iPhone Rebates & Power Of The People

27 Comments

[qi:020] The $200-price cut announced by Apple (AAPL) yesterday turned into a bit of a PR disaster for the company. The cuts penalized the fanboys (including yours truly) for being early adopters, and prompted iPhone owners to express their outrage across the web and beyond. In an interview in USA Today, Steve Jobs remarked:

That’s technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that’s what happens in technology.

Now there’s a way to annoy the people who have stuck by the company through thick and thin. Today, realizing that Apple’s goodwill was at risk, Jobs announced a $100 credit to all early iPhone buyers, promising to do the right thing.

Is it really the right thing? Not in the classic sense, because unlike the 14-day-returnees, you aren’t getting cash back. It’s a sop, really — albeit an admittedly good-natured one — since the $100 you get back is only good for another Apple product.

Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple’s website next week. Stay tuned.

I wonder if Steve Jobs’ open letter, and the $100 credit, would have happened in another time when social media tools weren’t as prevalent as they are today. Regardless, the good thing is, Apple listened.

Update: Dave Winer doesn’t want the money; just a T-Shirt

27 Comments

Gary Liew

Not an iphone owner but thinking of getting one since it is so cheap now. A few comments.

1 – You think Mr. Jobs is worried about his customers? This is corporate America. He is only worried about the price of Apple stock. He did it because he knows that there are people out there that “must” be the first to have everything. Same as Xbox, Playstation etc. etc. etc. Six month later, price drops significantly. iphone, XBox, Playstation etc. etc. etc. If you want to be the first, then dont whine about the price.

2. Didn’t anybody tell you not to buy the first iteration/model of anything. 6 months is a good time to wait for people to make complaints and companies to fix their product.

Then again, money is your and you can do as you see fit. I think I will wait until thanksgiving, bet there will be another huge discount during that day.

Grant Lynde

I am absolutely incensed by this credit. This iphone is my first (and LAST) apple product. The credit is useless because it is non-transferable and cannot be used at itunes. I’ve been on hold for 10 minutes to get the name of someone at HQ to write to… the best they can do is tell me that no one will help me even if I write.

Apple, go to hell!

Jeremy

I agree with Ellen Stafford. It’s not that Steve didn’t know the business, he just wants to explode it. It’s all part of a carefully planned scheme.

You guys will need that $100 when you have to start replacing the batteries on those things anyway.

Martin Hesse

I was shocked by the reaction the public had to the drop in price for several reasons. First, not only is Jobs right about how “this is technology”, but this is also business. Although we may love and be loyal to the products Apple markets and produces, our admiration alone does not and has not justified abandoning the basic tenets of a business venture. Second, I am told that we were duped into buying a $600 phone? No, we each valued its worth to us at THAT moment and considered it a worthwhile investment. Now it should matter little that it can be had for a fraction of the price. Like every tech product that has come before it, the price of the iphone was surely to decrease within a matter of months. Surely those who felt it worth the $600(not a paltry sum) to buy it instantly assessed both the risks and the rewards? What the people have asked Apple for is to compensate them for their negligent impulse shopping. But even the remedy provided is a business move; they are being consistent. And this should never have surprised anyone.

Avnish

I think Steve Jobs came to know the realities of cell phone business. You cant keep a phone so high cost even if it is revolution technology. Reality is that cell phone is used by masses and it needs to be affordable and at the same time if you sell more you make more money. However in my opinion one reason could be holiday season sales and another could be some other competition coming with some amazing phone with better rates. I mean come on how can you drop prices all of a sudden, this is major PR disaster done by Apple and I doubt volume sale is the reason, I am pretty about future competition coming from rivals and Apple came to know about it and they lowered the price to make money ASAP. Look at the the PR disaster steps taken by Apple, first $200 rebate then refund for 14 days old customers, then $100 store credit, it all adds to anxiety level faced by Apple executives.

Matt Mendolera

How is it even reasonable to expect that pissed off customers WANT $100 towards more Apple gear. I’m one of the fools who asked his fiance for the iPhone for my bday 3 weeks ago…and wrote in to Apple the second I heard about this price cut. What good does $100 towards new stuff do, if I never plan to shop at Apple again as a result of this greedy stunt. I’m in the tech industry–I expected a new version and a lower price to happen around December, given the holidays and the fact that it’s 6 months after the launch. But this week, and a 33% cut? That’s outrageous, especially when the standard return policies for most smart retailers are 30, 60 or 90 days…not 14. Apple has just destroyed their brand in my eyes.

Ellen Stafford

Oh Please “Apple Listened”???? All of this was well planned out right from the start of the marketing hype when the phone first came out. If the Iphone didn’t reach its targeted sales they knew they would drop the price. All Jobs did was wait until the outrage crescendo reached a predetermined pitch and then he condescendingly made a peace offering. I’m not impressed. And like other cult leaders, he has no real respect for his followers, more like contempt, I’d say.

feed

actually it’s not that big a price cut: over here in europe, it has emerged that apple is getting a share of the connection fees during the 2-year mandatory contract, so the price is higher for buyers as well as for apple itself. it’s still $200 of course, but a lower percentage, and more iphones sold for less money means higher fee-based revenues

William Wei

First of all, Apple changed the price for as big as $200 within such short time period for reasons and the reasons might be:

  1. GPhone is for real now and it will be much cheaper than $599.
  2. Apple realized that iPhone launch isn’t as a hit as the market expected, so it try to correct the reaction from the market.
  3. Apple rekons that the market will be getting competitive from its market research.

Now, for giving back $100 store credit doesn’t really fix the negitive reaction. It should be $200 store credit if I was Steve. First, it equals to the $200 drop, but not really the immediate cash value that will hurt Apple.

The components didn’t drop that much within 60 days, it is bad to show the public how much is iPhone’s margin.

Again, personally, ATT deal is the one that will hurt Apple in the long run (is it 5 yrs exclusive deal?). iPhone could have had much bigger potential market grow. I think Apple realized that and that’s why they launched iPod Touch to equalize their deal with ATT.

Nitin Ahuja

I think its a question of timing. Dropping the price within 60 days of launch (that too 200 bucks) is unusual. I think even early adopters understand that they pay a premium for buying a product first hand, but the discount cycle kicks in typically in 6 months – 1 year. I am wondering why would they drop the price on such a short notice or on the contrary price is at 600 in the first place when they had to drop it so soon? which is part of the reason why few people are upset.

Skeptic

I’m with the others who say quit the whining. If you’d been with Apple through thick and thin (and yes, I’ve been with them since the Apple II), then you’d know that 1st generation Apple products are always a bit of a gamble either from a bug/stability standpoint or wrt to the premium paid.

Early adopters used to know what they were getting into…but it seems like the “new” (post iPod) Apple has a attracted a bunch of n00bs.

Paul

Apple doesn’t ask you to stand by them through thick and thin. You do that yourself. Don’t blame Apple because of your actions.

I agree that Apple listened and although the $100 store credit may not be ideal, remember that Microsoft having acted illegally has settled cases with various states giving credit to purchase MS products only.

Apple hasn’t done anything wrong. Think of the people who bought homes 9 months back and now home prices have declined. Should the previous owner give them a refund. Apple is setting market prices it thinks it can get, just as the real estate market sets home prices.

Judy

This is really upsetting. I can understanding something going on sale after it has been out for sometime. This is grand way to reward the people that always stood behind Apple in thick and thin. I bought my iPhone August 12th and now I learn I could have bought it for $200 less. I was willing to keep it even though I am unable to make calls from our house. ATT has more difficulties connecting in this area. This is my reward?

grant

As an iphone owner, I am particularly upset to lose that $200, but more disappointed that Apple had that planned since the day 1 of iphone launch, and obviously, it’s losing us early adopters in the long run. This $100 rebate helps. But not sure how much

David / IC

I agree with Om, Apple listened and I’m convinced we will see more and more CEO’s doing a step-back after having analyzed the situation. Social medias reach CEO’s and other top execs bypassing 10 layers of managers that were usually filtering/optimizing the information.

Leigh

Quit your whinning. Tell me of one other product you have bought when it first came out and the price dropped later and the company did anything about it. Suck it up and chalk up the $200 for looking cool when the phone first rolled out.

Leigh

arno ghelfi

well, the $100 won’t necessarly go back to Apple. You will be able to purchase what ever they sell online at the apple store. [a]

Zealus

I see this as another marketing trick targeted specifically at Apple fans. They WOULD use this credit one way or another. As a different example, myself – the iPhone is the first product by Apple I have purchased in my entire life (and not even for myself), such credit is absolutely and perfectly useless.

Good thing I bought mine less then a week ago.

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