Here's why Apple sells 16GB iPhones and iPads (and why they're not going anywhere)

Are you hoping that Apple bumps up the minimum storage on the iPhone or iPad so you don't have to spend the extra cash to get more storage? Here's why that's very unlikely to happen anytime soon.

Apple's financials for Q1 16 are out, and while on the surface it seems that Apple had a very good quarter, the truth is that iPhone sales appear to have stalled, and iPad sales are in a nosedive.

Now 75 million iPhone sales, and a further 16 million iPad sales (plus a whole bunch of other stuff like Macs and Apple Watches) means that Apple is far, far from doomed, but it's also new territory for Apple. For the first time since the iPhone was released in 2007 we're seeing a plateau, and possible signs that iPhone sales are weakening.

See also: Is the iPhone just too darn expensive?

But there's more to reading the financial data than looking at unit sales. Another key figure is ASP, or average selling price. This figure is simply the revenue divided by unit sales for each product category. For the iPhone the ASP is $691, and for the iPad it's $439.

Let's just focus on that figure for the iPhone for now. A 16GB iPhone 6s will set you back $649, so the higher ASP suggests that Apple is shifting a lot of more expensive iPhones (higher capacity devices, and the 6s Plus devices). However, remember that offsetting this is the fact that Apple is selling older devices, specifically the iPhone 6 and 5s, for significantly less than the price of the 16GB iPhone 6s.

Note: This is a complex subject, and there are a lot of factors - such as exchange rates and such - that I'm ignoring. But ASP is still a handy tool that gives us an insight into the breakdown of the devices Apple sells.

It's a delicate balancing act, but the idea is for Apple to keep that ASP as high as possible, while offering cheaper devices for those who don't have deep pockets. You flush folks who buy the 128GB iPhone 6s Plus handsets for $949 are helping shore up Apple's bottom line in the face of those who pick up a cheap iPhone 5s.

Now a big complaint I hear from iPhone and iPad owners is that they feel that 16GB of storage just isn't enough for them. Well, in many ways that's by design, because Apple ideally wants customers to buy higher-capacity devices. This is exactly why iPhones and iPads don't have a micro SD card slot that allows customers to bump up their storage cheaply.

The problem with getting rid of the 16GB iPhone and iPad, and replacing them with say a 32GB model, is that it would remove the biggest incentive that customers have to give Apple more of their money. That, in turn, would have a negative effect on the iPhone's ASP (which has been steadily increasing). And with iPhone sales having hit a plateau, and revenues only up by 1 percent, keeping the ASP up is important.

So, if you're hoping that the base iPhone model will see a storage upgrade anytime soon, I think you're outta luck.

See also: