Gigabytes
From a Virtual Pants post refuting my experiences with the Surface: … Mr. Pants reminded me of a pricing trick I've wanted to point out for a while. — Flash-memory upgrades on tablets are much cheaper for the manufacturers than the $100 increments that Apple established with the original iPad pricing.
Context & Ripple Effects
Apple established $100 storage-step pricing with the original iPad, even though the article argues the underlying flash-memory cost is far lower. That pricing logic matters as Apple enters the smaller-tablet segment with iPad mini and its iPad share has fallen to 50.4% in Q3 2012.
Surface makes advertised capacity a sharper competitive issue: Microsoft revised its usable-storage claim after acknowledging that only 16GB was open on the 32GB model, as detailed in its revised Surface storage disclosure. Buyers are comparing usable space, not just the number printed on the box.
First-order effects
- Apple’s storage tiers preserve a high-margin upsell path, while iPad buyers must pay in $100 increments for capacity that costs Apple materially less than the price step.
- Microsoft’s 32GB Surface buyers face a much smaller usable-capacity baseline, making its entry configuration less comparable with tablets marketed on nominal storage alone.
Second-order effects
- Surface and other tablet makers must communicate available storage more clearly or compete on higher-capacity base models, rather than relying on headline gigabyte figures.
- For buyers weighing iPad, iPad mini, and Surface, storage becomes a total-price comparison: the cheapest device can require a higher configuration once operating-system and app space are considered.
Third-order effects
- If Apple’s tiering holds as tablet competition broadens, flash capacity becomes a durable form of product segmentation: low-cost memory differentiates configurations and captures willingness to pay.
- Usable-storage disclosures may become a competitive constraint on that model, shifting attention from component capacity to the software footprint that determines what customers can actually store.
The trend: Tablets are turning flash storage into a pricing and segmentation lever, while usable-capacity disclosures determine whether the advertised tiers remain credible.