You’re paying too much to get a little more space on your iPad and iPhone

I can't stand the "breakdowns" from iSuppli: as if raw components were the only cost! There are the massive teams of software engineers, not only to write the software, but to maintain it over time. There are shipping costs, labor for manufacturing and quality control, advertising, marketing, R&#38;D for all the unshipped iterations, legal and compliance issues (for every single country), data centers, overhead, infrastructure, and more. Sure, some of these are fixed costs, and some can be absorbed by revenues from other product lines, but it's not like you can just subtract components and arrive at the take-home profit.<p>All that said, I'm sure that Apple still takes in a good profit on every low-end unit. But I don't see their overpriced storage as a gouge (or at least, an unreasonable one). Rather, it also acts as a subsidy: all the people who can afford a 64GB/3G iPad make up the difference profit-wise for the 16GB/WiFi, allowing them to offer it at a lower margin, both to entice users in and then up-sell, and also to grow the market share. Other industries do this kind of thing all the time, for cars, game consoles, etc.<p>Is Apple overcharging you on storage? Most certainly. But I don't think it's anything worthy of outrage. If it's not a good value proposition for you, don't buy it. There are plenty of alternate tablets which include micro-SD slots.

This is simply called segmented prices <a href="http://en.wikipedia.org/wiki/Price_discrimination" rel="nofollow">http://en.wikipedia.org/wiki/Price_discrimination</a><p>By all accounts it's a good thing, since it lets those with lower budgets still get the device, and yet still allows the manufacturer to make a profit.<p>You want to make a device for every price point your customers are willing to pay.<p>Cars do it too - those extras you can pay for don't cost anywhere near as much as you pay, they are simply there to make extra profit.<p>That's why you have the high/mid/low models of virtually every device, and the price difference is not anywhere near the performance difference (look at intel CPUs for example).<p>When you go to a car wash do you really think that extra shine/wax/whatever spray really costs that much? It doesn't, it's simply a way to make a little extra from those who are willing to spend it.

IMO this article is spot on. I've ordered the Nexus 7 and wondered if 8 GB would be enough, but then checked how much of the 16 GB on my Nexus phone I was using, and it's only a couple of GB.<p>In contrast, the PCWorld review of the Nexus 7 (<a href="http://www.pcworld.com/article/258772/google_nexus_7_tablet_review_solid_but_not_revolutionary.html?tk=rel_news" rel="nofollow">http://www.pcworld.com/article/258772/google_nexus_7_tablet_...</a>) starts by harping on and on about the supposed storage constraints of the 8GB model.<p>Too many mainstream reviewers are still obsessed with specs. Normal people don't know or care about specs; they only care about the overall experience, which is why Apple is where it is.<p>IMO Android has caught up to iOS in terms of everyday usability but the hardware is generally much cheaper than Apple and improves faster. I think the Nexus 7 will mark a turning point in the Android ecosystem.

It's a technically easy way to create product differentiation and start capturing consumer surplus. It's also easy for their salespeople to explain the added value to a wide audience - "you can take more pictures and video, and run more apps on this version." Easy to do and easy to sell is a product manager's dream.<p>Production cost is irrelevant. People don't buy things based on how much they cost to make. It's all about value, and Apple knows how to sell it. I would be interested to see a breakdown of how much of Apple's profits have come from selling Flash upgrades. I'm sure it has proven to be a brilliant pricing strategy earning them untold billions.

Regardless, people tend to make purchases based on the perceived value, not based on component cost.<p>I mean, is Slate going to do a car comparison and create an argument for consider horsepower per dollar (or cubic feet of storage per dollar, or seats per dollar, or whatever metric you fancy most) when purchasing a vehicle? I mean, does it really cost thousands of dollars more to produce a 6-cylinder engine over a 4-cylinder, plus a beefier transmission and driveline components? Of course not.

While this is a totally valid point, the article is missing a fundamental piece of the equation. There is no way to upgrade an iPad for cheaper. If I need 64GB on my iPad, it's not possible for me to circumvent Apple's fees.<p>The necessity of going through Apple, who is charging too much, is what makes this a valid point of complaint and Slate totally misses that, which makes them look dumb.

This is why I like devices to have a micro SDXC slot. My Galaxy Note 'only' came with 16GB built it, but I bumped it up to 80GB for a total of $70.<p>Flash memory of various types is not expensive these days, and it is small and low on power requirements. It's been easy to spot the price-gouging for a few years now.

I really find the extra space useful (for podcasts, audiobooks, music, and a movie or two for that long flight). I wish the upgrades were cheaper. I know why Apple does it, but I don’t like it; and contrary to Slate’s POV, I’m not a sucker, I am just getting a raw deal on the upgrade.

This is a strong reason to pick devices that let you use a microSD (or similar, hopefully non-proprietary) card for extra storage. I will never run out of memory on my smartphone for that reason, since most "bulk data" that I encounter is music, photos, etc.

Do these stats take into account device density? I wonder if the higher density flash chips are more expensive.<p>About a year ago 4GB DDR3 SODIMM's were about $50/each but 8GB versions which required twice as dense chips were around $500/each - there was a huge premium on the dense chips.<p>Now the prices have dropped to roughly $30 and $70 respectively, which is much closer to a linear price/size curve.<p>Does anyone know if flash pricing follows a similar curve?

How much storage do you really need on a mobile device these days? I had the 64GB iPad 2, but with the new iPad I didn't feel the need to go beyond 32GB. I don't even fill that up. With iTunes Match and so many other streaming services, local storage with all its syncing issues isn't as relevant anymore.

"Modern gadgets are meant to be disposable machines, not eternal repositories of all your stuff. "<p>I think that would be a better subject to get worked up about than the feeling you're getting conned because the profit margins on one (optional!) part of your gadget are higher.

Good, the people willing to pay through the nose for the premium model can fund research into more products, heck, they can even make or break the success of the product as a whole. Meanwhile, if the lower spec options works for you, you are getting a deal.