Well handled. That’s my reaction to this announcement from Steve Jobs on the Apple iPhone price reduction fiasco. Well handled. Each person who paid $599 for the iPhone will be receiving a $100 Apple Store credit. Folks that are entitled to a rebate or price match don’t get the deal, but they’re better off without it.
I don’t want to rehash the issue in its entirety here, but I do wantto share some last opinions on why this is the right thing to do. Yes,early adopters often pay more for products to get them first. You’repreaching to the choir with that argument as I’ve owned four HDTVsalready; the first one purchased in 2001 before I could actuallyreceive any HDTV content. The issue isn’t as simple as "paying more" forsomething. The issue is that there are certain expectations andprecedents that were just shattered by the scope and quickness of theiPhone price cut. In the grand scheme of my mobile tech budget, $200isn’t going to break me. However, you have to look at the percentage ofthe price drop to keep this perspective. That $200 is 33%. When youcombine that large relative amount with the fact that the price droppedjust 60-odd days in the product lifecycle, something is wrong. Peoplewill feel used.
Another way to look at it: the iPhone was announced in January aswas the price. It was heralded as a truly innovative and game-changingdevice, the likes of which we haven’t seen before. I’m comfortable inagreeing with that. For six months, interest was building in thisinnovative device. Two months after introduction, it was tossed aroundwith a large price cut in a device market where the typical lifecycleis around 12 months and contracts last for 24. It’s not the iPod marketI’m talking about, it’s the cellular phone market.
In the end, I put my consumer beliefs behind and used the dusty ol’Economics degree hanging on my wall to understand why Apple had to dropthe price. I mentioned it in my post yesterday with this thought on theiPod Touch: Remember the $599 justification for the iPhone was it’s an iPod anda phone. If the iPod features are $299, is the phone part worth $300?
With the introduction of a $299 iPod Touch with 8 GB of memory, themarket wouldn’t sustain a $599 iPhone with 8 GB of memory. I get that.It’s nice to see that Apple gets how their earliest adopters feel aftersuch an announcement. The good news is: my Leopard upgrade should onlycost me $29 now… unless they lower the price of that two months lateras well. ;) Not likely and I’m just kidding.
Thanks for the heads up, Jose and Trevor!
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