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> If Apple made the 32GB the base model and sold it for the same price as the 16GB model, you wouldn't have to pay any more money.

That's not how {Apple,the World,business,life} works, young grasshopper.

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First of all, short and long sightedness are part of the world industry. Giving people a bad experience on an 8gb device can set you up for future resentment. Not all consumers understand what 8 or 16gb means and trust any iPhone to be good.

Moreover Apple could easily double their smallest tier and still have the largest margins in the industry.

Multiple smart phone manufacturers have already begun doing exactly that, young grasshopper.

Note 4, Nexus 6, Lumia 930, YotaPhone all come with a minimal capacity of 32GB.

You're not comparing like-for-like: Samsung, LG and Microsoft all produce other devices that come with less than 32GB of space. If you need 32GB, Apple provides a device for that (as do other manufacturers). If you don't need that much but want an Apple device, you can buy a 5C.

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