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Apple's 16GB IPhone 6S Is a Serious Strategic Mistake
HughPickens.com writes: Matthew Yglesias writes at Vox that Apple's recent announcement of an entry level iPhone 6S is a serious strategic mistake because it contains just 16GB of storage — an amount that was arguably too low even a couple of years back. According to Yglesias, the user experience of an under-equipped iPhone can be quite bad, and the iPhone 6S comes with features — like the ability to shoot ultra-HD video — that are going to fill up a 16GB phone in the blink of an eye. "It's not too hard to figure out what Apple is up to here," writes Yglesias. "Leaving the entry-level unit at 16GB of storage rather than 32GB drives higher profit margins in two ways. One, it reduces the cost of manufacturing the $649 phone, which increases profit margins on sales of the lowest-end model. Second, and arguably more important, it pushes a lot of people who might be happy with a 32GB phone to shell out $749 for the 64GB model."
But this raises the question of what purpose is served by Apple amassing more money anyhow. Apple pays out large (and growing) sums of cash to existing shareholders in the form of dividends and buybacks, but its enormous cash stockpile keeps remorselessly marching up toward $200 billion. "Killing the 16GB phone and replacing it with a 32GB model at the low end would obtain things money can't buy — satisfied customers, positive press coverage, goodwill, a reputation for true commitment to excellence, and a demonstrated focus on the long term. A company in Apple's enviable position ought to be pushing the envelop forward on what's considered an acceptable baseline for outfitting a modern digital device, not squeezing extra pennies out of customers for no real reason."
But this raises the question of what purpose is served by Apple amassing more money anyhow. Apple pays out large (and growing) sums of cash to existing shareholders in the form of dividends and buybacks, but its enormous cash stockpile keeps remorselessly marching up toward $200 billion. "Killing the 16GB phone and replacing it with a 32GB model at the low end would obtain things money can't buy — satisfied customers, positive press coverage, goodwill, a reputation for true commitment to excellence, and a demonstrated focus on the long term. A company in Apple's enviable position ought to be pushing the envelop forward on what's considered an acceptable baseline for outfitting a modern digital device, not squeezing extra pennies out of customers for no real reason."
Also keep in mind, many, many people own a smartphone, yet don't use the advanced features offered. Like my dad. He has about 3 apps he uses -- no interest in getting others, no interest in shooting video, maybe shoots photos every couple of months. I suspect there are a few million people like him. I would think and hope that the people buying the entry level know what they're getting into -- which, is that if you plan on using the phone much or the advanced features, it IS NOT for you. However, if you plan on just wanting a smart phone, but use none of the advanced features, then it most certainly is just fine.
I don't think it is that bad to keep it around.
But that doesn't make the 16GB version a strategic mistake. The absence of a 32GB version is.
It doesn't have to be like this. All we need to do is make sure we keep talking.
I have heard an argument from the corporate IT side that Apple needs to continue to offer the 16gb model for the sake of corporate clients, who don't want to stuff them full of data or apps, but want to tightly control what apps are on them, and need little more room for anything else. As they're not going to make one just for corporations (this is Apple, after all â" scaling & possible scaling down the road, or they're not going to do it), they might as well make it the baseline version.
brwski
"Because without beer, things do not seem to go as well''