The new iPhone lineup looks set to turbocharge that approach. Alongside other camera upgrades, the handsets will include a higher-quality video format called ProRes when they’re released in the next few weeks, as well as more chip updates.
With every improvement in image quality comes a commensurate increase in storage requirements. The new photo format that Apple added to the iPhone last year branded ProRaw is 12 times larger than the standard JPEG. Bigger video files will exacerbate the trend.
Consumers’ need for more storage is enormously profitable. It costs the consumer $100 to add 128 gigabytes of storage. Apple is unlikely to pay more than $20 for the same chip. If you’d prefer to store the data remotely, Apple’s iCloud offering enjoys similar profit margins. Besides, those who have already chosen to opt for a $1,099 iPhone 12 Pro Max may be less concerned about paying more cash for extra capacity.
Faster download speeds and greater processing power have the same effect. 5G lets you download more data more quickly, but you need the capacity on your device to store it, as do the whiz-bang games enabled by faster chips.
This year, Apple revenue is expected to jump 33%, to an astonishing $365 billion, though only a slice of that comes from additional memory options. But it shows how wise investment in improving the right technologies can have a multiplicative effect on profit even in the absence of blockbuster new features or flagship products. The average selling price of the iPhone jumped from $748 at the end of 2019 to $938 this March.
So while we wait for Apple to eventually reveal its Next Big Thing, whether in autonomous cars, smart glasses, or something else entirely, in the meantime, the world’s most valuable company is showing just how profitable its game of inches has become.
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