Why did Apple drop the price?

What's going on here?
Unprecedented wealth making.

Why would Apple do this?
To Preempt future competition.

iPhone's $200 Price Cut = $2 Billion Customer Handout
http://orangehues.com/blog/2007/09/iphones-200-price-cut-2-billion.html

Just to let everyone knows that TODAY I receive a reimburse for $214 for my 8gb iPhone bought on Aug. 25th...I just went to the Apple store with the invoice and whualla!!!

Jake you're a tool, and your web site sucks. Focus your impassioned discourse towards slightly more important things in this world than bitching about a price reduction on what's basically a luxury item. How dare Apple make a product affordable for more people and increase its business. You're a whiny douche.

I've got a feeling soon Apple will introduce a 16GB iPhone for $599

In addition to all the other thoughts that have been thrown out a couple of other things occur to me.

1. It seems like Apple should be achieving an economy of scale in production now that they'll be selling iPod touch and iPhone. Maybe they're getting better prices on some of the components.

2. I wonder if the possibilities of the G-Phone becomming a reality might also have spurred some agressive tactics by apple. I think Google is one of the few companies with the market cachet that Apple has...I know I was holding off on an iPhone until I got more info on the Gphone. Until yesterday that is:)

Two reasons: one, to make sure they sell as many phones as possible, therefore increasing the royalties they receive from AT&T, and eliminating the barrier of acceptance that came with the 599 price tag.
Two, with the ipod touch coming out, the iphone's price looked ridiculous, specially considering that the 2 year contract adds more cost to the purchase.

I think, and have always thought, that the iPhone will be to Jobs, an Iraq moment - the worst decision in the companies history. I never understood the commentaries speculating and begging for an Apple phone. It made no sense and it makes even less sense now.

This disaster will divert resources from the OS, as it already has with the delayed release of Leopard. The cover flow iPod is a design camel, planned by committee. Anyone who thinks the iPhone is good from here only has to look at what happened to Motorola over the last year with the Razr, the cell phone market is brutal and Apple should be putting its effort into being Apple computer. With their growing market share maybe they could cut the price of things that matter, like MacPros and screens.

Who put a gun to your head & said "buy a $600 Iphone or I'll kill you?" - A bunch of Lames if you ask me

They dropped the price to compete with the Google phone that will be announced any day now:

http://www.boston.com/business/technology/articles/2007/09/02/introducing_the_google_phone/

This happened for a few reasons. Most have already been said.

The price of flash memory has decreased.

This is to level the playing field, enticing people to buy an iphone instead of ipod touch, seeing as it is a lot closer to the same price.

The fact that both the ipod touch and iphone are built from the same components except for a few differences, this means manufacturing is much cheaper.

And of course, to pave the way for the new iphones, be it 2nd generation, or a flash increase to 16gb or (which I'm praying for) 32 or 64. Seeing as I'd use it as an ipod and put all my music on it, which is a lot.

Or I'll just keep my 5.5 gen ipod, I guess I should call it my ipod CLASSIC 5.5, which I actually like better than the 6gen. But who knows, let them do their revisions on the iphone, get the second gen out, and then we'll see. But at least from the strategies Steve is putting into play, we know a memory increase or new model is coming out soon, and with the iphone's success, why wouldn't it?