Will the Apple Inc. iPhone 7s Include 3 GB of RAM?

By Ashraf Eassa Markets Fool.com

A while back, TrendForce said that Apple's (NASDAQ: AAPL) upcomingiPhone 7s Plus and iPhone 8 will come packed with 3 GB of DRAM, just as the current iPhone 7 Plus does. The iPhone 7s, on the other hand, will sport 2 GB of DRAM, just as the current iPhone 7 does.

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According to analyst Timothy Arcuri with Cowen and Company (via MacRumors), though, all three iPhone models that will launch this year will pack 3 GB of RAM.

Image source: Apple.

Which one of these analysts is more likely to be right? Let's take a closer look.

More RAM is nice, but it's a cost adder

Although Apple's smartphones are premium devices with price tags to match, Apple can't just throw features in willy-nilly; there needs to be a good reason from a user experience/selling point perspective to add more features.

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Right now, memory prices are quite high (just look at how well the memory makers are doing these days), so not only does additional memory add cost, but it's a relatively significant one at this point.

It makes sense for Apple to include additional memory in the iPhone 7 Plus/iPhone 7s Plus/iPhone 8 for a couple of reasons. First, these phones simply have higher-resolution displays than the iPhone 7 does (and the iPhone 7s presumably will). For graphics-intensive applications like games, the additional memory can help improve performance at higher resolutions.

Additionally, KGI Securities analyst Ming-Chi Kuo argued a while ago that the additional RAM is helpful for the added functionality that the dual-camera system found on the iPhone 7 Plus (and will be found on the iPhone 7s Plus/iPhone 8).

Obviously, more RAM is better, but there needs to be a legitimate reason from a user experience perspective for Apple to add that RAM and therefore increase the cost to produce the device, which would translate into either an increase in end-user device cost or lower product gross profit margins for Apple.

I'm just not sure I see that reason.

A potential solution

One thing that other smartphone vendors have done is tie the amount of RAM included in a device to the amount of flash storage inside the device.

So, there could very well be a scenario under which both TrendForce and Arcuri are correct. The entry-level iPhone 7 with 32 GB of flash storage, for example, could come with 2 GB of RAM, while the higher-priced models with 128 GB and 256 GB of storage could come with 3 GB of RAM.

In this case, Apple would be cutting somewhat into its gross profit margin per device with the higher storage tier models, but the higher-margin profiles on those devices would be able to somewhat cushion the blow.

I don't know how likely it'd be for Apple to offer different RAM configurations based on the device, though (especially since it wouldn't be able to actually advertise the difference, as Apple doesn't ever talk about the RAM capacities of its devices).

Foolish takeaway

My inclination is to believe that the next 4.7-inch iPhone will have 2 GB of memory rather than three, as this should allow Apple to keep costs under control -- especially in an environment in which DRAM is relatively pricey -- while still delivering a compelling user experience.

There's always the possibility of Apple trying to segment DRAM capacity within the iPhone 7s lineup based on storage capacity, but I think the odds of that are slim.

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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has a disclosure policy.