It costs tablet manufacturers such as Apple less than £6 to add an extra 16GB of tablet memory. But they'll charge you as much as £80 for the privilege.
Which? research has uncovered outrageous pricing mark-ups in the tablet industry. If you buy a tablet with extra space for storing your apps and files, you could pay up to £80 for a piece of extra storage that costs manufacturers less than £6 at market prices. The true cost of tablet memory
There can be huge differences between tablet manufacturers in what they choose to charge customers for extra storage space. If you step up from a 16GB model to a 32GB model, the difference can be anything from £40 to £80.
Most tablet manufacturers don't produce their own Flash storage. Instead, they buy it from third-party component manufacturers. Although individual deals between suppliers and manufacturers remain secret, Flash memory is a traded commodity, and prices are tracked by market watchers such as DRAMeXchange.
According to market prices of Flash memory tracked by DRAMeXchange from August to October this year, the memory used in tablets costs on average £5.95 for a block of 16GB of storage. For large companies buying in bulk, the prices can be even lower. Apple uses a different Flash memory (MLC) to its rivals, and this traded at an average price of £5.85 for 16GB in October.
Yet despite these paltry market costs, Apple charges its customers £80 more for its 32GB iPad than for its 16GB model. That’s a profitable mark-up of at least 1,267%, based on the market price of £5.85.
Apple charges a premium that’s far above what most of its rivals add on for an extra 16GB of storage space. Amazon, for example, charges £40 more for a 32GB Kindle Fire HDX 8.9, compared to the 16GB model. Google adds a sizeable £70 if you opt for a 32GB Nexus 10 rather than a 16GB model. Insider verdict: ‘scandalous’
These shocking figures are backed up by industry insiders who buy blocks of storage from the same supply chains used by tablet manufacturers.
Chillblast is a UK-based computer manufacturer specialising in high-end machines. It buys its Flash memory from some of the same suppliers who make the Flash storage components found in tablets. ‘16GB of Flash memory is mind-numbingly cheap now,’ says Chillblast’s Ben Miles. ‘As a general rule, for manufacturers like ourselves, Flash costs less than 40p per GB, so for companies to charge so much for an extra 16GB seems scandalous.’
And it seems there are few additional manufacturing overheads created by the addition of extra storage. ‘The difference in cost between manufacturing a product with 16GB and 32GB of memory would probably equate to less than $10,’ says Miles.