Ahead of the launch of Apple‘s (NASDAQ: AAPL) iPhone X, there was some expectation that the iPhone maker would introduce a version of its iPhone X with 512GB of storage.
This rumor wasn’t too hard to believe — larger storage configurations have always been a way for Apple to get customers to buy higher-priced iPhones, boosting Apple’s revenue and profits. Moreover, as smartphone cameras have evolved to take sharper pictures and images, image sizes have gotten larger, driving the need for more storage space.
However, this year, Apple didn’t launch any iPhone models with 512GB of storage. Its new iPhone 8, iPhone 8 Plus, and iPhone X all came in 64GB or 256GB storage configurations.
However, according to a new report from Nomura Securities, by way of Business Insider, Apple might finally introduce iPhones with 512GB storage configurations with its 2018 lineup.
Here’s why that makes perfect sense this time around.
Image source: Apple.
A good selling point for the iPhone X series
Next year, Apple is expected to launch three new iPhones: a standard-priced iPhone with a liquid crystal display; a direct successor to this year’s iPhone X that features a more advanced organic-light emitting diode (OLED) display and a higher price; and a larger version of the iPhone X successor for a still higher price.
I think it highly unlikely that Apple will bring a 512GB storage configuration to the lowest-cost model of the trio. Apple probably wants to reserve such a premium configuration for its ultra-premium smartphones. However, it’d make perfect sense for Apple to add such a configuration to the higher-end iPhone X lineup, especially as those phones are targeted at the power users who would value such a large amount of on-device storage.
The rationale doesn’t end there, though.
A way to lower the barrier to entry to iPhone X
Today, Apple offers the iPhone X with 64GB of storage at $999 and the 256GB version for $1,149. I wouldn’t be surprised if, in the interest of helping to juice demand for its iPhone X-class devices, Apple were to lower the starting price of the next-generation iPhone X to something along the lines of $899.
Image source: Apple.
Such a price reduction could help spur demand, but it would also pose a risk to Apple’s iPhone average selling prices year over year, and to revenue growth. So if Apple wants to have its cake and eat it, too, it could add a 512GB variant at the top of the iPhone X product stack to increase the price.
Instead of offering the iPhone X 64GB at $999 and the 256GB model at $1,149, Apple could instead offer the next iPhone X 64GB at $899, the 256GB model at $1,049, and then a 512GB model for $1,199.
Such a product stack, coupled with the introduction of the rumored iPhone X with a 6.46-inch display for, perhaps, $100 more, may allow Apple to enjoy average selling price growth while stimulating iPhone unit growth as well.
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Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.