Steve Jobs Apologizes for iPhone Price Drop
The CEO of Apple, Inc., Steve Jobs, has written a personal and open letter this morning to all the early iPhone customers, apologizing for dropping $200 off the original iPhone’s price tag after only two months of the product being out in the market. I can certainly sympathize with early iPhone customers, it’s pretty hard to hear that the iPhone 8GB is only $399 when only two months ago it was marked at $599. It is definitely a significant price change when concerning phones. On the other hand, everyone else that wanted an iPhone but didn’t have a chance to get one should be quite ecstatic about the price drop.
In the letter, Steve Jobs even lays down the harsh reality of the Tech world by basically saying, that’s how life is when dealing with technology, you can never be certain that you will end up winning. You’ll more than likely go into a store to buy a product today just to find out the next day that it’s outdated or a better deal has been offered. If we all lived in the fear of falling victim to this unfortunate inconvenience then no one would purchase technology, since there will always be a better and cheaper solution on the horizon. Although it would have been more ethical for Apple to have waited at least six months after the launch of the iPhone to drop the price tag, on the plus side, Apple is expected to hook more customers into buying the iPhone for the holidays now. Something which would increase their profit margin for this quarter alone.
Steve Jobs also mentions that they are in the works to offer early iPhone customers a $100 credit, which would be valid towards the purchase of any Apple product. This isn’t official yet, but we should expect this to surface within the following months. It is a gesture which all early iPhone customers deserve for trusting in Apple’s products, which would at least demonstrate that Apple cares and values their customers by giving back. In my opinion, a $200 credit would be a bit more fair since the credit can only be used towards Apple products anyways. The currency will solely circulate within their company as it is, so why not offer the full sum. Although Apple, Inc. is quite clear about being aggressive with their marketing strategies, hopefully we won’t see more hiccups like this one in future product releases.
If you’re interested in reading the full letter, click here to check it out.
Sep 7th 2007
I agree that $200 would make more sense to give back to the customer, it doesn’t matter anyways because they only offer it back as “store credit” … Now if they actually mailed you a check, well that’d be cool!
I think Apple dropped the ball when it came to the R&D on the price of the phone when it came out. They have sold tons of phones and made a huge profit on the IPhone, but the price was too high so it was probably a big spike in sales (first few weeks of release) that has dwindled very quickly. I guess they realized, “hey it just isn’t competitive enough to sell a phone for $599 + 2 year contract” so they dropped the prices. I like the fact that they decided to lower the prices, but I think it could of all been avoided if they just kept the price low at launch. They would have probably sold a ton more because there wouldn’t have been such a buzz around how overpriced the phone was…Unfortunately now, I think even the price drop might be a little too late even though its only 2 months after launch. It doesn’t look good to reduce the price of this “costly and expensive” phone by a third, because it either looks:
1. Obvious they want to sell more phones and are willing to reduce their already outrageous profit margin by doing so…(also revealing their profit margin, see #2).
2. Obvious that the phone probably isn’t that expensive to produce. Most companies do not sell anything under the production cost, and to slash prices by $200 gives you a base number on how much Apple was making off of each phone.
3. Obvious that if you’ve adopted the IPhone early, you unnecessarily got screwed because you paid the high premium so you could “look cool”.
I must commend Steve Jobs on his “astounding insight” on the technological world. Most people know that technology becomes obsolete fast and lowers in cost…but something like the IPhone to drop 1/3 of the price in 2 months?! Name me another product with as much hype around it to just drop in cost like that. Even console gaming systems which are extremely popular take QUITE a while to get a price drop…at least a year from what I’ve seen in the past (excluding Sony recently reducing the cost of the PS3/but that’s only because it was WAY overpriced, and it wasn’t such a nominal drop compared to the IPhone). To me, its quite obvious that Apple is trying to make a big push into getting everyone on the IPhone, and soon! Why?
Dum dum dum! If you watched the Keynote then you obviously saw Steve Jobs latest “money maker”. The Wi-Fi music store as well as Ring Tone store. Now he will be able to extract more money from people either on IPods or IPhones with their WiFi store. The ring tones are just the sprinkles on top for all those kiddies out there that want “fitty cent” on their cellphone, and want to cough up the extra 29, 39 — whatever amount of cents to turn an existing track into a ringtone. If by any chance (which I doubt) that these price drops would make Apple break even or lose money on the devices’ sale; I assure you he will be making it back with his new online WiFi store/ringtone sales.
Brilliant when you think about it from a money making point of view; if I owned large amounts of apple stock, I might actually give a shit.