Fewer iPhone buyers are paying for extra storage, signaling a shift toward cloud reliance that could shake up one of Apple’s most profitable upsells.
Apple has long relied on iPhone storage upgrades as a revenue driver. The strategy is simple — offer a base storage option that’s “good enough” while enticing users with pricier upgrades.
But recent data suggests that fewer people are biting. According to a Consumer Intelligence Research Partners (CIRP) report, storage upgrades have dropped across the board for the latest iPhone models, signaling a shift in consumer behavior.
A subtle but significant decline
In the holiday 2024 quarter, 44% of iPhone 16 Pro and Pro Max buyers paid for additional storage, down from 48% in the same period a year earlier with the iPhone 15 Pro models. The trend is even more pronounced for standard iPhone 16 and 16 Plus models, where just 42% opted for more storage, compared to 48% for the iPhone 15 and 15 Plus in 2023.
At first glance, a four- to six-percentage-point drop might not seem like much. But considering Apple charges anywhere from $100 to $500 per upgrade, it represents a meaningful financial shift.
Percentage of iPhone buyers choosing more storage by model (December 2023 vs. 2024). Image credit: CIRP
If fewer people feel the need for more space, Apple’s high-margin storage business could see a real impact.
Why are buyers resisting upgrades?
One explanation is that Apple’s base storage tiers have finally caught up with real-world needs. The iPhone 16 Pro Max starts at 256GB, double the 128GB entry point for most other models.
Even Apple’s cheapest iPhone, the SE, now ships with 64GB. That’s a long way from the days when users had to delete apps and photos just to install a software update.
Beyond that, cloud reliance has changed the game. With fast Wi-Fi, 5G, and seamless integration with iCloud, local storage just isn’t as essential as it used to be.
Streaming services have largely replaced offline music and video libraries, and cloud-based photo management means users don’t need to store years’ worth of images on their devices. For many, the base storage is plenty, making an upgrade unnecessary.
The unexpected rise in storage upgrades for older models
Interestingly, while high-end and mainstream iPhone buyers are skipping upgrades, legacy iPhone buyers are doing the opposite. More people who purchased an iPhone 15, 14, or SE in the past quarter opted for extra storage compared to 2023.
There are a couple of possible reasons. Some of these users may be upgrading from much older models with smaller storage limits and don’t want to repeat the frustration of running out of space.
Others might plan to hold onto their phones longer, making a storage upgrade feel like a smart, long-term investment. Since they’re already spending less on their device, the extra $100 or so for more storage might not feel like a major stretch.
What this means for Apple
Apple has always thrived on hardware upselling, and storage has been one of its most profitable add-ons. But as consumer habits change, the company may need to rethink how it pushes upgrades.
While other premium features — like better cameras, longer battery life, and new AI capabilities — still drive purchases, storage might not hold the same allure.
Apple might be selling fewer storage upgrades, but that doesn’t mean it’s losing out entirely. More people relying on the cloud means more people paying for iCloud+, which starts at just a few bucks a month.
Over time, that kind of steady subscription revenue can be even more profitable than a one-time storage upgrade. Plus, the more users store their photos, backups, and files in iCloud, the harder it becomes to leave Apple’s ecosystem.
So even if hardware margins take a hit, the company still wins in the long run. The question now is whether Apple adjusts its strategy or doubles down on services like iCloud+ to make up for the lost hardware revenue.
