Apple has long profited from selling higher storage tiers for its iPhones. However, new data suggests fewer buyers are opting for these upgrades. This trend could impact one of Apple’s most lucrative revenue streams.
Decline in Storage Upgrades
A recent report from Consumer Intelligence Research Partners (CIRP) highlights a drop in customers choosing additional storage for their iPhones. In the holiday quarter of 2024, only 44% of iPhone 16 Pro and Pro Max buyers upgraded storage. This is a decline from 48% for iPhone 15 Pro buyers in 2023.
The trend is even more pronounced in standard models. Only 42% of iPhone 16 and 16 Plus users paid for extra storage, compared to 48% for the iPhone 15 and 15 Plus in the previous year. While the percentage decrease may seem small, Apple charges between $100 to $500 per upgrade. This means a significant financial impact on the company’s revenue.
Why Are Users Skipping Storage Upgrades?
Several factors contribute to this shift. Apple’s base storage tiers have increased over the years. The iPhone 16 Pro Max, for example, starts at 256GB, twice the previous standard of 128GB. Even Apple’s budget-friendly iPhone SE now offers 64GB as a baseline.
Additionally, cloud storage has changed user behavior. Faster Wi-Fi, 5G connectivity, and seamless iCloud integration reduce the need for large local storage. Streaming services have replaced downloaded music and videos, while cloud-based photo storage eliminates the need to keep extensive media files on devices.
Unexpected Growth in Older Models
Interestingly, while new iPhone buyers are skipping storage upgrades, users of older models are doing the opposite. More iPhone 15, 14, and SE buyers upgraded storage compared to 2023. This could be due to users transitioning from much older models with limited storage. Additionally, customers who plan to keep their phones longer may find the extra storage a worthwhile investment.
What This Means for Apple
Storage upgrades have been one of Apple’s most profitable add-ons. However, shifting consumer habits suggest the company may need to rethink its strategy. Instead of relying on hardware upsells, Apple could focus more on subscription-based services like iCloud+.
Although Apple may see a decline in one-time storage purchases, its growing cloud ecosystem ensures steady revenue. Users storing data in iCloud become more dependent on Apple’s ecosystem, making it harder for them to switch to competitors.
Apple’s challenge now is to balance hardware sales with its booming services sector, ensuring continued profitability despite changing consumer preferences.
