Filed under: Analysis / Opinion, iPod Family, Steve Jobs, Apple, iPhone
Jobs on iPhone price drop: "That's technology."
Many TUAW readers are a little upset with Apple for dropping the price of the iPhone by $200 after only two months on the market. I would like to say that Steve Jobs feels your pain, but according to this interview with USA Today it is clear that he doesn't. When asked about the price drop and what he would say to customers who bought the iPhone at the original price he replied, 'That's technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that's what happens in technology.'
As someone who bought an iPhone not too long ago, I actually agree with Steve. We all knew that the price of the iPhone would be coming down sooner or later, so I am not upset in the least. I am sure the price of the iPhone will continue to go down, much as it has for the iPod, and I'm ok with that.
The interview also covers whether or not the Beatles will be joining iTunes (Steve says later this year), if iPod Touch sales will impact iPhone sales (Steve says either way Apple is making money), and how much impact NBC pulling out of iTunes will have on Apple's business ('Zero,' was Jobs' estimate).
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Reader Comments (Page 1 of 8)
Angela said 9:35AM on 9-06-2007
Steve Jobs:
"Tough shit."
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blinkcowz182 said 9:38AM on 9-06-2007
Wow Steve Jobs officially the biggest douche bag. He makes Steve Balmer look good. I'll forgot about buying the AppleTV and new iMac I had money saved up for. I'll buy the cheaper computers instead of paying more for a little class, which Apple clearly lacks now. I guess that's technology.
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Eli Hodapp said 9:39AM on 9-06-2007
This whole debacle is proof that people on the internet will complain about anything. If $200 is ruining your life, perhaps you shouldn't have bought the iPhone in the first place.
Anyone upset by this should have researched their purchase. THIS IS HOW CELL PHONE WORKS. They all have a curve of about 8 months where they debut at an expensive original price, and end at free with contract.
This is not news, it's just Apple fanboys who either ate ketchup packets and ramen for months to afford an iPhone... or better yet, still have the $600 they paid sitting on their credit card.
These people shouldn't have bought a piece of luxury electronics.
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Quix said 9:39AM on 9-06-2007
A 33% drop in *2 months* for a hot product that was announced 9 months ago and received, in great anticipation, by masses of consumers paying a premium price willing to take a chance on a new Apple venture is *not* typical "technology." It's just bad form by Apple.
Some of you will gleefully decry us as whiners, but Apple dealt itself a serious blow to its customer loyalty and company image with this move. They should have cut the price $100 now and another $100 in November at the very least to lessen the sting.
I'll never buy another Apple product at launch again. And I'm not alone.
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Jeremy said 9:39AM on 9-06-2007
While I have to agree with the obvious fact that iPhone was worth it to me to purchase at $600, a big part of me is pissed that it's so much cheaper only 2 months later.
I wouldn't be upset if it was $50 less, or even $100 less... but $200? That's no small change. And I wonder how the general public will see this. My sister, who is no Mac Geek, just a Mac User, heard about the price drop and her first reaction was "Goody! They dropped the price to get ready for iPhone 2.0". So now she's going to wait, instead of buying one next month like she was planning.
And let's not forget that Apple does have a track record of giving early adopters (in some cases) some green back after a large price drop. I could be wrong, but I think the last time was with Aperture.
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Eli Hodapp said 9:41AM on 9-06-2007
ARGH! STEVE JOBS IS SUCH A DOUCHE! I'M BUYING A DELL!
Good for you, we wouldn't want you to ruin your Mac with the stream of tears erupting from your eyes when its price gets reduced. Hope you have fun running Windows or worse yet, Linux.
STICK IT TO $TEVE JOB$!!!!
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Carl Trimble said 9:42AM on 9-06-2007
We will see if my credit card company feels the same way.
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jonathan ober said 9:42AM on 9-06-2007
Kind of ironic that NBC pulled out of the deal when this morning the new iPod touch and the iPhone were talked about and shown (Matt Laurer whipped out his iPhone and complained about the price drop). Maybe that was a gesture of love...
well, I havent downloaded any shows to my iPod or iPhone yet, not sure if I ever will...
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blinkcowz182 said 9:42AM on 9-06-2007
@3
Ok 8 months is understandable but to drop the price almost a 1/3 within two months of launch is shady. It shows that they could have sold it for less but decided to up the price to make quick cash on the loyal early adopters and then drop the price once all those people bought phones. It's not that I feel OWED $200, it's that Apple is alienating their loyal fans buy making it seem like they were stupid for buying it early. Some kind of compensation would be nice but for him to come out and say "yeah tough shit" is just rubbing salt in an open wound.
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docroland said 9:43AM on 9-06-2007
Seriously, that's a little rough. I didn't buy one at the $200 premium, but I'm sure if I had, I'd be annoyed. While everyone who frequents a site such as TUAW is well aware of the decreasing price of gadgets with time (though thanks for the condescending heads-up Steve-o), we'd all also probably agree that Apple is worse than most when it comes to lower prices and new technology in short periods of time. Lucky for Apple, we're like a gadget cult and we'll keep buying their stuff no matter what.
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Dustin Everhart said 9:43AM on 9-06-2007
As an early adapter you should know that what you're paying more for, someone will get a lot cheaper and better in the near future. It's the price you pay to be able to say you're the first one on your block to have an iPhone. And while the iPhone hasn't really changed in the last 2 months it looks a lot better sitting at $399 then it did at $599. What do you expect? Apple is trying to make money off of these things.
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Robert said 9:43AM on 9-06-2007
My brother-in-law works for Apple and has long been trumpeting the virtues of your product line. I had an iPod Nano which I liked very much, but didn't see any strong correlation between it and Macs.
Embedding some of the OS X into the iPhone was a great move as it highlighted some of the usability features that many claim, "Make Apple...Apple."
I'm not a wait-on-line kind of guy and I try not to build up consumer debt. So about a month after the iPhone launch, I had made sure the iPhone could be bought w/o crimping the family budget, and began my OS X experience with your phone.
There were a few glitches but they were minor and seem better after the first two patches. I found the device elegant and intuitive. I was a fan. I recommended it to others. I started reading some Apple sites and blogs. I began to make arrangements to purchase a Mac Pro when new processors and graphics were released.
All that changed yesterday. Previously, I never even knew Apple events happened. Such was my new interest in your company and products, that early yesterday afternoon I read through TUAW's account of what happened.
I was first greeted with the headline "Apple screwed you: So now what?" What? This from The Unofficial Apple Weblog, a bastion of Apple support and supporters. I read on to get the details and couldn't believe it. My 32 day old iPhone had just been discounted to the tune of 33%.
Surely, I thought, there must be some mention of a plan for those that waited in line for hours and helped the hype that drove iPhone sales. Surely, I thought, there must be some plan for folks, like me, who purchased their phone only four weeks earlier. Nothing...no mention.
Steve Jobs does mention the high customer satisfaction ratings from people, like me. I can assure you, my satisfaction rating is now significantly lower. Further, his comments to USA Today, were not helpful, "...that's what happens in technology."
Without going off too far on a tangent, that isn't really what happens with technology, and according to employees I've talked to, it's unprecedented at Apple. Prices will drop, that is the nature of technology, but a 33% devaluation that "officially" affects folks who have owned their devices from 11-60 days is not.
Case in point, several credit card companies have complementary "price protection" programs for 90 days. Dell price matches itself for the first 30 days. If a 33% devaluation were commonplace neither credit card companies nor the largest PC manufacturer could afford these policies.
Returning to my central point, these first 800,000+ iPhones were purchased disproportionately by a combination of Apple evangelists and those seeking an "Apple" experience that contrasted starkly with Windows Mobile, Blackberry, etc.
The former group helps build buzz and provides those priceless PR video clips of folks waiting patiently in line and then getting high-fives after purchasing their new $600 device. Will these folks second guess the wisdom of doing so next time? Will they fear another 33% devaluation is only two months away?
The latter group represents the halo that Wall Street talks so much about. I fall into this group. Will I get enamored with the OS X experience and purchase a Mac Pro with Leopard. Speaking only for myself, that was, indeed, my plan.
Was. That plan is now in limbo.
As I told my brother-in-law, "Listen, I've just about made it to Vista SP1 and things are pretty stable. If I want to help a company launch their product and then get screwed for doing it, I'll stick with Microsoft. At least that way, I'm used to it. You told me Apple was different."
He responded, "They are. Listen, I have faith they will do the right thing." The words were right but he didn't seem so sure, and he always refers to Apple as "we." Not this time.
The ridiculous thing here is all this could have been avoided. Clearly some market research went astray and the 4GB iPhone should never have been manufactured and, while current sales were high, the desired volume for iPhones was higher. Basic economics...lower the price of something you want more of. Want more iPhone sales, lower the price. I get it.
What is Apple's internal cost for iPhone AppleCare?
What is Apple's internal cost for iTunes content?
What is Apple's internal cost for some select iPhone accessories, e.g, bluetooth headset?
If Steve Jobs had concluded this section of the event with something as simple as, "...and don't think we've forgotten the nearly million of you who helped make this the most successful phone launch ever. Everyone who has a activated their iPhone and is outside the 14 day return window will be receiving complimentary AppleCare and a $50 credit to their iTunes account. We know our early adopters are our solid foundation and our new adopters are the engine for our growth, so we are excited to demonstrably show that today!"
How much real cost would that have entailed. Not opportunity cost mind you because, yes, some of those folks would have purchased AppleCare...etc. etc..
Maybe $25? Contrast that with the fact that the second most "Dug" story on Digg.com with nearly 5,000 diggs is this story. How do you quantify the value of bad press and disappointed customers? I don't know, but I'm betting it is greater the $25 referenced above.
In conclusion, while it is the nature of technology to have new devices released at lower price points. It is not its nature to execute a 33% discount within 60 days of a very successful product’s launch. This is even more of a surprise to Apple customers who are accustomed to relatively stable pricing until new models are released. Please, Apple, offer me an olive branch so I can see the win/win scenario here.
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Eli Hodapp said 9:44AM on 9-06-2007
@9: Are you new to cell phones? CELL PHONES ALWAYS GET CHEAPER; ALWAYS. The RAZR launched at $600. Within weeks it was $450, within months it was $100. Now they're giving them away. This trend is not new. Perhaps you should have researched the market before impulse buying?
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Fred said 9:48AM on 9-06-2007
DUDE! Everybody knows Steve Jobs is an asshole. It's no secret, Steve knows it too. BTW, if you happen to have exchanged your iPhone at any point in the last 2 weeks the clock starts over for the return. In my case I'm getting the refund just under the 14 day wire.
I think it's crap myself, you don't have a price drop like this, and not know it's coming from the start. Steve-o boned the early adopters, and we'll all know better next time. (Well, I will anyway)
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Jon said 9:48AM on 9-06-2007
Do you think I have a case if I ordered it at the old price and it was reduced before it arrived?
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Aron Trimble said 9:49AM on 9-06-2007
There isn’t a product in the world that drops 33% in value after two months. Not your house, not your car, and certainly not your cell phone! The fact of the matter is Apple slapped it’s most loyal customers in the face, and as a result many (if not most) of the early adopters they rely so heavily on are now afraid to make an investment in future new products. Don’t get me wrong, I’m as happy as a pig in a blanket to know that I will be able to get my 2nd Gen iPhone for $399 or less; but it doesn’t matter what the feature set is – I won’t be buying it in the first 2-3 months.
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Mo said 9:49AM on 9-06-2007
@12: TUAW stands for The _Unofficial_ Apple Weblog
They're not TUAW's products. They're Apple's. This site isn't run by Apple (it's actually run by AOL).
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Eli Hodapp said 9:51AM on 9-06-2007
@16- What are you smoking? Can I have some? Things don't get reduced in price? Are you unfamiliar with the cell phone market in the USA?
Research your purchases before impulse buying.
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Bloor said 9:52AM on 9-06-2007
I bought an iPhone on Day 3. Paying the now extra premium of 600 (now 200 more then retail price).
I completely agree that there is an early adopter fee but 33% over 2 months is a bit steep.
To say the lease I'm not going to bitch to much about this dilemma do to the fact that I still love and adore my iPhone and it still works today just as well as it did yesterday.
But if Apple offered a free iTunes gift card or Apple store rebate; I am sure it wouldn't hurt to give a little back to the most devoted of all Apple users. (the ones willing to stick up 600 for the iPhone)
Heres hoping for a kick back,
iPhone 600 Club
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Aron Trimble said 9:53AM on 9-06-2007
@Eli Hodapp
Stop making statements as if they are facts without actually doing any research.
My dad bought a RAZR for $600 from Cingular the first day it was available. Two weeks later we were at the beach when he left it in his pocket (I know, dumb, whatever). Guess what he paid to buy ANOTHER brand new RAZR the following week? If you guessed $400 - you are wrong; he paid $600 for the same phone almost 3 weeks after it was launched.
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