"A 64GB flash storage chip is more expensive than a 16GB flash chip, but it's not anywhere near $100 more expensive, so pushing people up the chain increases not just revenue but profit margins.
[...]
This highlights the fact that the margin-boosting potential of the 16GB iPhone 6S doesn't serve any actual purpose."
That's not the strongest logic. If the 64GB one has higher margins, adding a 16GB option gives buyers the opportunity to go for a lower margin product.
I think the reason the 16 GB version exists is to give money-constrained buyers an option to buy an iPhone without giving less money-constrained, but money-conscious, buyers a reason to also go for the cheaper model.
It is a common pricing tactic to have a premium product that no one buys because it makes the mid-range product seem more reasonable vs settling for the low-end.
This could be same thing in reverse. By having a low-end that is so low, it sets the expectation floor so low that the others seem like reasonable upgrades even though they are actually low/mid-range implementations at mid/high-end prices.
The entry-level 16GB model is still practical if you rely on cloud services for the storage and retrieval of media files. 16GB is still enough room for iOS, bundled apps, and a moderate number of third-party apps. That said, I think it's likely that the 2016 iPhone will start at 32GB.
16GB is very appealing to people who do not use the app store at all. A number of people just use the iPhone as a (gasp!) phone with just calendar and contacts and a bit of email. For such a small segment, that makes the 16GB a logical loss leader to get people who would not ordinarily think of getting an iPhone and who then might go for the 64GB model a year later.
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[ 3.7 ms ] story [ 26.6 ms ] threadThat's not the strongest logic. If the 64GB one has higher margins, adding a 16GB option gives buyers the opportunity to go for a lower margin product.
I think the reason the 16 GB version exists is to give money-constrained buyers an option to buy an iPhone without giving less money-constrained, but money-conscious, buyers a reason to also go for the cheaper model.
This could be same thing in reverse. By having a low-end that is so low, it sets the expectation floor so low that the others seem like reasonable upgrades even though they are actually low/mid-range implementations at mid/high-end prices.