Steve Jobs is at it again. The latest open letter from the Apple CEO is responding to the fallout from the iPhone’s $200 price cut yesterday. Yes, this is the real Steve Jobs, not that Forbes dude. Says Steve:
…even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these.No, sorry, you’re not getting your $200 back, but I’ll tell you what you are getting: a nice letter from Steve Jobs.
And $100 worth of credit at the Apple Store.
That’s…that’s…great googly moogly. Okay, I’ll admit it: I was in the midst of penning a piece on how the iPhone price cut uproar is ridiculous when this news broke, and like the rest of Steve’s open letters, I gotta say I didn’t see this one coming. If I were a paranoid conspiracy theorist, I’d say this whole thing was staged to perfection. But since I’m feeling a little more rational today (hey, it happens once a week or so), I’m really just taking Steve at his word.
Apple’s already sold close to a million iPhones, which means that they’re offering up almost $100 million worth of credit at their stores. Sure, not everybody will take advantage of that the credit, but that’s less important than the gesture itself and, I dare say, far more than you’d get were people to not only launch but win a class action suit (tenuous at best).
Some people will no doubt still be peeved at the perceived slight, but come on: when’s the last time you saw a company do this of their own volition? Cheer up.
It's great because now you have to go back in the Apple store, in the holiday season, with a $100 gift card... Then you gotta buy an iPod for you or someone else, and Apple makes the money right back. ;)
-Ken
It's too bad that we weren't given the option to use the credit towards our AT&T bill. Now THAT would have been nice! It wouldn't have to be all at once, either. How about a $16.67 credit per month for a year instead?
Oh well... hopefully there won't be a time limit on the Apple Store coupon. I don't need anything new for awhile. =:\
Ron
A spectacular offer considering no one has any grounds to complain. I'd happily chip in to help Apple cover this just to shut up the whiny loosers.
Personally, I love how this drop makes the iPhone "affordable." It's a one-time cost. Save up your money and buy the damned phone. If you can't scrape together $600 once, how will you come up with $60+ every month?
"...100 million worth of credit at their stores..."
Well, yes, from our perspective. But Apple's really only out the cost of whatever you buy, easily 0.50 on the dollar.
Or they're ahead of the game if you use your $100 as a down payment on an iMac or MacBook.
Good god, get over it already. What a bunch of fscking whiners.
Like any other company would even come close to doing this.
"... I'd happily chip in to help Apple cover this just to shut up the whiny loosers..."
You're missing the point. No one is complaing that they spent too much money or that the iPhone was too expensive. The problem is that this is the first time that I know of that Apple has dropped the price on one of their products so soon after it was released - and a whopping 33%, too! You can't tell me that their costs dropped that much in only 2 months.
"... A spectacular offer considering no one has any grounds to complain..."
You're right that no one really has grounds to complain, but a spectacular offer??? No, it's not. It's a PR stunt designed to soften the impact from the backlash of their irrate customers.
I usually take the attitude of "deal with it" on things like this, but this one is different. It was too big of a price drop too soon. They took advantage of all the hype that got built up in the 6 months prior to release and knowingly gouged their best customers.
I will not join the chorus of "I'll never buy another Apple product again!" - I know I will. Nobody makes a quality product like Apple does. However, I will never buy another new product so soon from them again if this is what they are capable of doing. Once bitten, twice shy.
Ron
I think we all expected the price of the iPhone to drop but I certainly didn't expect it to drop by so much and so quickly. Yeah, we do appreciate that technology falls in price and that new models are released but a 2-month turnaround is definitely more than the consumer should reasonably expect (6-months would have been OK). Since the announcement it was reasonable to expect that early adopters would be upset and I really did expect some sort of gesture to be made. Honestly, I expected that gesture to come in the form of some free downloads from the iTunes Store or something like that so $100 is pretty surprising. Overall I think it's more than should have been expected and this should keep the faithful happy.
Difference being that the
phone market is more hype-sensitive thatn the PC/MP3 player market. iPhone was just way to overpriced and this is more or les a correction that was expected. Unfortunately every early adopter pays too much and is offered with deficiencies.. thats life...you can always choose to wait a few monts.. about the 100MUSD.. even IF apple's margin is 50% they are still giving away 50MUSD.. anyway you look at it, it is a lot of money and it goes from gross margin any way or the other.
There is more than one good reason for not buying a brand new hot product right after its release. Inevitable price drop + feature increase is one reason. Another good reason is waiting for the bugs to be figured out and fixed - surprisingly, this does not seem to have been much of an issue with the iPhone, but more often than not, you'll benefit from waiting those few months.
While the margin Apple's been making on the iPhone is indeed huge, one can argue that they have earned it, every dollar. Remember the pre-launch campaign? All the pre-hype, hype and all? And then the product that was so well received despite all the hype, and on top of all, was delivered in sufficient quality.
My final point, I believe that the groups of Mac Computer Buyers and iPod/iPhone Buyers, these 2 groups, while they do overlap, are not nearly the same. I would even go as far as saying it is more typical for an old Apple faithful to have waited those few months, rather than camping outside an Apple store on the product launch eve.
I can see how the costs for the iPhone could drop, maybe dramatically. They are using, essentially, many of the same parts in the touch as are in the iPhone. So Apple orders twice as many cool touchscreens, prices drop, Apple passes that down to the customer and gains more in the process. Now maybe the price cuts aren't super dramatic, but estimates were giving Apple 45% profit on the 8GB iPhone. So maybe they now take 25 or 30%, and gain more of a foothold in the market. At the same time, maybe they had overestimated the markets size originally and need to clear the inventory for the second gen iPhone, which I wouldn't doubt would be coming in January at Macworld. Maybe they use the size of the new nano? I think this is the first time I've ever heard such an uproar over a cost CUT. Brilliant PR on the part of Apple, drop the price, upset everyone, then turn around and do the amazing thing and listen to customers and give them something!!!!