Reviews of Apple's (NASDAQ:AAPL) latest iPhone, the iPhone 6s, have been overwhelmingly positive. Critics have praised the phone's improved camera, enhanced features, and better build quality.
But there's one aspect of the iPhone 6s that has been almost universally derided: the mere 16GB of internal storage offered on the base model. Vox called it a "serious strategic mistake". The Wall Street Journal went so far as to label it a rip-off. With photos and apps growing ever-larger, 16GB is increasingly inadequate. Apple's high-end Android competitors have raised their entry-level offerings to a far more acceptable 32GB, yet Apple has not followed.
Instead, Apple has gone in a different direction, pursuing an alternative that should ultimately benefit its bottom line.
Apple slashes the price of iCloud
Last year Apple changed the cost of additional storage. Spending an extra $100 on the iPhone 5s resulted in only 16GB of additional storage (from 16GB to 32GB); but with the iPhone 6, that extra $100 went much further, adding a full 48GB of space. Some were hoping that Apple would bump the iPhone 6s' base storage to 32GB, but I didn't expect it. Sure enough, Apple decided to carry its existing storage tiers over to this year's model.
But while Apple continues to charge arguably exorbitant prices for local storage, its cloud storage is increasingly affordable. To coincide with the release of the iPhone 6s, Apple slashed the price of its iCloud storage service. Now the entry-level plan, which costs just $0.99 per month, offers 50GB of storage (up from 20GB). The mid-level 200GB plan has also had its cost reduced, while the the high-end, 1TB plan has had its price cut in half, down to just $9.99 per month.
iCloud isn't a perfect substitute for local storage -- it isn't accessible without a connection -- but it definitely helps. Large photo and video libraries can be offloaded to iCloud so they don't take up as much storage space on the iPhone. Documents and large files can be stored and accessed through iCloud Drive, rather than kept on the device. Apps must be kept locally, but users can always uninstall (and then reinstall) apps they're using less frequently.
Apple's marketing head, Phil Schiller, hinted at such a strategy at Apple's Worldwide Developer Conference earlier this year. "The belief is more and more as we use iCloud services for documents and our photos and videos and music...price-conscious customers are able to live in an environment where they don't need gobs of local storage," he said, speaking to John Gruber.
Driving greater iCloud use would benefit Apple, keeping customers loyal and encouraging them to purchase its other products. Photos and documents stored in iCloud can be accessed from a web browser, but the service works best with Apple's own hardware -- not just the iPhone, but also the iPad and Mac. If you're paying monthly for iCloud, and you're storing many files, you may be more likely to stick with Apple's products.
Consumers are opening up their wallets for more storage
Apple sold 13 million iPhones the weekend following the iPhone 6s' release. That's up 30% from last year, when it sold just 10 million. Clearly, consumers aren't particularly upset. While Apple's refusal to offer a large screen iPhone in prior years likely resulted in lost sales to its competitors, its internal storage decisions don't seem to matter. At some point, 16GB may become inadequate. Until then, Apple seems to be making the right decision.
Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.