Apple's margins are the envy of the PC industry. One of the key contributors to those margins is the cost of additional flash storage, which can only be added at purchase. What does Apple's pricing on the new iPads and MacBook Air tell us?
Apple pioneered the use of flash storage in SSDs and mobile devices. For some time they accounted for some 50 percent of the industry's total sales. They have quite a history in flash storage.
Apple's gross margins -the percentage difference between revenue and cost of goods sold - are typically around 38 percent. HP Inc. - the PC and printer company - has gross margins of around 17 percent. A big contributor to Apple's margins is what they charge for larger storage capacities.
Take the new 11" iPad Pro, a model I'm thinking of buying for myself. To upgrade the base storage config from 64GB to 256GB costs $150, or $0.78/GB. If you upgrade to the new 1TB version, that is also $0.78/GB.
To put these numbers in context, a 1TB compact, high-performance, Samsung 970 EVO NVMe PCIe M.2 drive goes for $278 online, compared to the $750 Apple charges for its 960GB upgrade for the new iPad Pros.
The pricing is even more egregious on the new MacBook Air. The 128GB upgrade to 256GB costs $1.56/GB. Upgrade to 512GB and the cost drops to $1.04/GB or $400. The upgrade to a 1.5TB SSD costs $1200, or $0.85/GB
This compares unfavorable to MacBook Pro storage pricing, where upgrades are priced at a uniform, but still high, $0.78/GB. Just like the new iPad Pro storage pricing.
The new option
The good news is that with the new USB-C port on the iPad Pros, you'll be able to attach much cheaper external storage. For example, a G-Technology 1TB G-Drive Mobile SSD goes for $242 online, about $0.24/GB.
It's not all good: you'll have the hassle of an external drive, and need an app to transfer data to it. Hopefully developers are working on that app right now.
The Storage Bits take
We'll have to wait for benchmarks to come out to fully judge Apple's storage value proposition. They've often led the way in SSD performance, which takes some of the sting out of their pricing.
Given that SSD pricing online is in the $0.30/GB range, it's clear that Apple's storage pricing for upgrades is a major contributor to their industry-leading margins.
But let's look in the bright side: the original iPhone charged $25/GB for an upgrade. So there's that.