When it comes to hardware and services revenues, storage is Apple’s secret spell. Not only has iCloud storage become Apple’s most frequently paid-for service, but people are more often purchasing additional storage when acquiring new Apple hardware.

This is good business for the company and all it had to do to build that business was to sell world-class products everybody wants, while managing to remain notably stingy in the quantity of storage it offers inside both its devices and free online storage tier. 

So, what’s my evidence for these claims?

What’s the evidence to justify this?

They’re anecdotal, to some extent. Apple has always offered only 5GB of free iCloud storage, even back when 5GB was still too little but meant a lot more. It has always offered relatively low quantities of storage in its entry-level devices. People do complain about this, but the company still generates industry-leading consumer satisfaction figures despite those limitations. 

There is factual evidence to support these claims:

• Consumer Intelligence Research Partners (CIRP) tells us 70% of US Apple device purchasers pay for iCloud storage. This has been a consistent pattern for years and it really helps Apple generate additional services sales. Services currently generate around $100 billion in revenue for the company at around a 60% to 70% margin. (iCloud is estimated to account for  perhaps $10.4 billion of that.)
• The researcher also tells us that 46% of all iPhone buyers upgraded from base storage to higher storage levels in the December 2025 quarter, up slightly on the previous year. (Apple increased the base storage with iPhone 17, likely for Apple Intelligence.) If you look at how the company sets up its pricing tiers, you’ll find how easy it makes additional storage costs appear. Why wouldn’t you spend an extra $100 for more space for your photos? CIRP believes storage tweaking means consumers pay up to 50% more than the base price for their selected iPhone as a result of making added storage decisions.
• And don’t underestimate the role of Photos in Apple’s business. The company has worked hard to make the camera system on iPhones world class, even when compared to dedicated digital cameras. That’s attractive to customers, but also means you need a little more storage for all those images on your devices over time. Consumer addiction to taking pictures of friends, family, pets, and what they eat feeds the need for storage on Apple devices, one forgettable memory at a time.

Just as it does when it comes to developing its hardware, Apple takes a “whole widget” approach across its ecosystem. It thinks about how each piece of its vast ecosystem interacts with and can support every other piece. That means someone inside the company likely already has the data on the overall value of storage across the Apple enterprise. In short, storage has become a key profit lever, with Apple-managed storage scarcity stimulating storage demand.

Happy customers don’t mind too much

There’s nothing particularly wrong with that. Critics moaning about Apple’s famed low storage levels would only find something else to complain about if Apple loaded more storage inside its devices. There’s always going to be something that can be improved.

For Apple management, those complaints will be weighed against the company’s industry leading consumer satisfaction rankings. It tells Apple’s leaders that yes, while storage is clearly an issue to many people, it’s not enough of a problem to severely dent the value of the “Apple experience.”

There’s a lot of truth in that. After all, as long as everyone remains happy with the Apple products they own, the storage side-business Apple has managed to put together remains a fortunate revenue driver. It is, after all, still a choice and frugal customers can potentially survive without investing in additional device storage. But people keep paying for the upgrades. 

(In a statement following a successful defense against a 2024 lawsuit, the company said this: “Apple believes in providing our customers with choices. Our users are not required to use iCloud, and many rely on a wide range of third-party alternatives for data storage. In addition, we work hard to make data transfer as easy as possible — whether it’s to iCloud or another service.”)

In the end, Apple provides a tightly integrated ecosystem that delivers experiences that build customer loyalty while also generating strong revenues. Storage revenues help the company deliver both strong shareholder value while supporting high quality, high design tech products and services that provide compelling value to customers, most of whom seem happy with the exchange. If only every profitable business could achieve the same thing.

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