http://blogs.which.co.uk/technology/tablets-2/the-tablet-memory-mark-up-scandal/

The tablet memory mark-up scandal
by Rich Parris, Deputy Computing Editor
Tablets
20/11/2013

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.

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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.

Chillbast 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.
How to beat the tablet memory mark-up

Although tablet storage may be limited, there are alternative ways of
boosting your storage space without paying for a pricier model. You can
keep your digital files safe and accessible using cloud storage service
such as Dropbox, Google Drive, SkyDrive or iTunes Match.

Some tablets have a card slot to let you insert an SD or microSD card.
These can provide up to 64GB of additional storage for around £35 – much
cheaper than buying extra internal storage. Most tablets won’t let you
store apps on a memory card, but extra storage is hugely useful for music,
videos and photos.

Tablets that let you insert a memory card include the Samsung Galaxy Tab 3,
Microsoft Surface RT and Sony Xperia Tablet Z.

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