When Dan and I were discussing the iPad Mini, one item of contention for both of us was that while others (Amazon Kindle Fire HD, for example) have moved to a $50 differential from 16GB to 32GB, Apple has held steady with the $100 increment. I stated that my understanding was that at $50 Amazon was getting at least $28 (probably more like $38) … meaning that for Apple there is at least $78 more profit in the 32GB version and $156 more profit in the 64GB version.
Dan asked me what changes have happened in memory pricing since the original iPad came out, with the assumption that Moore’s law would uniformly increase capacity and decrease price. My response was that I assumed it had decreased but that memory prices don’t always behave normally based on any number of factors. If you are interested in all of the details behind the chart at the top, you can head here.
I remember well in the late 1980′s when memory prices skyrocketed and stayed high for a couple of years before plummeting. If you look at the chart you can see that. You will also see that in the early 90′s things dropped and then in late 1993 doubled and stayed high until almost 1997 before plummeting again. I had just bought 8MB of memory for my home computer and a couple of months later needed some for a computer at work and was shocked that the cost had doubled!
Since then the trend has been downwards, but with some periods of stagnation and even an increase from 2009 through early 2011!
As for the actual answer to Dan’s question? The price per megabyte has dropped by ~50% since 2010 … meaning that the memory upgrade that was quite profitable for Apple on the first iPad is TWICE as profitable now! As we discussed in the video, it is one of the ‘nickel and dime’ things Apple is doing that simply drives us crazy.
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