AH Primetime: Forget 32GB by Default – Next Year’s Flagships Should Come with 64GB of Storage by Default

December 14, 2013 - Written By Lucian Armasu

You can check the bill of materials of smartphones and tablets over the years, and you’ll notice the component price drops by about 30 percent every year, which means the same component will cost half as much two years later, and only a quarter of the original price, four years later (or four times that amount of storage will cost the same, however you want to see it).

Yet, here we are with OEMs pushing phones only with 16GB in their flagships, no less, almost four years after we first started seeing 16GB of storage in high-end smartphones and tablets. What’s worse, is that most of them still charge $100 more for that extra 16GB of storage when you opt for the 32 GB version.

PocketNow is asking for OEMs to switch to 32GB of storage by default, from the current 16GB of storage, for next year. But I’m going to do one better, and ask for 64GB of internal storage by default in flagship smartphones and tablets.

You may think that’s a little too extreme and that perhaps OEMs can’t afford it, but you’re only thinking like that because the jump from 16GB to 64GB seems too huge, and because OEMs still charge ridiculous amounts of money for that storage difference. Apple for example, charges $200 more, if you want to go from 16GB to 64GB.

Since we’re already speaking about Apple, and it’s by far the worst offender, anyway, that unfortunately many other OEMs copy, too, in pricing tactics, let’s see how much it cost Apple to put that amount of storage in their tablets in 2010, when we first started seeing 16GB of storage as the base model for flagship devices, and what it costs them today.

2010 – iSuppli puts the whole BOM for the 16GB iPad 1 at $260, and the 32GB version at $290, while the 64 GB version was $348. That means it cost Apple $30 for 16GB, and $116 for 64GB (so roughly $120, which is 4x the price, for 4x the storage).

2013 – iSuppli has this to say about the 32GB version of iPad Air compared to the 16GB version: “The profitability of the iPad Air rises dramatically as the NAND memory capacity increases. For example, the 32GB model costs Apple only $8.40 more to produce—but has a retail price that’s $100 higher.”

So in 2013, it costs Apple only ~$8.50 to add 16GB of storage, and if we multiply that by 4, we get – what do you know – the exact same price it cost Apple to put 16GB of storage in their iPad in 2010: $30. So Apple could be already using 64GB of storage as default in its $500 iPad, instead of the measly 16GB they are offering for $500 right now. For $100 more, they could add 128 GB of storage, which would cost them only $60, so they’d still make a nice healthy profit even on the 128 GB version that should be priced at $600, not at the ridiculous $800 price they are asking for right now ($300 more!).

As I mentioned, Apple seems to be the worst offender with this, but many other OEMs are not too far from them either. Some have just started offering an extra 16GB for $50 more, but as you can see, even that is too expensive, since it costs them less than $10 to add it. So they should be charging maybe $20 more, at most, for the 32 GB version.

I’m not advocating, however, for having 8GB, 16GB, 32GB, 64GB and 128GB versions of the same device, because that increases complexity, and it does end up costing OEMs more overall – at least until that ARA project comes alive. Then it would be just a matter of component makers selling those modules.

Until then, what I am saying is that OEM’s should be switching to 64GB of storage as the base model for their flagships, for the same price as they charged for the 16GB models before, and then having 128GB models that cost only $100 more. That would be very fair to the consumer (at least for now, but hopefully they won’t drag these prices for years to come, too).

For the mid-range models, such as the Moto G2 next year, it should have 16GB by default at $180, and 32 GB at $200, because by then it should cost them only $6-$7 to add that extra 16GB.