Why Are External SSDs More Expensive Than Internal SSDs? Key Points Explained

SSD storage devices come in internal and external types. When comparing SSDs with the same capacity and speeds, external models cost about 70% more than internal ones. What factors account for this substantial price premium on external SSDs?

In this detailed article, I explore the various reasons behind the price gap between internal and external SSDs. I will examine the components, manufacturing costs, market influences, value-added features, and other considerations that contribute to externals costing much more.

By understanding the tradeoffs and seeing price comparisons across specific SSD brands and models, you can determine which type best fits your budget and storage needs.

Components and Costs 

One of the main reasons why external SSDs are more expensive than internal SSDs is the difference in the components and costs. Let’s take a look at the main components of each type of SSD and how they affect the price. 

Internal SSDs 

The main components of an internal SSD are: 

NAND flash memory: This is the core component of an SSD that stores the data. NAND flash memory is a type of non-volatile memory that retains data even when the power is off. NAND flash memory comes in different types, such as SLC, MLC, TLC, and QLC, which differ in the number of bits stored per cell, the speed, the durability, and the cost. Generally, the more bits per cell, the cheaper, slower, and less durable the memory is. The most common type of NAND flash memory used in SSDs is TLC, which stores three bits per cell. 

Controller: This is the component that manages the data transfer between the NAND flash memory and the host device. The controller is responsible for performing tasks such as wear leveling, garbage collection, error correction, encryption, and compression. The controller also determines the performance and compatibility of the SSD. The controller can use different interfaces, such as SATA, PCIe, NVMe, or U.2, which differ in bandwidth, latency, and power consumption. Generally, the faster and more advanced the interface, the more expensive the controller is. The most common interface used in SSDs is SATA, which has a maximum bandwidth of 6 Gbps. 

Printed circuit board (PCB): This is the component that connects the NAND flash memory and the controller to the host device. The PCB also contains other components, such as capacitors, resistors, and chips, that support the functionality of the SSD. The PCB can have different form factors, such as 2.5-inch, M.2, or mSATA, which differ in size, shape, and power consumption. Generally, the smaller and more compact the form factor, the more expensive the PCB is. The most common form factor used in SSDs is 2.5-inch, which has a standard size of 100 mm x 69.85 mm x 7 mm. 

The cost breakdown of these components varies depending on the manufacturer, the quality, the capacity, and the performance of the SSD. However, according to a report by TrendForce, the average cost breakdown of a 256 GB internal SSD in 2020 was as follows: 

•  NAND flash memory: 80% 

•  Controller: 10% 

•  PCB: 10% 

This means that the NAND flash memory is the most expensive component of an internal SSD, accounting for 80% of the total cost. The controller and the PCB are relatively cheaper, accounting for 10% each. 

Another factor that affects the cost of internal SSDs is the economy of scale. Internal SSDs have a larger market share and a higher demand than external SSDs, which means that they can be produced in larger quantities and at lower costs. According to a report by Statista, the global shipment of internal SSDs in 2020 was 333.7 million units, while the global shipment of external SSDs was only 18.8 million units. This means that internal SSDs have a market share of 94.7%, while external SSDs have a market share of 5.3%. This also means that internal SSDs can benefit from the mass production and the competitive pricing of the internal SSD market. 

External SSDs 

The main components of an external SSD are: 

NAND flash memory, controller, and PCB: These are the same components as in an internal SSD, but they are usually enclosed in a metal or plastic case that protects them from physical damage and provides a sleek and stylish design. The type, quality, capacity, and performance of these components can vary depending on the brand and model of the external SSD, but they are generally similar to those of an internal SSD.  

Enclosure: This is the component that houses the NAND flash memory, the controller, and the PCB. The enclosure can be made of different materials, such as aluminum, plastic, or rubber, which differ in durability, weight, and heat dissipation. The enclosure can also have different features, such as shock resistance, water resistance, or fingerprint recognition, which add to the functionality and security of the external SSD. The enclosure can also have different colors, shapes, and sizes, which add to the aesthetic and portability of the external SSD. 

Cable: This is the component that connects the external SSD to the host device via a USB or Thunderbolt port. The cable can have different types, such as USB-A, USB-C, or Thunderbolt 3, which differ in bandwidth, latency, and power delivery. The cable can also have different lengths, which affects the convenience and mobility of the external SSD. Generally, the more advanced and faster the type of cable, the more expensive it is. The most common type of cable used in external SSDs is USB-C, which has a maximum bandwidth of 10 Gbps. 

Interface electronics: These are the components that enable the communication between the external SSD and the host device. The interface electronics include a bridge chip, a power management chip, and a firmware chip, which perform tasks such as protocol conversion, voltage regulation, and firmware update. The interface electronics also determine the compatibility and performance of the external SSD. The interface electronics can use different standards, such as USB 3.1, USB 3.2, or Thunderbolt 3, which differ in bandwidth, latency, and power delivery. Generally, the more advanced and faster the standard, the more expensive the interface electronics are. The most common standard used in external SSDs is USB 3.1, which has a maximum bandwidth of 10 Gbps. 

The cost breakdown of these components varies depending on the manufacturer, the quality, the capacity, and the performance of the external SSD. However, according to a report by TrendForce, the average cost breakdown of a 256 GB external SSD in 2020 was as follows: 

•  NAND flash memory: 65% 

•  Controller: 8% 

•  PCB: 8% 

•  Enclosure: 10% 

•  Cable: 5% 

•  Interface electronics: 4% 

This means that the NAND flash memory is still the most expensive component of an external SSD, accounting for 65% of the total cost. However, the cost of the NAND flash memory is lower than that of an internal SSD, due to the lower quality and performance of the memory used in external SSDs. The enclosure is the second most expensive component of an external SSD, accounting for 10% of the total cost. The cable and the interface electronics are relatively cheaper, accounting for 5% and 4% respectively. 

Another factor that affects the cost of external SSDs is the complexity of production. External SSDs have more components and features than internal SSDs, which means that they require more engineering and manufacturing resources and expertise. External SSDs also have a smaller market share and a lower demand than internal SSDs, which means that they cannot benefit from the economy of scale and the competitive pricing of the external SSD market. 

Market Factors and Demand 

Another reason why external SSDs are more expensive than internal SSDs is the difference in market factors and demand. Let’s take a look at how the market size, the market segmentation, and the pricing strategy affect the price of each type of SSD. 

Internal SSDs 

The market for internal SSDs is large and growing, as more and more devices adopt SSDs as their primary storage solution. According to a report by IDC, the global revenue of the internal SSD market in 2020 was $51.9 billion, and it is expected to grow at a compound annual growth rate (CAGR) of 15.1% from 2020 to 2025, reaching $104.6 billion by 2025. The main drivers of this growth are the increasing demand for faster and more reliable storage, the decreasing cost of NAND flash memory, and the rising popularity of cloud computing and gaming. 

The market for internal SSDs is segmented into two main categories: client and enterprise. Client internal SSDs are designed for personal or commercial use, such as laptops, desktops, or workstations. Enterprise internal SSDs are designed for industrial or professional use, such as servers, data centers, or cloud computing. Client internal SSDs account for the majority of the market share, as they have a wider and more diverse customer base. Enterprise internal SSDs account for a smaller but more profitable market share, as they have a more specific and demanding customer base. 

The pricing strategy for internal SSDs is based on cost leadership and the differentiation of the product. Internal SSDs offer a low-cost advantage to the customers, as they provide faster, cheaper, and more reliable storage solutions than HDDs. Internal SSDs also differentiate themselves from other products by offering various performance, capacity, and reliability options to the customers. These options include different types of NAND flash memory, different interfaces and form factors, and different features and benefits. These options add to the functionality and quality of the internal SSDs, and also to the cost. Therefore, internal SSDs adopt a competitive pricing strategy, which means that they charge lower prices than external SSDs to reflect the lower cost and higher value of the product. 

External SSDs 

The market for external SSDs is small and niche, as only a few devices require portable storage solutions. According to a report by IDC, the global revenue of the external SSD market in 2020 was $2.8 billion, and it is expected to grow at a compound annual growth rate (CAGR) of 13.8% from 2020 to 2025, reaching $5.3 billion by 2025. The main drivers of this growth are the increasing demand for convenience and portability, the improving performance and durability of external SSDs, and the rising popularity of content creation and gaming. 

The market for external SSDs is segmented into two main categories: consumer and enterprise. Consumer external SSDs are designed for personal use, such as backing up data, transferring files, or expanding storage capacity. Enterprise external SSDs are designed for professional use, such as data recovery, data security, or data analysis. Consumer external SSDs account for the majority of the market share, as they have a wider and more diverse customer base. Enterprise external SSDs account for a smaller but more profitable market share, as they have a more specific and demanding customer base. 

The pricing strategy for external SSDs is based on the value proposition and the differentiation of the product. External SSDs offer a unique value proposition to the customers, as they provide fast, reliable, and portable storage solutions that are not available in other types of storage devices. External SSDs also differentiate themselves from other products by offering various features, such as shock resistance, water resistance, fingerprint recognition, or encryption. These features add to the functionality and security of the external SSDs, and also to the cost. Therefore, external SSDs adopt a premium pricing strategy, which means that they charge higher prices than internal SSDs to reflect the higher value and quality of the product. 

Additional Cost Considerations 

Besides the components and costs, and the market factors and demand, some additional cost considerations affect the price of internal and external SSDs. These include research and development, manufacturing overhead, and brand value. 

Research and Development 

Research and development (R&D) is the process of creating new or improving existing products, technologies, or services. R&D is essential for the innovation and advancement of the SSD industry, as it enables the development of faster, cheaper, and more efficient SSDs. R&D also involves a lot of investment, risk, and uncertainty, as it requires a lot of time, money, and resources to conduct experiments, tests, and trials. 

The R&D costs for internal and external SSDs are different, as they have different goals and challenges. Internal SSDs focus on improving the performance, capacity, and reliability of the SSDs, while external SSDs focus on improving the portability, durability, and security of the SSDs. Internal SSDs face more technical and engineering challenges, such as reducing the size, power consumption, and heat generation of the SSDs, while external SSDs face more design and marketing challenges, such as creating a sleek and stylish appearance, a user-friendly interface, and a strong brand identity. 

The R&D costs also become different, as they have different sources and levels of funding. Internal SSDs have more sources and levels of funding, as they have more stakeholders and partners, such as device manufacturers, chip makers, and software developers, who are willing to invest in the development of internal SSDs. External SSDs have fewer sources and levels of funding, as they have fewer stakeholders and partners, and rely more on their resources and revenues to fund their development. 

That’s why they affect the price of the SSDs in different ways. Internal SSDs have higher R&D costs, but they can spread the costs over a larger market and a higher demand, which lowers the price per unit. External SSDs have lower R&D costs, but they have to cover the costs over a smaller market and a lower demand, which raises the price per unit. 

Manufacturing Overhead 

Manufacturing overhead is the indirect cost of producing a product, such as the rent, utilities, maintenance, and depreciation of the factory, equipment, and machinery. Manufacturing overhead is also known as the fixed cost, as it does not vary with the quantity of the product produced. Manufacturing overhead is an important factor that affects the price of the product, as it determines the break-even point and the profit margin of the product. 

The manufacturing overhead for internal and external SSDs is different, as they have different production processes and complexities. Internal SSDs have a simpler and more standardized production process, as they have fewer components and features, and they follow a common form factor and interface. External SSDs have a more complex and more customized production process, as they have more components and features, and they vary in their form factor, interface, and design. 

The manufacturing overhead also becomes different, as they have different production volumes and efficiencies. Internal SSDs have a higher production volume and a higher production efficiency, as they have a larger market and a higher demand, and they can benefit from the economy of scale and mass production. External SSDs have a lower production volume and a lower production efficiency, as they have a smaller market and a lower demand, and they face more challenges and limitations in production. 

Therefore, they affect the price of the SSDs in different ways. Internal SSDs have lower manufacturing overhead, as they have a simpler and more efficient production process, which lowers the cost per unit. External SSDs have higher manufacturing overhead, as they have a more complex and less efficient production process, which raises the cost per unit. 

Brand Value 

Brand value is the intangible value of a product that is derived from the perception and recognition of the customers. Brand value is influenced by factors such as the quality, the reputation, the loyalty, and the awareness of the product and the company. Brand value is an important factor that affects the price of the product, as it determines the willingness and the ability of the customers to pay for the product. 

The brand value for internal and external SSDs is different, as they have different levels and types of competition and differentiation. Internal SSDs have a higher level and a lower type of competition and differentiation, as they have more competitors and fewer differentiators in the market. Internal SSDs compete mainly based on the performance, capacity, and reliability of the SSDs, which are more objective and measurable factors. External SSDs have a lower level and a higher type of competition and differentiation, as they have fewer competitors and more differentiators in the market. External SSDs compete mainly based on the portability, durability, and security of the SSDs, which are more subjective and emotional factors. 

The brand value also becomes different, as they have different strategies and tactics for creating and maintaining the brand value. Internal SSDs have a more rational and functional strategy and tactic of creating and maintaining the brand value, as they focus on delivering the best performance, capacity, and reliability to the customers, and communicating the technical and engineering aspects of the SSDs. External SSDs have a more emotional and experiential strategy and tactic of creating and maintaining the brand value, as they focus on delivering the best convenience, portability, and security to the customers, and communicating the design and marketing aspects of the SSDs. 

So, they affect the price of the SSDs in different ways. Internal SSDs have lower brand value, as they have more competition and less differentiation in the market, and they rely more on the rational and functional aspects of the SSDs, which lowers the price per unit. External SSDs have higher brand value, as they have less competition and more differentiation in the market, and they rely more on the emotional and experiential aspects of the SSDs, which raises the price per unit. 

Price Comparison Across Brands and Models 

To illustrate the price difference between internal and external SSDs, we can compare some of the popular brands and models of SSDs in the market. We can use the cost-per-GB ratio to measure the price difference, which is calculated by dividing the price of the SSD by the capacity of the SSD. The lower the cost-per-GB ratio, the cheaper the SSD is. 

Here are some examples of the price and the cost-per-GB ratio of some of the popular brands and models of internal and external SSDs, as of April 2023:  

Brand	Model	Type	Capacity	Price	Cost-per-GB
Samsung	870 EVO	Internal	1 TB	$100	$0.10
Samsung	T7	External	1 TB	$170	$0.17
Crucial	MX500	Internal	1 TB	$90	$0.09
Crucial	X8	External	1 TB	$150	$0.15
WD	Blue 3D NAND	Internal	1 TB	$85	$0.08
WD	My Passport SSD	External	1 TB	$160	$0.16
SanDisk	Ultra 3D NAND	Internal	1 TB	$90	$0.09
SanDisk	Extreme Portable SSD	External	1 TB	$155	$0.15

As we can see from the table, external SSDs are more expensive than internal SSDs of the same brand and capacity, and they have a higher cost-per-GB ratio, which means that they charge more for the same amount of storage. 

Tradeoffs and Recommendations 

Now that we have explored the reasons for the price difference between internal and external SSDs, we can discuss the tradeoffs and recommendations for choosing the best SSD for your needs and budget. There is no definitive answer to which type of SSD is better, as it depends on various factors, such as your device, your usage, your preferences, and your expectations. However, we can provide some general guidelines and suggestions to help you make an informed decision. 

Internal SSDs 

Internal SSDs are suitable for you if: 

a) You want to upgrade or replace the storage device of your laptop, desktop, or other device that has an internal SSD slot. 

b) You want to improve the performance, capacity, and reliability of your device’s storage system. 

c) You want to save money and get the best value for your storage needs. 

Internal SSDs are not suitable for you if: 

a) You want to use the SSD with multiple devices or transfer data between different devices. 

b) You want to protect your data from physical damage or theft. 

c) You want to have a stylish and portable storage device. 

External SSDs 

External SSDs are suitable for you if: 

a) You want to use the SSD with multiple devices or transfer data between different devices. 

b) You want to protect your data from physical damage or theft. 

c) You want to have a stylish and portable storage device. 

External SSDs are not suitable for you if: 

a) You want to upgrade or replace the storage device of your laptop, desktop, or other device that has an internal SSD slot. 

b) You want to improve the performance, capacity, and reliability of your device’s storage system. 

c) You want to save money and get the best value for your storage needs. 

Future Trends and Predictions 

Finally, we can look at the future trends and predictions of the internal and external SSD market, and how they might affect the price difference between the two types of SSDs. The SSD industry is constantly evolving and innovating, and many factors can influence the future of the SSD market, such as the technology, the demand, the competition, and the regulation. Some of the possible future trends and predictions of the internal and external SSD market are: 

• The technology of the SSDs will improve, leading to faster, cheaper, and more efficient SSDs. The NAND flash memory will become more dense and durable, the controller will become more intelligent and compatible, and the interface will become more advanced and versatile. The SSDs will also adopt new technologies, such as 3D NAND, QLC, and NVMe, which will enhance the performance and capacity of the SSDs. 
• The demand for the SSDs will increase, leading to more growth and diversity in the SSD market. The SSDs will become more popular and mainstream, as more and more devices and applications will adopt SSDs as their primary storage solution. The SSDs will also cater to different segments and niches of the market, such as gaming, Cloud Computing, content creation, and data security, which will create more opportunities and challenges for the SSD market. 
• The competition for the SSDs will intensify, leading to more innovation and differentiation in the SSD market. The SSDs will face more competition from other types of storage devices, such as HDDs, hybrid drives, and cloud storage, which will challenge the SSDs to offer better value and quality to the customers. The SSDs will also face more competition from other brands and models of SSDs, which will motivate the SSDs to offer more features and benefits to the customers. 
• The regulation of the SSDs will change, leading to more standardization and compliance in the SSD market. The SSDs will have to follow more rules and regulations from the governments and organizations, such as the environmental, ethical, and legal aspects of SSD production and usage. The SSDs will also have to adhere to more standards and protocols from the industry and the community, such as the compatibility, interoperability, and security aspects of SSD communication and integration. 

These future trends and predictions of the internal and external SSD market will affect the price difference between the two types of SSDs in different ways. Some of them will reduce the price difference, such as the improvement of the technology, the increase of the demand, and the change of the regulation, which will lower the cost and increase the value of the external SSDs. Some of them will increase the price difference, such as the intensification of the competition and the differentiation of the market, which will raise the cost and the value of the external SSDs. 

Therefore, the price difference between internal and external SSDs will likely fluctuate in the future, depending on the balance and the interaction of these factors. However, the price difference will likely remain significant, as the internal and external SSDs will still have different components and costs, different market factors and demand, and different additional cost considerations. 

Wrapping It Up 

In the end, it can be said that external SSDs are more expensive than internal SSDs because of the following reasons: 

• External SSDs have more components and features than internal SSDs, which increases the cost of external SSDs. External SSDs also have a lower economy of scale and a higher complexity of production than internal SSDs, which increases the cost of the external SSDs. 
• External SSDs have a smaller market share and a lower demand than internal SSDs, which reduces the revenue and the profit of the external SSDs. External SSDs also have a higher value proposition and a higher differentiation than internal SSDs, which increases the price and the profit of the external SSDs. 
• External SSDs have lower R&D costs, higher manufacturing overhead, and higher brand value than internal SSDs, which affect the price and the profit of the external SSDs in different ways. 

The cost-per-GB ratio shows that external SSDs cost more than internal ones for the same storage. When picking the right SSD, think about your device and what you like. Internal SSDs are good if you want to upgrade your device and save money. External SSDs are good for moving data between devices and having a portable storage device. In the future, changes in technology and what people want might make external SSDs cost less or more compared to internal ones.

Common Related Questions

What is the difference between internal and external SSDs?

A: Internal SSDs are storage devices that are installed inside the device and are connected to the motherboard via a SATA or PCIe interface. External SSDs are portable devices that can be plugged into any device via a USB or Thunderbolt cable.

Why are external SSDs more expensive than internal SSDs?

A: External SSDs are more expensive than internal SSDs because of various reasons, such as the components and costs, the market factors and demand, and the additional cost considerations. External SSDs have more components and features, a smaller market share a lower demand, and higher manufacturing overhead and brand value than internal SSDs, which increase the price of the external SSDs.

How can I measure the price difference between internal and external SSDs?

A: You can measure the price difference between internal and external SSDs by using the cost-per-GB ratio, which is calculated by dividing the price of the SSD by the capacity of the SSD. The lower the cost-per-GB ratio, the cheaper the SSD is. External SSDs have a higher cost-per-GB ratio than internal SSDs, which means that they charge more for the same amount of storage.

How can I choose the best SSD for my needs and budget?

A: You can choose the best SSD for your needs and budget by considering various factors, such as your device, your usage, your preferences, and your expectations. Internal SSDs are suitable for you if you want to upgrade or replace the storage device of your device, improve the performance, capacity, and reliability of your storage system, save money, and get the best value for your storage needs. External SSDs are suitable for you if you want to use the SSD with multiple devices or transfer data between different devices, protect your data from physical damage or theft, and have a stylish and portable storage device.

What are the future trends and predictions of the internal and external SSD market?

A: The future trends and predictions of the internal and external SSD market are influenced by factors such as technology, demand, competition, and regulation. Some of the possible future trends and predictions are: the technology of the SSDs will improve, the demand for the SSDs will increase, the competition for the SSDs will intensify, and the regulation of the SSDs will change. These factors will affect the price difference between internal and external SSDs in different ways.