Most tablet manufacturers dont 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. Thats a profitable mark-up of at least 1,267%, based on the market price of £5.85.
Apple charges a premium thats 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.
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