Apple caves on iPhone price...or did it?
Steve Jobs announced in response to the backlash from iPhone buyers who were angry over yesterday's $200 price drop that Apple would issue $100 worth of "store credit" to all purchasers who paid full price for their phones.
Aside from being tempted to call for the waahm-bulance for these crybaby early adopters who knew very well that they were paying a premium to be the cool kidz on the block, I have to hand it to Jobs for making lemonade out of the lemons. Sure, this move will possibly take net cash out of Apple's (and AT&T's) pockets, but it could actually result in an incremental increase in sales revenue. There aren't a lot of products that go for under $100 in Apple's inventory, so in order to use the credit, some/many/most shoppers will have to pony up some additional cash.
In addition, there must be some percentage of iPhone buyers who wouldn't otherwise set foot or shop online in the Apple store (aka, "Windows users") who now will be forced to do so in order to use their credit. They don't have to buy an Apple product – the company does market a few third party goods – but they'll at least have to walk past them, and who knows what siren song will lure them to the fateful shores of Appledom?
I'm sure there are plenty of people ticked off about spending $200 more than they had to, but, as Jobs points out, it happens all the time. All the time. Apple's going out of its way to address the issue in a more than reasonable fashion, but I wouldn't hold my breath that it will ever happen again.
Unless, of course, they can figure out some way to increase market share or net income as a result. (And, really, that's the least they can do for their stockholders.)
There's probably fodder for a post on the Equity Theory of Satisfaction in here somewhere, addressing the issue of why we're content to pay a given price for something until we find out someone else got it for less, but I don't have the energy to ferret it out right now.
Update: Here's one theory as to why early purchasers were unhappy with the price drop. Via Daring Fireball
I want one of the iPod oneupmans. I'd be happy with even the little 4Gig version.
It seems as though they'll first be available on my birthday. ...for those of you who look for "coincidences" like that to act upon.
Posted by: Brian at September 6, 2007 08:29 PMWhether moved by ethics or business savvy, seems like a good move.
Have any of the above commentors who say the phone part of the iPhone is an afterthought actually used one?
I haven't. While I have read critical reviews of the touch keyboard I don't recall seeing anything negative about the phone functionality.
The new iPod is cool, but it only has WiFi, right? One of the attractions of the iPhone for me would be using cell service to have internet connectivity at nearly any location - regardless of whether a WiFi hotspot was available or not.
If business is going good, I might pick up an iPhone once the 2nd generation comes around.
Posted by: Justin Pease at September 6, 2007 08:41 PMJustin, most of the criticism I've seen of the phone's functionality relates to AT&T's lame data service. I don't keep up with such things but apparently there's faster technology available (EDGE? GSM? I can't recall) and the hope is that AT&T will adopt it for Gen2.
The new iPod is cool, but it only has WiFi, right?
Yeah, otherwise it would be, you know, an iPhone. ;-)
Personally, I'd take an iPod with wifi any day over an iPhone. I'm counting on Brian and Jim to pool their resources to make it happen.
Posted by: Eric at September 6, 2007 09:42 PMI wasn't crying. I knew the price would come down when I bought it. It was worth $600 then, and it is still worth $600 -- you just don't have to pay that much.
(I will cash in my $100 credit, though. prob on a bluetooth thingie.)
Posted by: Phelps at September 6, 2007 11:24 PMI'm sure you'll be able to spend your $100 at the iTunes music store so you can fill the 8 gig and want the 16 gig that they will have for $599 by Christmas ... lol
When I bought my new iMac I knew new ones were somewheres on the horizon and of course they came out 1 month and few days after I bought mine, after the return period. I don't regret buying mine when I did after all I did get the use of it for that time. As with any technology buy the best you can afford at the time and enjoy it, cause its going to be out of date in 5 mins anyway.
Eric, re: "being tempted to call for the waahm-bulance for these crybaby early adopters who knew very well that they were paying a premium to be the cool kidz on the block" ..... amen, brother.
Posted by: Jeff at September 7, 2007 05:59 AMPhelps, it's people like you who are the happiest with Apple's announcements. You were realistic about the initial purchase, and now you've had an early Christmas present dropped in your lap. ;-)
It would be interesting to see a profile of those initial purchasers who choose NOT to cash in the $100 credit (if there are any).
Bleu, I didn't consider the possibility of the credits extending to the iTunes Store. Jobs's letter didn't include iTunes, but that doesn't mean the final policy won't.
Posted by: Eric at September 7, 2007 09:32 AM@Justin...
I haven't tried an iPhone but the reason for my comment has nothing to do with its functionality as a phone. It has much more to do with my general distaste for cell phones. They may be a necessary evil these days, but that's how I see them; the less I have to spend on one the better.
With all the functionality apple built in to the iphone, can the presence of the ability to use it as a phone be anything but an afterthought? Most of the online reviewers did point that out, and the three or four I've seen in use in the wild were not being used as a phone at the time (I find it interesting that though I see at least ten people per day using a cell phone, I've never seen someone actually talking on an iPhone).
The Wifi capable iPod touch, however, is quite cool. I'm just sad that I bought my first nano only a month and half ago, now I don't have any money to spend (Steve J are you listening?) on one an iTouch... to give to Eric, of course.
Posted by: Jim at September 7, 2007 10:54 AMPretty sure I'll be getting Dede an iPod Touch for her b-day. She's been oogling the iPhone for months...
On a side note, I'm with George on the cellphone thing - too many people have lost all perception of "need" and common-sense with those things. And since mom's never more than a button-press away, I'm concerned that they're replacing the ability for children to think ahead...
Posted by: Rob O. at September 8, 2007 09:11 AMI would like an iPDA, with WiFi.
Apple was smart to offer the $100 voucher. It soothes the bitterness quick, and will probably increase revenue for Apple in the long run.
Posted by: mis_nomer at September 14, 2007 11:56 PM
Of course the early adopters were ticked at the price drop.
So?
I'm still working on a unified theory of why anyone would buy an iPhone in the first place. I mean, it's got a cell phone in it (even if it is kind of an afterthought), and who wants that? ;-)
Now, those new iPod oneupmans, or whatever they're called... those things look cool.
Posted by: Jim at September 6, 2007 07:17 PM