Apple has shocked the world by releasing a 128GB version of the iPad 4. At $ 930, the 128GB iPad (with cellular modem) is $ 100 more than the 64GB model, and a full $ 300 more than the 16GB version.
While this might not appear to be the most exciting news in the world, there are actually two trends worth analyzing. First, why did Apple wait almost three years to release a 128GB version of the iPad? Second, is Apple (or any other mobile device maker) really justified in charging such a hefty premium for a few more gigs of NAND storage?
To begin with, the iPad 4 only has space for a single NAND flash chip — and Samsung only recently released the first single-chip 128GB solution. These, in turn, are only possible because of recent advances towards sub-20nm NAND flash processes and 128Gbit cells. The other option would’ve been for Apple to redesign the fourth-generation iPad’s logic board to allow for more NAND chips, but that would’ve no doubt been seen as an expensive, profit-munching frivolity — better to just wait for new chips, which can simply be plugged in.
We should also consider other market factors, such as Microsoft’s Surface Pro, which will debut in February with 128GB of storage. The Surface Pro already has a dizzying list of features and capabilities — USB and HDMI outputs, a kickstand, access to millions of x86 apps — and Apple probably didn’t want storage space to be another feather in Microsoft’s cap (though the Surface Pro is still expandable…) Curiously, there don’t seem to be any 128GB Android tablets on the market yet (but again, many Android tablets are expandable).
Next, the price: Can Apple really, with a clean conscience, charge $ 929 for an ARM tablet with 128GB of storage? The estimated cost of building a third-generation iPad with Retina display, with 64GB of NAND storage and cellular modem, is $ 400. With the fourth-generation iPad, that cost probably went down a little. We don’t know the cost of Samsung’s new 128GB NAND chip, but it’s probably in the region of $ 120 (64GB costs ~$ 60). In short, the 128GB iPad probably costs Apple in the region of $ 460 to produce — and yet it sells for $ 930. Now you have some idea of how Apple makes such massive profits.
To put this into perspective, the Surface Pro with 128GB of storage is only slightly more expensive at $ 1000. Apple’s own MacBook Air, with 128GB of storage and a real Core i5 CPU, is $ 1100.
To be fair, though, it’s not like many people will actually buy the 128GB iPad 4. In its press release, Apple seems to suggest that the new model is mainly targeted at commercial users who might use their iPad to edit AutoCAD files, movies, and music. Most users will still be more than happy with a WiFi-only model, which starts at a very reasonable $ 500, or an iPad Mini.