Jobs' Mea Culpa is Apple's Victory


[qi:004] Steve Jobs is sorry. He wants to give you $100 back for what you paid when you bought your iPhone too early. Provided, of course, you spend that $100 in one of his stores.

I disagree with Om on this. I get this feeling that this is exactly what Steve Jobs had planned all along? The chances are high that that extra $100 you would have saved, had the iPhone been appropriately priced to begin with, would have been spent outside an Apple (AAPL) store. Now it’s staying in Apple’s coffers. And Steve Jobs looks like a caring, responsive CEO who didn’t mean to hurt anyone’s feelings.

So Apple wins again. Forget the news stories that say Apple cut its price because sales were sluggish. On Tuesday, iSuppli, a research firm, said nearly one in 50 mobile phones sold in the U.S. was an iPhone, and that Apple was on track to sell 4.5 million iPhones this year. Today, iSuppli reiterated that view:

The iPhone outsold all competing smart-phone and feature-phone models in the United States in July on an individual basis. iSuppli?s teardown research indicates that Apple was generating a robust hardware margin at its previous pricing, and will still be profitable at the new pricing.

I suspect the money Apple makes off the iPhone will be a wash: What it loses in the new discount it will easily make up in holiday-season volume. And it will end the year with an even higher market share in handsets.

But what about Apple’s stock? It fell to $132.93 this morning from a high of $145.73 Tuesday, a drop of nearly 9%. Again, the press has been quick to assert that Wall Street was disappointed with Jobs’ announcements yesterday, particularly the iPhone price cut. But look at the 5-day chart, and it’s clear that Apple is actually up. It was a classic case of buying the pre-announcement hype and selling on the news. It may even offer a last-chance to buy in at this level.

aapl 5 day chart

Over at Barron’s Tech Trader Daily, there is a nice summary of analyst’s preliminary reactions to the iPhone news. Bottom line, analysts were taken aback by the timing and the degree of the iPhone discount, but overall they remained “fairly enthusiastic” and few dared to lower their ratings or price targets.

Apple does not take pride in disappointing investors, and it may be that this iPhone discount, coming sooner rather than later, is a way of signaling that iPhone sales have been strong enough that it can lower prices without missing targets.


Daniel Golding

The $100 in store credit is brilliant, because of what you can buy for $100 in an Apple store if you have an iPhone: Accessories! Cases, headphones, chargers! For those unfamiliar with the business model, the margin on those items is really immense. That means that the $100 “rebate” costs Apple about $20 – not a bad deal at all. And – it just got folks to come back in for another visit, which may mean additional sales, which would more than pay for that $20. Steve Jobs is a smart guy and understands retailing.

Don Jones

Jobs just trained a lot of people not to buy his products when they first come out. Kind of like Detroit carmakers training consumers to wait until the next sale (a month or two) to buy a car.


Like all things Apple price is centre stage. It would had been much more fair to those ‘I really want the new iPhone now’ people to had been given a store credit for $200. That would be still money in the bank for Apple and less of an outcry on the price drop.


Spend the $100 on iWork ’08 family-pack if you have more than one Mac. It is worth every penny. It beats Microsoft Office hollow!


Anyone who could afford to be an early adopter/beta tester at the initial price offering should not be whining about the ‘expected’ drop in price (which occurs in practically everything electronic – mctr raised its 2GB flash drive from $15.99 to $17.99). Don’t blame Apple because you paid top $ to own an iPhone in the first month.

Neil Anderson

Lots of free publicity with the iPhone price reduction. And those folks will be going back into an Apple store to spend their $100 credit. Good luck on getting out spending less. :)


As an iPhone buyer I feel stupid & ripped off. I feel Apple took me for granted.

They sure bungled big on this. First by puttng a 600 price tag, second by dropping it by a third and third by offering the 100 in store credit.

Does Steve Jobs want me to believe that he is doing me a favor??? If he really was trying to makeup for a mistake – I would have appreaciated a 150 in cash refund. But no, thats not what happened.

here is what folks at Apple need to know – I am your customer not your bitch. I pay you and not the other way round. I need to be shown some respect. Take your 100 and shove it up where the sun dont shine. I aint buying anything Apple in the next 100 years…


Job might have messed it up or it could be a brilliant move of his, Job is the only one who can tell us. But I still like my iphone and I still think AAPL is a great American company, but wait a minute, it is not it, there is more. Another American company whose customer service has scored big from this AAPL ‘strategic’ move, and I am not surpirsed if get some good PR coverage next week. I called my American Express card yesterday and got my $200 refund in 5 mins, I gave them my iPhone serial number and that was it, no other question asked. I was so impressed that I will now buy everything on my AmEx card, and I will also start buying some AXP shares next monday.


With Apple, you get what you pay for. They’ve always cost a little bit more and have been totally worth it if you value intuitive interface and better design.Over the last 2 years it seems like Apple has been trying to hit a lower price point without sacrificing what has made them stand out.

It’s obvious that Apple’s strategy is to become to the world’s household’s what IBM became to business. And I wouldn’t be a bit surprised if they do it. What happened with the iphone is just part of a strategy to keep their customers loyal and happy.


Don’t forget that the market has been tanking the past two days, and that probably also contributed to Apple’s stock decline as well. Yes, the $200 price drop will definitely help drive demand where volume will increase overall revenue.


Maczealots are brainwashed retards. Mr. Turtleneck plays the carrot and stick game and these asses praise him at the end of course. Jehovah’s Witnesses are sane people compared to these cowards.


One the other hand… Steve has now messed up the profit margins of all the iPhone wannabes that were coming to market shortly… The 399 price is probably where the other companies prices were heading so that they were probably adding features to build a machine at that price… after wednesday those figures are now smoked.


I don’t buy that the price drop was planned all along. Certainly not this quickly after launch.

I think sales were below predictions.

I also suspect returns were higher than they anticipated. There were refurbished iPhones available, in quantity, on the Apple site less than a month after the product shipped.


The chances are high that that extra $100 you would have saved, had the iPhone been appropriately priced to begin with, would have been spent outside an Apple (AAPL) store.

What does appropriately priced mean? Free? The sum of the electronics component prices? The cost to develop, assemble, and ship a product? The price that only 0.1% of the population can afford? The price point where a company can maximize the profit per unit while selling as many units as possible? Or is it the price that consumers are willing to pay for a product?

A Ferrari costs hundreds of thousand dollars. Is it any more appropriately priced than a KIA costing around ten thousand dollars? What metric do you use to say a price is appropriate while others aren’t and do you apply this metric equally to all companies?


I’m not an Apple fanboi, nor do I have any interest in getting the iPhone. But I’m not sure if this was an intentional effort on Apple’s part to let this one go and try to score free PR by refunding some money in the form of vouchers.

I think Apple took an opportunity to make some good cash out of the gate with their iPhone, realizing that they could charge a premium based on the hype. Then after the initial wave of hype died down, they probably realized that they had to cut prices to ensure that they could make sales targets. Since Apple has a cult-like following of devotees, who quite franky – can be whiny bitches, they had to capitulate somewhat.


Supply and demand. Apple can charge whatever they want. If you buy it, that’s the price you accepted at that time. Demand is lower now. Price drops. They don’t have to give a discount, but they are, even if it’s money that has to be spent in their stores.

So, they should suck it up. No ethical issue here.


What you are seeing is top level business strategy in action. It’s all about market share, Apple is in for the long term. They are being very smart and nimble… limiting the bad press and gaining ground on Nokia and Eriksson. Their price cut wrong foots the competition and buys them valuable time.

Rob H

I think it was a brilliant PR move by Steve Jobs and Apple. Even if this was a pre calculated move by Jobs, it shows how savvy Apple is at doing right by the customer. You never in a million years see Motorola, Microsoft, etc. offering this kind of rebate/apology to its customers. Also if you look at the $100 rebate to use on anything sold at an Apple Store or Online, Apple has just created more revenue by giving you the money to spend.

Most people always end up spending more when they have a gift certificate, same thing applies here. Plus in reality Apple is not losing $100 because they made such huge margins on selling the phone and you are now going to purchase items in their stores, which will be more than the rebate anyway. I think I’ll buy some itunes gift certificates.

Bender Robot

You Wall Street analysts just don’t get it, do you? You don’t know Jack about Apple; just how many of you have predicted Apple’s demise in the last ten years and been absolutely WRONG?

Stick to stuff you know, like how Exxon and Wal-Mart can best screw over both their customers and employees. After all, that’s what you do, isn’t it? Tell companies how to best fuck consumers over?

Apple might be making startling moves here to you, and people might be mad because they paid more for being the first ones in line, but Apple’s motives aren’t to “fuck over their loyal customers” as so many of you wall street morons have claimed. They’re working hard to make a great product a success.

I know… call me a “fanboi”. Like I care what you retards think of me.

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