumers don't have a choice in the matter. If they want the extra storage, they have one choice in the matter (well two, they can buy a used device, but you get my drift). Pay the higher prices, or stick with the lower storage SKU.

SD cards are the floppy disks of the mobile age? Do you know how useful it is on a phone? The manufacturer can make the phone only 16GB built in, and if the person wants more, they can choose as much as they want (all the way to 128GB). I'm sure something will FULLY replace SD cards (microSD on phones), like the cloud, but we need cellular and wifi coverage like everywhere. Local storage is much more reliable.

It just seems Apple wants to make more $, so they rip people off by charging $100 more for each storage upgrade, instead of fitting a microSD in a phone. And I'm sure Apple can still make their phone pretty, as the sim tray looks just fine.

I think as far as base model storage is concerned 32 GB is pretty much feasible now. I think 16 GB option should no longer be an option. A decent quality flash storage for handhelds has now ( I guess) reduced in prices to a considerable extent Correct me if I'm wrong please. Coz the system software alone takes up almost 6 GB of storage.

I agree, I've hoped 32 gigs would become the new minimum option for the last couple of refreshes. 16 is simply too small these days and really ends up limiting the future buying opportunities for apps and music. My wife had an 8 gig iphone 4 and stopped buying music and apps very quickly because she ran out of room and had no where to put it. That's bad for Apple and developers.

As far as the cloud observations, there seems to be a disconnect between the people who make these great devices and the companies who allow us to use data. There's this push from most content companies to use the cloud. Stream music, buy digital movies, offload your pictures and access them anytime no matter where you are. Then you have the data companies severely limiting your access to these things because they offer subpar networks. At some point something has to give. Even with Sprints wonderful unlimited data (when you're actually in an area where it works) you'll quickly find out that unlimited isn't really unlimited. The cloud is the way of the future, it's just a matter of how long it takes us to get there. I simply don't believe it's a realistic option for most people at this current date and time.

It'll be interesting to see how this changes later in the year with the introduction of a new iPhone. Taking a hint from the recent iPod touch price and storage refresh (where the 64GB model is only $100 more than the 16GB model), I think it's looking likely that Apple will move the differentiating and "premium" factor of their phones to be screen size (as well as possibly features?), as opposed to storage as it is now.

On a separate note, I do hope Apple realise that it's 2014 and charging an extra $100 to make the jump from 16GB to 32GB is not okay. I understand it's all about margins, and paying a "premium" for the feature you want but that is just absurd. I'd like to see the 2014 iPhone start at 32GB as well- 16GB (or even 8GB on iPhone 5c) is simply not enough for the vast majority of people in today's world.

I'd like a bold move by Apple.

iPhone 5S @ $0
iPhone 6C 4.7" @ $100

iPhone 6 5.5" @ $200

And then from there, last year's model shrunk down to the 4" form factor while the two higher tier models being new devices each year, with the only difference being screen size, like 2013's iPad models.

You actually think they'd call the 4.7" version, which will be the flag ship phone, the 6c. There's is no way on earth--laughable.

The iPad Air made sense because it's lighter and thinner than all previous iPad models. I just don't see why iPhone Air makes sense for the largest phone ever released by Apple.

$199 isn't a real price. It's a carrier subsidized price. iPhone 5s currently starts at $650 and goes up to $750 and $850.

I guess a "bold move" for carriers would be to subsidize them more, but it's hard to see Apple charging less as they add size and features (things people typically pay more for).

It's kinda like saying "I want BMW to be bold and make a $14,999 sedan!"

32gb should be the base model. Storage is cheap enough and with apps among other things getting larger in size, 8/16gb just doesn't cut it anymore.

Sent from the iMore App

Apple loves to gouge their consumers after locking them in. I know this personally after being an Apple customer since 1987. They nickle-and-some everything in the essentially for the sake of high profit margins but ostensibly for an "Apple experience." Their hardware is rarely always the best (at least in every metric) and the cost of necessary accessories have always been inflated (e.g., ADB mice and keyboards; using SCSI *way* past it's expiration date; forcing FireWire, 30-pin and Lightning connections and cables down everyone's throat; chickensh*t iCloud pricing until very recently; and no user-added storage in any iOS device).

Sounds like you're quite a happy Apple customer... since 1987... Who has been forcing this on you for the past 27. You could, oh you know, just go get a Dell or something.

Yeah, that's why I said I'm hooked. I've used other tech, but came back for one reason or another. It just seems like Apple misses opportunities to expand its marketshare while defending margins.

Apple makes their money on hardware, which is truer now than ever. You get iOS/OS X, iLife, iWork, and a host of other things "for free" when you buy Apple hardware.

The "nickel and diming" is, in part, the hardware subsidizing everything else, including Apple's very healthy profit margins.

Yeah, I know. It's like asking Google not to use our data or Amazon to give away it's content for free: business models.

They can afford to sell this stuff cheaper, they just choose not too because they are greedy pricks just like all companies.

Sent from the iMore App

Devil's advocate: Should all bosses only pay employees minimum range? Are employees who want more also greedy?

Or is there an element of what the market will bear at play?

The thing is it's not like people who work at apple are making the bare minimum. Plus apple has tons of cash, making the 32gb the base and pricing that at $199 wouldn't kill them when phones cost less than 200 to produce and they sell for $750+

Sent from the iMore App

At least for iPads, the base model need to be 32GB as the Retina apps are just too huge.

Sent from the iMore App

How about one model and give us a micro-SD slot....I know, crazy.

I guess I think the article makes this more complex than it is. The only difference to me as a consumer is the storage capacity between price tiers. As a consumer I don't need to know and should not care about whatever business theory is behind it - to paraphrase the article, it is what it is. The difference is storage. I've heard all the reasons why Apple won't add a micro-SD slot, but it all comes down to this price. It's not going to add too much weight, etc. SD cards are not going anywhere, the Cloud is just an excuse. It is not practical, cost effective in terms of bandwidth, nor safe for long term storage of media or anything else. It makes much more sense for me to have my music collection on a tiny card the size of half a fingernail than it is to constantly be uploading and downloading sucking data and paying Apple $25 a year for the privilege. It makes no sense whatsoever.

Someone can correct me if I'm wrong (like anyone actually needed permission for that), but don't SD cards present some software challenges? Writing to them can be slower than built in memory and can also have a higher failure rate. LG, Motorola, and Google have been moving away from SD cards for the past few iterations of their phones. The difference is that they don't charge a premium for their devices and the cost is just less for higher storage.

Sent from the iMore App

As much as I agree and want greater/more storage options, I DO stream my music via iTunes Match. I'm kinda done with chasing storage capacity while choose which of my songs I will put on it.

But I've got unlimited data plans. Otherwise, I guess I'd deal with the hassle and back up and sort through and all that crap.

Sent from the iMore App

The iMore app doesn't let me see the text near the bottom of my response. Apologies for the odd phrasing.

Sent from the iMore App

Yeah that makes a real cute sound bite but it doesn't hold up to any reality. Floppy disks fell out only because of storage capacity. A SD card can hold as much data as an entire iPhone, or more. There is no similarity whatsoever aside from physical media. It is patently ridiculous to have to download/upload everything constantly to "the cloud". it's a huge needless waste of bandwidth only useful for backing up critical data, not as an everyday solution to storage. The only reason Apple wants everything in the cloud is control and lack of flexibility for the end user to transfer their data as they see fit - aside from the obvious being able to charge a huge premium for more on board storage.

"Yeah that makes a real cute sound bite but it doesn't hold up to any reality. Floppy disks fell out only because of storage capacity. A SD card can hold as much data as an entire iPhone, or more. "

As the kids would say: "This."

I wouldn't consider them "floppy disks" of mobile, a better analogy would be DVD-HD and BD. Think of internal memory as BD and SD cards as DVD-HD. Initially DVD-HD was touted as a better product (prior to Android 4.0 almost all devices had SD cards and the operating system played really well with them) but then there's BD supported by a media monger (Apple and their enormous marketshare along with iTunes is not too similar to Sony's marketshare of PS3 and their entertainment branch, Sony Entertainment). Eventually all moved toward BD (as we see Google no longer pushing external memory storage). SD cards will be around for a long time, mobile devices aren't the only devices these, however the idea that SD cards will phase out for mobile devices is a high possibility.

SD cards are the new styli. Holdovers from the previous century. Manufacturers keep using them only because they're cheap.

Not to mention with sd slot people would be less likely to need to pay $100 for storage when they can get an sd card for $20-$30

Sent from the iMore App

This business model does make sense from a marketing perspective. No way around it. Three sizes, three prices. People can wrap their heads around it and the majority of people will just get the lowest priced model.

This will become a liability if not changed soon though. Really good Android phones are giving far more storage for a far cheaper price. It could be slow but eventually people will catch on to the better value. The iPhone surged to dominance in a carrier model where subsidies made everything equal. In moving to installment billing of the full cost of phones customers will actually see a difference by going with a different model. If the market is segmented by storage there is a large difference between a $650 16 GB iPhone and a $499 G2.

This is also becoming a liability because of Apple's own ecosystem. The base 16GB model is being stretched thin by higher res photo and video that the iPhone takes. Furthering the problem is the increasing size of apps as they add features and new designs. Space doesn't last as long as it used to. Getting an up sell is good but Apple has to wait for the contract to be over or the phone paid off to the carrier before the next up sell can occur anyway. In the meantime it is nothing but customer friction - and in Apple's premium model they need to avoid friction whenever possible.

The current storage options don't match up with the competition and increase friction with customers trying to use their devices just how Apple advertised for them to do so. This catches up with you eventually.

Sure but Apple's offering more value than just storage capacity for money.

They're offering the iPhone. Android phones can be cheaper as long as people are willing to pay more for the iPhone: For iOS and apps you can only get on iOS, including Apple's.

That's worked for the Mac even with it's very small market share.

If that changes, then Apple's model might have to change.

Understood, but the Mac and the iPhone have an important difference: the Mac has never been subsidized.

If the iPhone became like the Mac in terms of market share because of price pressure what does that do to Apple's scale and the app ecosystem? Less people buying is less people buying - no matter how valuable the iOS customer is vs an Android customer.

Not that I think that storage options could be the downfall of the iPhone - but there is a new reality in how these devices will be purchased. The subsidy model played a large part in the iPhone becoming what it is: a premium device everyone can buy. What happens if there is a time when only the truly premium buyer will buy it?

HTC M8 199.00 32GB w/128GB SD Card slot. How is Apple offering a superior product? Less value , more cost for the same 32GB with no SD Card. 650 off contract if you want to go that route. Both phones are built equally well with the M8 being bigger, having stereo speakers that face the front. Who offers more value? Not Apple [ and just for the fanboys I use both so don't accuse me of being biased].
Sent from my 2012 Mac, because frankly Windows Sucks!

How is "they're offering the iPhone " your actual answer? That's the type of answer that's given when no valid answer exists. Typical of people when talking about Apple. Don't get me wrong, Apple makes some good products. The best? Meh. To each their own. But the argument of "yeah, but it's Apple" is sad on all levels. Like how the term "it just works" became synonymous with Apple. Users of other OS's had more features long before Apple, but Apple always seemed to "just work" without them. Then a year or 2 later Apple would implement necessary changes to the OS to add new features and options and it still "just works"...does it really? Did it then or does it now? If it comes up short it comes up short. Every other OS has to own up and so should Apple. I'm all for liking a company and its products but come on. Like Apple and NFC. NFC has been used for years, connecting things with a tap. Paying for things with a tap. I went to Timmy Ho's today...tap. Apple likes something else, good for them. Must mean NFC isn't useful. That's what it sounds like reading about Apple. If Apple isn't on board then it's not good enough... until Apple releases it in their phones and it "just works" "because it's Apple".

Thanks for the thoughtful article Rene. Much better than some other sites cough 9to5Mac cough that said the new iPod storage pricing will never come to iPhone because Apple is greedy. Fact is we have no idea what Apple will do this fall. Apple 3.0 under Tim Cook just may surprise us all.

You say slave, Apple sees wizard. The efficiencies and agilities he's managed to pull of at scale are impressive and I think likely unprecedented in the industry.

I think whether you think highly or wrongly of Apple depends on perspective. From the producer and shareholder perspective, Apple is great. They manage to differentiate their products more by their software and marketing than by hardware (for instance, their displays are made by companies that make displays for competitors, too, yet we pay the same or more for a 720p-ish retina display as a 1080p one). Thus, they have a higher profit margin than other tech companies.
From the consumer perspective, Apple is not great though. They charge you for the "experience" while providing what is usually cheaper hardware (display example above or just a smaller phone for the same price as other metal phones like the HTC One). Thus, we often get "less" than what we paid for. But to each his/her own I suppose...

Posted via the Android iMore App!

Too many people have the idea profits are something of a meaningful global measurement for a company. While it's true for investors, it's not true for customers.

The number of iPhone model seems to be growing every year. There's already the 3 colors x 3 operators x 3 storage = 27 models and that is for iPhone 5S alone. Add 30 models of the 5C and 6 iPhone 4S models.
If they are consistent with previous years they will ditch the iPhone 4S completely, and only offer one storage (probably 16 GB) of the iPhone 5C but the 2-4 most popular colors rather than all five. I suspect they will keep the 5S in all colors but only offer 32 and 64GB. The new iPhone 6 (4.7") will come in 32, 64 and 128 GB at the same price points as today's iPhone 5S. The 5.5" iPhone (6X?) will probably come in the same colors and storage sizes as the 6 but at a $50 higher price point. All this is going to expand the number of models to keep in stock drastically.

i am from Europe -Nicosia -Cyprus and apple logo is going to be dead in 1 or 2 years from now and became the new BlackBerry.i have the iPhone 3-3gs-4-4s-5-now i have the 16gb 5s ,and yes that was the last iPhone i own .Conclusion..Stupid 16gb what to by from apps store and put them where?? wifi range is lock ,blue tooth is lock,no infrared no dnla,now big screen..and the most of all TO EXPENSIVE .No more don't even bother to open more shops in Europe and keep selling i phones to sleeping and jailbreak boys in america and uk.
Samsung ,LG,AND HTC is far chipper and offer more staff.

Apple charges $100 because profit. There is no way around it. $100 is too much for an increase of 16GB. You can write tons of articles to sugarcoat the truth, but it ain't changing. And that is the only reason why SD cards wont find a place in an iPhone.

iPhone is iPhone. And yes I believe its the user experience is at stake with all this price point. Nobody is forcing you to buy an iPhone. Just go get a Moto E a cheap but good phone.

Even if Apple will release a 4GB model, people will be buying that even without an expandable memory. Its the premium feel that others want not the memory.

Sent from the iMore App

The best way to segment a product line is by how much utility a user can get out of the product.
All the whining and complaining in the comments shows well how segmenting based on storage achieves that.
People that use their devices more (use more apps, create and consume more media like photos, videos and music) need more storage.
People that have just a few hundred songs and pictures and a dozen apps have plenty of space left on their 16GB devices.

If you use it more you should be willing to pay more.

Apple truly has got you convinced, huh, Rene? I love Apple as much as the next fella, but this article just reeks of justification for Apple's rip-off tier pricing.

Sad, Rene.

I agree 8GB is a waste of money! I had an iPad mini 16 GB and wasn't happy at all! Always deleting games! Didn't even put movies and music on it! Good games are already more than a GB so that's for that!

Cloud is the future!? Well I only have 500MB data so not for me and millions more!

Apple please drop all these 8/16 GB devices and start with 32GB

Sent from the iMore App

16GB is not only frustrating to consumers and degrades the experience, it ends up hurting developers and Apple's bottom end by limiting consumers from purchasing additional content for iTunes/Appstore for lack of space.

This is a good article on the tiering, which I hadn't understood. Thanks for that.

But on microSD cards: I want and expect my $$$ smartphone to play media. Why on earth would I want to pay data rates and rely on "the cloud" to maybe & expensively stream that media (if it's even there) when I can instantly snap in 32GB or 64GB of low-cost, practically zero size and weight storage? With microSD I can swap entire libraries of stuff in 10 sec. And carry as many of those as I want! It works ridiculously well.

I do understand the security issues that non-Windows OS have with SD as writeable storage. I'm not even asking for that. Make that SD slot read-only. But include it!! Otherwise I don't buy.