When Apple Inc. (NASDAQ:AAPL) designed the iPhone and iOS mobile operating system, the company chose to exclude support for external storage. On the other hand, many smartphones running Alphabet Inc’s (NASDAQ:GOOGL) Android operating system included the ability to supplement onboard storage using inexpensive SD memory cards. Not a game-changer, clearly.
But Netflix, Inc. (NASDAQ:NFLX) just made the difference a little more important, by adding support for Netflix downloads to SD cards on Android.
To SD or Not to SD
From the start, AAPL spurned the idea of giving iPhone (or iPad) users access to external storage. The company designed iOS to hide file directories from the user level — keeping the user interface extremely simple — and that meant not being able to choose whether to save a file in built-in storage, or in external storage.
Besides keeping the user interface clean and easier to support, the move also was a financial windfall for Apple. Without any option to boost storage, users who wanted more than the bare minimum would be forced to pay for the next tier in iPhones. So that $649 base model became $749.
AAPL’s profit margin on that extra $100 was considerable, since the flash memory used for storage is inexpensive.
For point of comparison, going from 32GB to 128GB on the iPhone 7 is an extra $100, while a 128GB microSD card can be had for $50. And that’s paying retail prices, which AAPL most certainly does not.
Google, on the other hand, supported the use of SD cards for external storage. It was limited at first, but by Android Marshmallow, Android users could use that extra storage for virtually anything, including apps. They could buy cheap, lower-capacity micro SD cards and swap them out at will.
This was a very popular feature, as Samsung Electronics Co Ltd (OTCMKTS:SSNLF) discovered when it ditched the feature on the Galaxy S6. After the outcry, the capability returned with the Galaxy S7.
Netflix Downloads Makes SD Card Support a Bigger Deal
The announcement of Netflix downloads for iOS and Android was a very popular move. Watching video on a smartphone is popular, but cellular data isn’t cheap. The new feature meant you could watch Netflix on iPhone or Android devices while commuting, traveling of just hanging around — without worrying about a big data bill.
Yesterday, Netflix downloads gained SD card support on Android. Suddenly, those cheap storage cards — that the iPhone cannot use — became a bigger deal. One hour of HD video downloaded to a mobile device from Netflix uses about 440MB of storage space.
With movies approaching 1GB each, you can see how this could add up quickly.
For travelers using Netflix on iPhone, the downloads could turn into an exercise in strategic file management. For someone with a Galaxy S7, a $50 card they can pop in their phone would hold 100 movies or more.
Netflix just may have become the killer app that makes SD cards on smartphones a serious advantage.
Just Another Challenge for the iPhone 8
When Apple releases the iPhone 8 in the fall, it’s going to be going up against intense competition. Google is expected to release the second generation of its popular Pixel Phone. More importantly, Samsung appears to be throwing everything it has at the Galaxy S8. The company has put the Galaxy Note 7 debacle behind it and is reassuring consumers the Galaxy S8 battery is practically bulletproof.
In addition, the Galaxy S8 is rumored to have a curved, bezel-free display, a larger screen (in the same size form factor), iris scanner and an optional dock that turns it into an Android-running desktop PC.
Netflix downloads supporting SD cards on Android smartphones won’t derail the iPhone 8. However, now that support for SD cards has a killer app, it’s one more feature — or lack thereof — the competition can hammer on when AAPL releases its all-important 10th anniversary iPhone.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
