Are iPhone Buyers Finally Ready to Rely on the Cloud?
Two factors drive iPhone financial performance: model mix and storage upgrades. Apple encourages customers to buy models with the newest, most advanced features and, of course, the highest prices. And, Apple sells storage upgrades that allow buyers to keep more photos, music, video, and apps on their devices, paying more for the added capacity.
Of course, everyone pays attention to model mix. It reflects how Apple’s latest features appeal to buyers, or conversely the lasting popularity of older models. The base price for available models ranges from $429 to $1,199.
Storage upgrades matter, too. Apple offers two or three storage upgrade options for each model, with upcharges ranging from $100 to $500. They add significant profit to a sale, as the prices for added storage far exceed the cost of a bigger storage chip.
For most models, the base storage level is 128GB. For iPhone 16 Pro Max, the base storage level is 256GB, and for iPhone SE, base storage is 64GB. For the newest and legacy flagship models, buyers can upgrade to 512GB. iPhone 16 Pro and Pro Max offer up to 1TB and the iPhone SE tops out at 256GB.
A straightforward way to think about storage purchasing is, how many customers upgrade from base storage? Storage upgrades have powered revenues for many years, and changes in that uptake rate are important to Apple’s financial results. So, let’s look at storage upgrades in the December 2024 quarter, the first full quarter of sales of the new iPhone 16 models introduced in September 2024. We group the phone models into three categories - 16 Pro and Pro Max, the leading edge, top-of-the-line; 16 and 16 Plus, the flagships; and iPhone 15, 14, and SE, the legacy phones.
In the most recent quarter, 44% of iPhone 16 Pro and Pro Max buyers upgraded from base storage, down from 48% for iPhone 15 Pro and Pro Max buyers in the similar year-ago quarter (Chart 1). Among buyers of the base iPhone 16 and 16 Plus, 42% purchased upgraded storage models, also down from the similarly situated iPhone 15 and 15 Plus (48%) in the prior year quarter.