Mysteries of Cupertino: Why Is There No 32GB iPhone?

Look at Apple’s iPhone lineup and you’ll see something weird: The entry-level versions of the 6s and 6s Plus start with just 16GB of storage. But the next step up — for an additional $100 — is a model with 64GB. Add another $100 and you get to the high end of the range: 128GB.

That’s not exactly a linear curve. There’s something — specifically, a 32GB model — missing. And it’s a fairly new development: Prior to the release of the iPhone 6 and 6 Plus in 2014, the iPhone lineup included a 32GB option.

So what happened to the 32GB iPhone? Nobody outside of the company knows for sure, of course. But we can make some educated guesses.

Maintaining margins

Like any responsible company, Apple is in the business of making money. The flash memory that iPhones use for storage is a pricey commodity, and Apple obviously wants to optimize the cost of making each phone versus the price it charges you for the finished product.

Just as obviously, Apple doesn’t publish the prices it pays for parts. But if you believe those analysts who disassemble tech products in order to guesstimate how much they cost to make, you’ll come away with some not-very-surprising conclusions.

First of all, as you’d expect, higher capacity flash memory costs Apple more than lower capacity: According to estimates from analysis firm IHS, a 16GB NAND flash chip costs $6, while a 64GB chip costs around $23 — almost four times as much.

But put that in context: While Apple is paying something on the order of $17 more to go from 16GB to 64GB, it’s charging consumers $100 more.

(Side note: Apple uses a lot of flash memory — it’s now the de facto storage medium in almost all Apple products except a few Macs here and there. So it has no doubt cut deals with vendors of flash memory, including Samsung, to buy in bulk, which could cut prices lower than those above.)

The thing is, Apple is fanatical about its margins, and its skill in managing them is one reason it’s Wall Street’s favorite company. I am going to make a leap here and assume that Apple did the math and decided that, if it wanted to offer just three iPhone configurations while keeping those margins optimal, 32GB was the odd one out.

The best deal for the customer

Then there’s the flip side of the equation: the value proposition for customers.

As a buyer, you’re looking at the three iPhone models at 16GB, 64GB, and 128GB. I imagine that a number of customers look at those offerings and find the tradeoff of paying another $100 to quadruple the storage capacity, from 16 to 64GB, is a pretty good deal. It’s very possible that not as many people would make the same jump if the entry-level model were 32GB instead.

My guess is that Apple positions the 16GB as a true base model. (Perhaps “bare bones” would be more accurate.) It’s the smallest amount of storage you can include in order for the device to be functional. Want a better experience? Jump up a tier to 64GB. Want to go full luxury? Upgrade to 128GB. It’s not dissimilar from buying an entry-level car versus one with all (or at least some) of the trimmings.

What storage capacities may come

But here’s the thing: 16GB won’t stay sufficient for long. With ever-sharper graphics and video, larger apps, and even an OS with a bigger footprint, 16GB is quickly becoming unworkable for even the most casual users. I would guess that we’ll see a change to the storage lineup next year. But I’ve learned that with Apple — as with so many things in life — predicting the future is a sucker’s game.