[ort888]

We now have 5 different members of the iPod and iPhone family, 4 of which really on flash memory. The Shuffle, Nano, Touch and iPhone. I'm going to remove the Shuffle and iPod classic from this comparison because they don't really fit.

So first we have the Nano. The only difference between the 8gig and 16 gig versions is the storage space. The price you pay for an 8 gig upgrade is $50. 8 gigs of flash = $50

Next we have the touch. Same deal, the only difference is memory size. $229 for 8 gigs. $299 for 16 and $399 for 32. You pay $70 for the first 8 gig upgrade and then pay $100 more to make a 16 gig jump. 8 gigs of flash = $70, 16 gigs of flash = $100

Now the iPhone. Exact same situation, storage being the only difference besides the addition of a white model. You pay $100 more for 16 gig model. 8 gigs of flash = $100

So we have the price of 8 gigs of flash memory set at $50, except for the 16 gig Touch and the 16 gig iPhone, which charge $70 and $100.

What is the deal with this discrepancy?

Especially with Flash being so cheap. Looks at this.

http://www.newegg.com/Product/Produc..._-NA-_-NA-_-NA

4 gigs for $10. If cards like that can be sold for a profit, or at cost, then you know apple is paying less then that for flash memory.

At any rate, I already know the answer to this question, so it's purely rhetorical. I understand that it's all marketing... I just find it annoying. I don't like it when they are so in your face with it. I know we are paying a premium for Apple products, I've come to accept it... I just fail to why 8 gigs of flash should cost twice as much in the iPhone as it does in the Nano.

[Dakar V]

Originally Posted by ort888 

it's purely rhetorical.

So... what can I say in this thread?

[ort888]

I dunno. I know this isn't some big revelation or anything, I just thought I would bitch about it.

[seanc]

I bought an 8GB pen drive for £12 so the price of £40 for an 8gb upgrade to 16gb seems expensive. This could be justified by the flash in the iPod being high quality and fast, the pen drive is a bit slow when writing.

[mduell]

8GB flash (two 32Gb chips) costs about $12.50 on the spot market... I'd expect Apple is paying even less. But that's just cost, it's worth a lot more when packaged up in a shiny product.

seanc: Apple isn't using the fast (SLC) flash in the iPhone/iTouch, they're using the same cheap (MLC) stuff as your pen drive.

[paduck]

Apple has always made higher margins as you move up their product line. On a product like the iPod/iPhone series, the only way to get that increased margin is by having a greater margin on the additional costs associated with the improvement. So, if 8GB costs Apple $12.50 and they charge you $50 for it, that allows for an increase in their their margin by $37.50 on the $200 price of a nano (18.75% margin, plus whatever they get for the 4GB version. If Apple makes $40 profit on each 8GB iPod nano, then their margin is 26.6%. On the 16GB version, the total margin of $87.50 would be 38.75% of the full purchase price. Great margins for consumer products, but very consistent with what Apple reports as its gross margin of 34.8% in the last quarter.

On an iPhone, same issue, except that they get $87.50 on a $300 device. That allows for additional margin of 29.2%, but it is probably less on a percentage basis since Apple is being subsidized by AT&T for each iPhone sold.