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Summary:

Back when the iPhone was first launched (only a year ago!) we were at best lukewarm about it as a web worker tool. One of our objections was bang for the buck: the announced price of $499 for 4GB and $599 for 8GB just seemed steep. […]

Back when the iPhone was first launched (only a year ago!) we were at best lukewarm about it as a web worker tool. One of our objections was bang for the buck: the announced price of $499 for 4GB and $599 for 8GB just seemed steep. In September, Apple killed off the 4GB model and lowered the pricing on the 8GB phone to $399. Now, they’re back to two pricing tiers, with the addition of a 16GB iPhone for $499.

It’s not clear how many people were holding off the purchase of an iPhone for extra RAM; they’ve been selling like hotcakes, despite our earlier skepticism. But it’s possible to make some guesses about Apple’s long-term strategy from this move.

First, the pricing suggests that Apple has determined $500 to be the “squeak point” for the iPhone, the point at which people will part with their money without squealing too much. Within that price envelope, they’re apparently happy to make hardware improvements that don’t hurt their margin. RAM was an easy one to do right now: pricing on the NAND flash memory that the iPhone uses is down 75% from last summer, so a 16GB phone now probably doesn’t cost them much more to make than a 4GB phone did in July. Indeed, they may even be making more profit on the 16GB model than they did on the 4GB phone when it was introduced.

The corollary to this is that we’re less likely to see hardware changes that would either push up the price over the $500 point or compromise the iPhone’s functionality. Apple is notoriously cagy about future product plans, but those waiting for a high-resolution camera or 3G connectivity (which would come at a cost to battery life) should probably not be holding their breath.

Second, timing. Why this upgrade now? The most likely driver is the release of the iPhone SDK, already out with some developers and slated for general availability this month. Our guess is that there are some third-party applications already far advanced on the drawing board that would like to take advantage of a larger storage pool for document management, gaming, image processing, or other uses. Watch for some applications to ship “strongly recommending” the latest – and largest capacity – iPhone when they come out.

  1. “Our guess is that there are some third-party applications already far advanced on the drawing board that would like to take advantage of a larger storage pool for document management, gaming, image processing, or other uses.”

    That is just ridiculous. There is no way that any app you would ever want to run on the current iPhone would need gigabytes of storage. There are lots of other bottlenecks (CPU, video processor, screen real estate) you would have to boost before you do any kind of serious gaming or image / video editing.

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  2. Third party apps for the iPhone currently use anywhere from 23kb to 7MB(referring to apps installed on jailbroken phones). There is no way programs would use more than 40MB because the hardware would have to scale to match.

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  3. You are talking about storage capacity of the Flash Memory being updated from 8 GB to 16 GB Not the RAM. The iPhone has 128 Megabytes of RAM and this has not changed between the 4 GB, 8 GB, and now 16 GB models.
    RAM is used when applications are run, storage space is where your audio, video, and images are saved.

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  4. Mike, do not write about technology if you don’t know what the fuck you’re talking about. RAM = Random Access Memory which as far as I know has not been increased on the iPhone. Why would a phone need 16GB of RAM? You have to be fucking kidding seriously. The 8GB and 16GB refers to the amount of storage space the iPhone has access to although as you probably DON’T know there will be slightly less available when formatted especially if it’s an iPhone with software that takes up space. Don’t give up the day job mate…

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  5. Sorry for the unclear expression, folks, but trust me, I do know the difference between the RAM where the running programs go and the gigabytes of memory used for file storage – which, on the iPhone, is NAND flash memory, sometimes called “flash RAM” (distinguishing this sort of random-access memory from read-only memory).

    I agree that we won’t want running applications that have a gigabytes-large footprint in the actual high-speed RAM used for running applications. But given that some people are treating the iPhone as a general-purpose computing device rather than a phone, I do suspect we’ll see that larger storage pool used for more than just audio, video, and images. If you’ve never had to deal with a database that’s gigabytes in size…well, perhaps you’ve not spent as much time in this industry as I have ;)

    Thanks for the feedback, and let’s try to keep it civil.

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  6. I challenge anyone to name one application you would want to run on your iphone that would require gigabytes of storage room. Just one.

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  7. Mark,

    If I’m not mistaken, GPS maps can take up gigabytes of storage, depending on how many of them you have and how much information they contain about the location. Financial databases can get mighty big as well (thank god for Quicken Online). Just because a program itself doesn’t take up gigabytes of storage space doesn’t mean that files and databases associated with those program are small as well.

    Also, let’s not forget that someone who actually uses all 8 gigs for music and videos will have no available room for applications. I only use about 6 gigs at a time but a friend of mine is constantly struggling with deleting old music and videos to make room for new ones.

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  8. I challenge anyone to name one application you would want to run on your iphone that would require gigabytes of storage room. Just one.

    iTunes. I have 32GB of music, and videos on top of that, my 60GB iPod is full. I won’t be interested in the iPhone until it completely mirrors the capability of my iPhone and my mobile phone.

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  9. In defense of the original poster, the term ‘RAM’ is technically correct, although unspecific in a device which contains many types of RAMs for different purposes.

    RAM (Random Access Memory) Is defined only by every bit being accessible with consistent latency (and hence randomly accessible without difficulty)… opposed to mechanical storage devices where access to bits has a variable latency. Therefor ‘RAM’ can and is applied to all semiconductor logic storage including the NAND RAM making up your storage memory, the DRAM making up your system memory and the SRAM making up your CPU caches…

    You could any type of RAM for any purpose but there are simply more suited to the purposes they are usually designated due to the volatility, density, expense and speed. Instead it’s best to name it after it’s purpose in a device… SYSTEM RAM, STORAGE RAM and so on, if you want to be so specific.

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