[nikhsub1]

Apple - To all iPhone customers

[cla214]

nice... i was among the first to get the iPhone, did not feel entitled to a rebate (it was worth $599 to me when I paid it in June), but think this is a great PR move by Apple.

[Mac Write]

I am not pleased with this move from Apple and the shareholders will agree this is a $100M less profit Apple will have and is seeing shares go down along with dividends.

[King Bob On The Cob]

Too bad Apple had to do this or risk alienating the rich early adopters. The same people you can't lose because they bring the "cool" factor for Apple's devices.

[k2director]

Originally Posted by Mac Write 

I am not pleased with this move from Apple and the shareholders will agree this is a $100M less profit Apple will have and is seeing shares go down along with dividends.

I'm extremely pleased with this move, and any shareholder with a shred of common sense should also be. Who cares about $100 million? That's chump change when compared to what's at stake as Apple tries to launch a major new platform like the iPhone. Apple's passionate early adopters have been key to the first steps of that effort, and will continue to be as they sing the praises of the phone (and its company) to friends, family, co-workers, etc. $100 million is easily worth it to keep those people happy, rather than disgruntled.

Frankly, the early adopters have made the iPhone the success that it is, and therefore already contributed BILLIONS of dollars of shareholder value via the stock appreciation that Apple has enjoyed since announcing the iPhone in January. If all those people hadn't bought the iPhone over the last 2 months, do you think Apple's stock would be trading where it is today? I think it would have been trading where it was in December 06, which is a far cry from the $100+ price that shareholders have enjoyed in 07.

Really: this move will pay dividends in multiple ways. It's a great business decision, and it's also the right thing to do. I'm proud of Apple.

[glideslope]

Originally Posted by Mac Write 

I am not pleased with this move from Apple and the shareholders will agree this is a $100M less profit Apple will have and is seeing shares go down along with dividends.

Depends on how they are "working out the details." I'm ok with it. I can relate to the anger in people, but honestly this would not be happening if not for the holiday season, and Apples self proclaimed goal of 1,000,000 units.

Apple will recover the loss. Remember, it's about OSX. As it spreads the assimilation will continue. I predict $200 a share by 12/08.

[butterfly0fdoom]

Neither my dad or I were expecting any compensation, but this is a nice touch (new nano, here I come, maybe? haha). Although I'm hoping we count as an early adopter; we bought it 3 weeks after it came out.

[scottiB]

Originally Posted by k2director 

Frankly, the early adopters have made the iPhone the success that it is, and therefore already contributed BILLIONS of dollars of shareholder value via the stock appreciation that Apple has enjoyed since announcing the iPhone in January. If all those people hadn't bought the iPhone over the last 2 months, do you think Apple's stock would be trading where it is today? I think it would have been trading where it was in December 06, which is a far cry from the $100+ price that shareholders have enjoyed in 07.

How nice that you did Apple the favor of buying one. Dude, it's all about you.

[mutelight]

All I was looking for was a gesture. Thank you Steve!

[amazing]

It will bring a whole lot of people into the Apple Stores, which will benefit Apple a lot in the long range--especially people who bought at the ATT stores and have never walked into an Apple Store.

It's really, really, really too bad that Steve didn't include this in his original presentation. It would have forestalled a major amount of bad publicity and anger, while allowing Apple to appear somewhat sympathetic and magnanimous.

Now, it just looks like Apple is scrambling to deal with the bad publicity. Especially after the dismissive and uncaring reply that Steve gave in the usatoday interview.

Meantime, people really have to get used to the extreme volatility in the cellphone market, where abrupt price drops can happen at any time. Just because it's Apple, that doesn't mean that they can afford to ignore cellphone market forces. They've gotta be just as cutthroat as all the other cellphone manufacturers. Fact of the matter is you can just about buy 2 iPhones for the price of a Nokia N95--yet Nokia posted a commiserating ad about the Apple insulting price drop...

Face it: The rumored gPhone is already impacting the market, and Apple reponded with a preemptive stike. And neither Apple nor ATT was subsidizing the original price, but you could say that Apple has decided finally that they're gonna offer a sort-of $200 subsidy for the holidays. Except they're not calling it a subsidy, they're calling it a price-reduction.

To paraphrase another astute poster elsewhere, "that's why early adopters are on the bleeding edge."

[kman42]

And it's a store credit. Meaning you get $100 of retail stuff, but it only costs Apple $75 or whatever their margin is.

[k2director]

Originally Posted by amazing 

Face it: The rumored gPhone is already impacting the market, and Apple reponded with a preemptive stike. And neither Apple nor ATT was subsidizing the original price, but you could say that Apple has decided finally that they're gonna offer a sort-of $200 subsidy for the holidays. Except they're not calling it a subsidy, they're calling it a price-reduction. "

I highly doubt the rumored gPhone is having any impact on the market. I think you're a little too close to the technology world, so you know something about it, but the mainstream public? Not really. Also, I doubt the gPhone is going to have anywhere the reach of the iPhone. It will certainly pale in comparison to the iPhone on the media side, because it won't have the tight integration with the world's biggest online media store (and I doubt it will be piggybacking on Microsoft's media engine).

[stevesnj]

...now if I could only find my receipt @#@$@???!@$@#

[stuffedmonkey]

Congratulations, whiners. Your sense of entitlement and false sense of personal victimization won out. If I had a dollar for every clone who wrote that the felt "screwed" "betrayed" or "punched in the gut" I could have bought an iPhone, put it in a tube sock and used it to beat some sense into you.

The true precedent this sets for companies is to keep prices artificially *high* - to keep margins high to appease the ignorant masses. Also that this is America - so never stop whining. When that doesn't work - sue.

[BLuEWeed]

I think this is awsome.. what is everyone going to buy??

[kman42]

An iPhone for the wife, of course. It was hard to swallow at $599 +$175 for divorcing Vzn, but at $299, it seems much more reasonable.

[missingbite]

Originally Posted by stuffedmonkey 

Congratulations, whiners. Your sense of entitlement and false sense of personal victimization won out. If I had a dollar for every clone who wrote that the felt "screwed" "betrayed" or "punched in the gut" I could have bought an iPhone, put it in a tube sock and used it to beat some sense into you.

The true precedent this sets for companies is to keep prices artificially *high* - to keep margins high to appease the ignorant masses. Also that this is America - so never stop whining. When that doesn't work - sue.

Aww, you called me a name and threatened to beat us up. How old are you again? Do you think Apple did this because of some whinning? Grow up.

[mutelight]

Originally Posted by stuffedmonkey 

Congratulations, whiners. Your sense of entitlement and false sense of personal victimization won out. If I had a dollar for every clone who wrote that the felt "screwed" "betrayed" or "punched in the gut" I could have bought an iPhone, put it in a tube sock and used it to beat some sense into you.

The true precedent this sets for companies is to keep prices artificially *high* - to keep margins high to appease the ignorant masses. Also that this is America - so never stop whining. When that doesn't work - sue.

Haha wow bud, easy with the "holier than thou" attitude. You are hilarious!

[Big Mac]

is every whiner going to apologize now?

[dpicardi]

Originally Posted by Mac Write 

I am not pleased with this move from Apple and the shareholders will agree this is a $100M less profit Apple will have and is seeing shares go down along with dividends.

This is an extremely short sighted viewpoint.

Early adopters were many of Apple's most rabid fans. A group that spend a lot on Apple products and gets others to as well. Not a group you want to alienate. Moreover, many non-Apple people bought iPhones. Now they will get another chance/have another reason to venture back into the Apple Store.

Apple wins big with this move from both a PR and Revenue standpoint. The Market "might" slap them over the next few days. But it not nearly the $100M hit you claim. Probably only 75% will take advantage and given that Apple's gross margin is exceptional it will likely be less than $25M. Relative chump change for Apple.

This will be a hiccup on the road to much higher revenues.

Dave

[stevesnj]

Originally Posted by stuffedmonkey 

Congratulations, whiners. Your sense of entitlement and false sense of personal victimization won out. If I had a dollar for every clone who wrote that the felt "screwed" "betrayed" or "punched in the gut" I could have bought an iPhone, put it in a tube sock and used it to beat some sense into you.

The true precedent this sets for companies is to keep prices artificially *high* - to keep margins high to appease the ignorant masses. Also that this is America - so never stop whining. When that doesn't work - sue.

[pooka]

BWhahHAHAHAH! Us whiners caused your poor wittle Apple to lose $100 worth of Apple Store junk... awwwww... I'm so sorry we huffed and puffed for adopting new tech early so you cheap chumps can swoop in and get a bargain basement deal. I feel soooooo bad now that poor little Stevie had to LIE in his open letter about treating their loyal customers FAIRLY and is having to kiss my whiney ass. It's just not fair.

And dood, for real, about the only thing you're gonna do with your tube sock is masturbate in it. Move out of mom's house and see how hard it is to earn $200 then come bitch to me.

[amazing]

Steve undoubtedly did it in response to all the bad publicity and to try to restore some stock market confidence. The complaints fueled the bad publicity, but it's the bad publicity and Apple's stock market image that prompted the credit.

Again, the firestorm of complaints were exceptionally easy to foresee, so Steve was really obtuse not to include a response in the initial presentation.

After all, in the past, all Apple had to do to seemingly raise its stock market price was to announce a new product. If Apple sets about encouraging extreme cynicism about product introductions, like "never buy a first generation Apple product" or "wait till Apple has milked all the early adopters," then that's a really big chunk or hard-earned reputation and image out the window.

Compare Apple's (former?) reputation to Microsoft's: What's your response when MS announces a consumer electronics product? Enthusiasm or skepticism? Is it gonna be great or is it gonna be brown, clunky and wannabe? Gonna break down repeatedly in the first year? You know, like when MS says it's gonna introduce a cellphone, hmm??

[Mrjinglesusa]

Originally Posted by stuffedmonkey 

Congratulations, whiners. Your sense of entitlement and false sense of personal victimization won out. If I had a dollar for every clone who wrote that the felt "screwed" "betrayed" or "punched in the gut" I could have bought an iPhone, put it in a tube sock and used it to beat some sense into you.

The true precedent this sets for companies is to keep prices artificially *high* - to keep margins high to appease the ignorant masses. Also that this is America - so never stop whining. When that doesn't work - sue.

Go yourself. And you can take your holier than thou attitude with you. Apple knows they screwed up - otherwise they wouldn't offer this credit. It's not about entitlement or victimization - if you can't understand that go troll in the PL.

[loveanh]

Originally Posted by stevesnj 

...now if I could only find my receipt @#@$@???!@$@#

Have the Apple store email it to you.

[loveanh]

Originally Posted by stuffedmonkey 

Congratulations, whiners. Your sense of entitlement and false sense of personal victimization won out. If I had a dollar for every clone who wrote that the felt "screwed" "betrayed" or "punched in the gut" I could have bought an iPhone, put it in a tube sock and used it to beat some sense into you.

The true precedent this sets for companies is to keep prices artificially *high* - to keep margins high to appease the ignorant masses. Also that this is America - so never stop whining. When that doesn't work - sue.

Not everyone whined or cried, some like me sat back and waited. Lay of the caffeine. The money is not coming out of your pocket anyways.

[icruise]

Originally Posted by stevesnj 

...now if I could only find my receipt @#@$@???!@$@#

I don't think you're going to need your receipt. All iPhone owners by definition have Apple accounts, so Apple could do it all electronically.

Originally Posted by Mac Write 

I am not pleased with this move from Apple and the shareholders will agree this is a $100M less profit Apple will have and is seeing shares go down along with dividends.

As others have already said, keeping the core customer base happy is going to yield far bigger dividends in the future than the amount they are spending now. And since it's store credit and not a refund, Apple really only pays a portion of the $100. Not only that, but most people will likely buy things that cost more than $100 (I can see a lot of new nanos being purchased). Apple will lose some money, but they'll be a lot closer to breaking even than you might think.

In fact, I think I'm going to start a new thread about what people will be using the credit for.

[Zeeb]

Originally Posted by pooka 

And dood, for real, about the only thing you're gonna do with your tube sock is masturbate in it. Move out of mom's house and see how hard it is to earn $200 then come bitch to me.

If its so hard for you to earn $200 why did spend $599 on a phone? A PHONE. Maybe you should learn a thing or two about managing your finances.

[sanford]

I know how they're going to verify you paid $599 for your iPhone -- by serial number date of sale. But how are they going verify you weren't compensated? Especially by ATT. I mean, if they want to spend the money, they can research their own Apple Store account records, but not ATT's private customer records. And ATT is doing different things, refunds, account credits, etc. for people who bought day one and people still in the 14-day return period. They're even doing account credits for people who bought the iPhone at an Apple Store. And the further problem is, who's to say even if you were eligible for a full $200 refund, you found out about it in time and actually went and did it? So there are going to be people who could have easily gotten a $200 credit because they were still in the return period but they really, honestly didn't go get it.

I mentioned this on another forum and somebody thought Apple would probably just throw up their hands. He's probably right. I have a feeling Apple is just going to end up handing out a $100 store credit to anyone who asks for it and bought an iPhone with a serial number that shows as sold before Sept. 5th. And human nature being what it is, a lot of people who have already received some sort of full or partial credit will sign up for Apple's $100 store credit, too. People can justify anything, like, you know, for example "that time I had to have my PowerBook fixed and it came back with a dent in the lid, etc." Or "I bought a brand new iPod and four days later they released a new one with more storage for $50 less".

[vertigociel]

Disclaimer: I did not buy an iPhone early, nor do I plan to now that the price has dropped.

Seriously, why all the stink about this?

It's not like Apple robbed the early adopters - they said "here's the price," and you said "okay, I'll pay." I mean, sure, the price drop really bites, and I'd be disappointed if it happened to me, but I certainly wouldn't feel like Apple needs to reimburse me. If you want to be on the bleeding edge, you should know that you're paying a premium for it. There's always something cheaper and better on the horizon - that's the nature of technological progress.

That being said, I think it's great for the early adopters that they're getting the rebate now - essentially, Apple is giving them $100 of free swag for buying something they already thought was worth the price. How sweet is that?
Leopard just dropped to $29 for them!

[pooka]

*redacted

[sanford]

Dizzy, uh, I mean Vertigo,

I know what you mean. I *did* pay $600 for iPhone -- at ATT Store because it was a few miles closer than nearest of 3 Apple Stores in the area -- but was lucky enough to be in the return period. Yet at first both Apple and ATT -- they were both quoting the same procedure although of course you'd take it where you bought it -- told me to get a refund I was going to have to bring the phone in , return in it in full, then buy a new one. Sure Apple said they'd waive 10% restocking fees and ATT said they'd waive the restocking fee and the new activation fee. So I'd come out $200 up, *but I'd have to return my current 8GB phone*. I told them of course this made no sense because they were going to end up with a big pile of used iPhones. They said they knew, but it was the only way they could refund the difference in price.

Well, the screen, the fit and finish, the battery life, everything is perfect on the phone I have, with no flaws cosmetic or otherwise. I didn't want to return the phone. Until the procedure changed so that all I had to do was bring in the receipt and get a $200 refund, no phone exchange, I had decided *to eat the $200 refund they were offering* just to keep the iPhone I already had.

So, you can see, I don't get it either. I mean I was willing to pay $600 when I bought the phone 10 days before the dropped the price and rather than exchange it for an unknown unit, I was still willing to pay $600 even though I didn't have to. People who bought a month or two ago should be falling over themselves they get a $100 store credit. If the iPhone wasn't worth $600 two months ago then why in the world did they buy one at that price?

Originally Posted by vertigociel 

Disclaimer: I did not buy an iPhone early, nor do I plan to now that the price has dropped.

Seriously, why all the stink about this?

It's not like Apple robbed the early adopters - they said "here's the price," and you said "okay, I'll pay." I mean, sure, the price drop really bites, and I'd be disappointed if it happened to me, but I certainly wouldn't feel like Apple needs to reimburse me. If you want to be on the bleeding edge, you should know that you're paying a premium for it. There's always something cheaper and better on the horizon - that's the nature of technological progress.

That being said, I think it's great for the early adopters that they're getting the rebate now - essentially, Apple is giving them $100 of free swag for buying something they already thought was worth the price. How sweet is that?
Leopard just dropped to $29 for them!

[JonoMarshall]

Bad move Apple: Wrong pricing, angry consumers, catch up (and undeserved) gesture without monopolising on the PR at the keynote event.

Tsk.

[Busemann]

Originally Posted by kman42 

And it's a store credit. Meaning you get $100 of retail stuff, but it only costs Apple $75 or whatever their margin is.

Exactly. A $100 gift card is very different for Apple than $100 in cold cash, especially if people spend it towards software/iTS.

[amazing]

Here's a great comparison article, between Jobs and Apple and Zanders and Moto:

Jobs learning the same lesson as Motorola's Ed Zander - MarketWatch
Do you see where about a year ago the RAZR went from $450 with 2-yr contract to zero with a 2-yr contract? Now, I still don't like the RAZR (just got the SE W580i instead) so I wasn't following the controversy. Did anyone here get caught by that one and did Moto offer a credit or something, beyond the 30-buyer's remorse clause? Because that was a much, much bigger gap. Indignation must have been intense, just curious how Moto played it out.

And again, in that case just like now, the markets and analysts thought Moto sold out too early with too large a discount, and history has shown that they didn't have another must-have waiting in the wings.

The realities of the piratical cellphone market is that a limited number of early adopters will pay big bucks for a must-have eye-candy phone. Their lives and self-respect depend on it, after all. Once a substantial percentage of that market have bought in, you have diminishing sales--so you might as well reduce the price and concentrate your research on developing the next eye-candy. Now, Apple has a lot of room for improvement and new models built-in to the iPhone, just waiting in the wings for better chips, less-battery consuming GPS, doc and spreadsheet viewing and editing, lots of stuff. So, just by introducing the iPhone, they've created a pent-up demand for future models and future features.

All the while, they've got a revenue stream from ATT, a revenue stream from iTunes, and a huge pent-up demand in the international market, but above all, it's the demand for future model upgrades that's going to make their day, just as with the iPod line: So, why did they alienate the customer base by this preposterously early and ill-advised PR shocker? Somebody really, really wasn't thinking clearly. After all, you really depend upon all those people buying the next model, and the one after that, and the one after that. Now, they've really fostered a huge amount of cynicism regarding future product announcements, in precisely their core product market. Just plain dumb.

The implication is that the iPhone was priced with a ridiculously large profit margin, thereby enshrining Apple's reputation as charging a pretty premium for hardware, and that you just have to wait a little while until the early adopters and beta-testers-at-full-price-hardware have ironed out the kinks and the price has dropped to where it should have been. And it won't even be that long a wait.

[Drakino]

Originally Posted by Big Mac 

is every whiner going to apologize now?

Only after you accept Intel as a good upgrade over PowerPCs for Apple and change your sig...

*ducks*


Anyhow, why do the people who felt burned as early adopters have to apologize? At least with my situation, I wasn't complaining because the $200 was so important for my financial well being, it was because it made me loose a lot of faith in new products from Apple. Thats something that won't change now either. Next time they introduce a new platform, I'll be asking myself "Are they price gouging me just for being willing to buy today instead of 2 months down the road?". The $100 store credit isn't making me feel they actually regret the decision and have admitted their mistake. It's enough to turn the tide of negative press and stock selloffs, and thus the minimum effort needed to fix the problem.

Thats also why I have a pending claim with American Express for a full proper $200 refund. We shall see where that goes.

[sanford]

Originally Posted by Drakino 

Only after you accept Intel as a good upgrade over PowerPCs for Apple and change your sig...

*ducks*


Anyhow, why do the people who felt burned as early adopters have to apologize? At least with my situation, I wasn't complaining because the $200 was so important for my financial well being, it was because it made me loose a lot of faith in new products from Apple. Thats something that won't change now either. Next time they introduce a new platform, I'll be asking myself "Are they price gouging me just for being willing to buy today instead of 2 months down the road?". The $100 store credit isn't making me feel they actually regret the decision and have admitted their mistake. It's enough to turn the tide of negative press and stock selloffs, and thus the minimum effort needed to fix the problem.

Thats also why I have a pending claim with American Express for a full proper $200 refund. We shall see where that goes.

If AmEx has price protection like my Visa card does, and you're within the time limit -- mine is at least 90 days -- you'll get it. But then are you going to apply for the $100 store credit, too? (I'm not judging you; a lot of decent people will justify doing both.) This is what I meant about Apple saying $100 store credit for people who received no other compensation but having no way to confirm whether you were compensated or not. They can't call AmEx and ask them if they price-protected you, because AmEx can't legally tell them. And with price-protection, it's like insurance that AmEx pays for, not store-generated account credit: Apple won't get hit for the refund they give you so they'll never see a thing.

[amazing]

I don't have an iPhone, so I don't have this dilemma. But, I do know that AmEx makes a goodly amount of money off me. As to whether to then get the Apple credit, think of it this way: You're billing Apple for heartburn, wear-and-tear, and insult.

Frankly, I have no qualms about working the system. They have no qualms about stiffing us, right?

[stuffedmonkey]

Originally Posted by Mrjinglesusa 

Go yourself. And you can take your holier than thou attitude with you. Apple knows they screwed up - otherwise they wouldn't offer this credit. It's not about entitlement or victimization - if you can't understand that go troll in the PL.

Apple gave them something to shut them up - not necessarily the admission of guilt you claim. How many times have you been in a grocery store and seen a child in the checkout line whining over and over for a candy bar? Sometimes the parent just gives them the candy bar - not because the parent did anything wrong, but because they want the child to simply shut up and leave them alone.

Why is it so strange for me to be *pro* price cut? I like it when electronics manufacturers cut the price of things - it means that I can get them for less...

And Mrjinglesusa - you are luck... It looks like Geraldo is looking for folks like you.. You could be famous!

Surly Adopter: Geraldo Rivera looking for iPhone crybabies - Valleywag

[sanford]

Originally Posted by amazing 

I don't have an iPhone, so I don't have this dilemma. But, I do know that AmEx makes a goodly amount of money off me. As to whether to then get the Apple credit, think of it this way: You're billing Apple for heartburn, wear-and-tear, and insult.

Frankly, I have no qualms about working the system. They have no qualms about stiffing us, right?

The deal is, on it's face your comment is unethical, dishonest, as it's not the letter of the agreement Apple has set forth. Yet you have a point. Forget them having no problem stiffing us. Even assume they would never stiff us. But when you go into an Apple Store and an Apple employee sells you a Mac, Apple is building in the cost to pay that employ to help, whether they help a little or a lot which will vary by customer, into the price of the computer. You are as customer paying for everything. The staff. The nice blond hardwood floors. The expensive interior design. You're paying. In the case of the iPhone refund, assuming you got some compensation before Apple announced the store credit, you probably spent a couple hours on the phone finding what Apple or ATT or both would do for you, since no one had a clue at first. Then another hour or two actually going out and dealing with the rebate. Use of your vehicle. Credit card interest. Etc. The store credit is for the iPhone price drop, but are they compensating you for the hassle of having to play detective to find out how to get a refund through Apple or ATT if you were in the return period, or how to get a billing credit from ATT if you bought a while back, as ATT was authorizing those for unhappy customers who bought at either store? No. It's just a token -- a nice token, really -- for the price drop. But that's it.

Note: I am not advocating anyone sign up for the $100 Apple Store credit if they have already been compensated $100 or more by Apple or ATT. I think people should follow their own ethical compass on this one. But it's an interesting question: To what extent does the vendor financially owe you, to cover what things, when they have indeed admitted they owe you something?

But these questions of what's right, and the difficulty in verifying prior alternative compensation, in verifying anything other than that the sale date for your iPhone serial number was some time before the price drop, this makes me think Apple will just hand out the store credits if your serial number tells them you were sold the iPhone <= 5th Sept. 2007. There's precedent for this: a very few early dual-ethernet "snow" Airport Basestations had defective power supplies that were original equipment defects but might not have shown up until after the year's warranty expired. They fixed them for free. Rather than track serial numbers and build dates for those models to verify yours is one with the bad power supply, they will still repair or replace any dual-ethernet Basestation for free, to this day, if it fails for any reason. I don't think they even check to see what failed; they just give you a refurb if they have them, a comparable refurb for a later model, or the latest model if they have no older replacement units available.

[frdmfghtr]

Originally Posted by amazing 

I don't have an iPhone, so I don't have this dilemma. But, I do know that AmEx makes a goodly amount of money off me. As to whether to then get the Apple credit, think of it this way: You're billing Apple for heartburn, wear-and-tear, and insult.

I posted the following to Slashdot, and I think it pertains to this discussion as well.

...the iPhone was, in fact, worth $600 on June 29, as evidenced by the throngs who paid $600 after waiting in line for hours. If it wasn't worth $600, people wouldn't have bought it, or would have quickly realized it wasn't worth the price and returned it.

An item will sell for exactly what both parties (seller and buyer) believe is a fair price at the time of sale. Those that claimed that they got ripped off are just complaining that they fell for the "early adopter" technolust that comes with the launch of a new gadget. ...[W]e should be cheering on those who couldn't afford one before but can do so now; "Hey, good for you! You're getting a deal!" instead of "Oh screw Apple, they let me buy something on my own free will at a higher price! Maybe I can join up with those non-user-replaceable-battery whiners and bitch about my lack of self-control and impulse buying."

Originally Posted by amazing 

Frankly, I have no qualms about working the system. They have no qualms about stiffing us, right?

Apple did not "stiff" anybody. People paid what they felt the iPhone was worth, and Apple sold it for what it believe the iPhone was worth. Nobody got screwed here, people only THINK they got screwed and complained so loudly that Apple responded.

The general overtone of those complaining about the price drop is that they somehow feel ripped off or betrayed by Apple reducing the price of the iPhone. While the amount and timing of the price drop may be out of character for Apple, it doesn't in any way reduce the value of the iPhone. If anyone thinks it does, they are only hurting themselves by killing the enjoyment they got out of being one of the first to get an iPhone.

[Moonray]

I’m close to send a list of all my Apple hardware together with buying dates to Apple and claim all time-dependent value losses.

-

[amazing]

Thing is, that abrupt and steep price reduction shows exactly that Apple was stiffing people with the original price. There's no way that their production costs could have dropped that much in 2 months. When the price was originally set, they knew at that time what the production costs were--and chose a pretty steep profit margin.

Either that, or Apple should've reduced the price at the very outset, knowing that their production costs had decreased significantly. Can't have it both ways.

[sanford]

Originally Posted by amazing 

Thing is, that abrupt and steep price reduction shows exactly that Apple was stiffing people with the original price. There's no way that their production costs could have dropped that much in 2 months. When the price was originally set, they knew at that time what the production costs were--and chose a pretty steep profit margin.

Either that, or Apple should've reduced the price at the very outset, knowing that their production costs had decreased significantly. Can't have it both ways.

Production cost is only a part of the picture. There are marketing costs, R&D to cover, myriad costs to launch a new product. Also Apple sold more than they thought they would and likely determined they would make up or exceed in volume at a lower price point what they were making at a premium price point.

I also have to agree with the above poster about perceived value. I thought my iPhone was worth $600 when I bought it. 10 days later when they announced the price drop, after having used it for those 10 days, I even thought I might have gladly paid $800 for it: it's the first mobile phone and/or portable communications/assistant device I haven't hated with a passion -- indeed I think it's great -- and I've tried many. In fact I thought it was so still worth $600 that when at first there was confusion about how they were going to handle rebate/refunds for purchases still in the 14-day return period at ATT Stores, and they thought the only way they could do it was to have me return the whole iPhone package, waive the restocking fee, and then have me buy it again at the lower price, then waive the new activation fee, I liked the actual unit I had so much I wasn't even going to the bother, considering the $200 well spent for product satisfaction.

[icruise]

Originally Posted by sanford 

Also Apple sold more than they thought they would and likely determined they would make up or exceed in volume at a lower price point what they were making at a premium price point.

I don't think that explanation makes a bit of sense. First of all, Apple has only announced their sales goals in very general terms, but I've seen nothing to indicate that they were selling more than they expected. At best, you could argue that things were going more or less on track. Remember, aside from the first week or so, you could easily get iPhones online or in stores. What people thought might be a Wii-style shortage turned out to be nothing of the kind.

But let's assume for a minute that you're right and Apple sold more than they thought they would. Why on earth would a company exceeding their sales goals decided to slash the price by 1/3? You cut costs to stimulate demand. If the demand is already there at the higher price, you'd be a fool to reduce your prices (of course this assumes that Apple had reasonable sales goals in the first place). You're right about one thing, though. They obviously decided that they would make more money overall by cutting the price, which says to me that the margins on the iPhone were incredibly high.

The real question here is whether the price cut was planned from the beginning (as Apple has claimed) or whether it was in response to slower than expected sales. I think it's a combination, as I've mentioned before. I think that even before they released the iPhone, they had planned to cut its price to coincide with the release of the iPod Touch, since it wouldn't work to sell the 8GB iPod touch (which has most of the iPhone's features) for $299 when the 8GB iPhone was selling for $599. However, it seems likely that they had a more modest price cut in mind (maybe $100). After all, I can't remember a single instance of Apple slashing a product's price so quickly or so drastically. But when they saw that sales weren't as high as they had hoped, they decided to go to $200 to stimulate demand. They probably decided to do it so early because they wanted to strike while some of the initial buzz about the iPhone was still around, but it ended up partially backfiring.

They probably had the $100 credit plan around from the start, but decided to gauge the waters after the cut. If people hadn't complained to the degree that they did (and if the media coverage about it hadn't threatened to overshadow the newly introduced iPods), they wouldn't have done anything for us.

That's not to say that I think having a lower price for the iPhone is a mistake. Far from it. Apple needs the iPhone to be a success, even if it means lower margins than they are accustomed to. The mistake was the initial pricing. They should've introduced it at $499 and then made a $100 price cut (and not given early adopters anything). My guess is that they would have sold more initially by doing this, and it wouldn't have looked like such a desperate move.

[amazing]

I don't think Apple planned on the price cut this soon, rather expected to do so at the next version intro at either Macworld San Fran or sometime next spring. Even the most obnoxious marketing executives couldn't miss predicting the outrage and the unnecessary extremely bad publicity that would bite into Apple's reputation.

Apple has known for quite some time what the revenue stream would be from their agreement with ATT. They've also got a very good picture about all the expenses. So, those things didn't figure into this abrupt price reduction.

Something else--something that we don't know about--forced their hand. Apple didn't do this price reduction willingly, given all the bad publicity. We'll find out eventually what prompted this decision.

Meanwhile, the price reduction is very good. The publicity is very bad.

iCruise is right: this is what the price should have been from the very beginning.

Meantime, here's some interesting reading about cognitive dissonance:

Cognitive dissonance - Wikipedia, the free encyclopedia

[Eriamjh]

I think the price cut was planned... in a way.

Apple probably over-priced the Apple as a way of protecting it against a poor launch. If the launch went well (as I can only assume it has) Apple has cut the price so that the sales can sky-rocket.

Remember, iSuppli said that the margin of the iPhone was estimated at ~57% ($240 of parts for $499). That's insane, even at Apple levels. Now, priced at $399, the margin is in-line with other Apple products, if not slightly higher. If the iPhone tanked, Apple would have probably reduced production and bit the bullet for a redesign or other change. In this case, the price reduction is justified to continue production if not increase it.

Crazy, but only Jobs knows for real what happened.

Either way, sales will probably continue to rise.