Those of us in the tech world will keep asking what is the point of the 16gb iPhones especially since images will be bigger. Well The Motley Fool thinks they have an answer.  The argument for the existence of the 16 GB iPhone lets Apple make better iPhones is the thinking most people don’t buy the 16 GB iPhone.  These days instead they tend by the 64 GB iPhone for $100 more because that’s how it runs.

Now the 16 GB iPhone 6S $649 the 64 GB iPhone is $749 and the 128 GB iPhone is $849  up the price is $100 for the iPhone six Splus.  People are willing to go the extra $100 for the 64 GB version because who wouldn’t rather have 64 GB over 16?

However one assumes that that decision wouldn’t be such a no-brainer if the starting point was 32 GB but that would hurt the average selling price for the iPhone.

Some you may be thinking so what Apple already makes 90% of the worldwide profits in smart phones today, could it not shave off a bit of profits? Well it could but that would eat into it’s profit margin which affects not only the money it gets to add to its coffers but also its share price.

Since profit margin is one of the data points on which investors and analysts concentrate on.  Keeping things nice and simple because my maths really is shocking,  let’s assume that Apple wants to maintain a 45% profit margin on the iPhone.

I think that the public at large to spend more money on the iPhone $749 instead of 649 say and Apple can spend more money on components for each iPhone and maintain their 45% profit margin.

That means super touchy screen layers for 3-D touch and better cameras and you name it in the fools estimation investors should very clearly like that Apple is making the 16 GB iPhone so unattractive that iPhone buyers are more likely to buy up the stack.

However I think is a good thing for consumers to at the end of the day the piece continues customers will probably wind up paying more but I think that what they will ultimately get by buying up the stack is a better smart phone overall

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