Filed under: Analysis / Opinion, Apple, Deals, iPhone
Why did Apple drop the price?
I think there's no question by now what the biggest announcement yesterday was. The iPod Touch is cool, and the new CoverFlow interface will definitely make some music listeners happy this holiday, but since the end of the announcement, the biggest splash has come from the iPhone's price drop.Why would Apple drop the price of something that was already hitting all the marks they expected to hit? The analysts have already started their breakdown, and if stock prices are any indication, it seems investors are sure Apple is worried (not about competitors obviously, but about expectations), and wants an extra boost. Of course, us Apple fans will disagree-- Apple really does want the iPhone to be "more affordable," and a lower price is icing on an already sweet cake. A lower price doesn't mean desperation-- it's Apple doing what Apple does: breaking the mold and making things better for consumers.
Except that if any other company dropped the price of a product after only a few months (ahem, Microsoft-- one of my Twitter buddies noted that no one raised hackles about the Zune's price drop), it'd be seen as a sign of big trouble. What's going on here? Is Apple just aiming to put more iPhones in consumers' hands? Are they worried about the iPhone's sales numbers? Or did they bring down the price just to make sure the iPhone was still competitive against the iPod Touch?
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Reader Comments (Page 1 of 5)
blake Mayerle said 8:10PM on 9-06-2007
Steve was SICK of all the crying!
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hung d doan said 8:16PM on 9-06-2007
With the "iTouch" now at 16GB, Apple had to make price room for the new 16GB iPhone. Also, with the iPhone soon approaching Europe, what is $599 in any European currency? Won't that be like $1200 in UK pounds?
So we know the 16GB will come out and be priced at $499, does anyone think this will still be a bit too high for the iPhone's worldwide acceptance/domination?
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Randall said 8:19PM on 9-06-2007
I think that Steve is worried that they won't be able to sell the 10 million iPhones by the end of next year as they had expected to. So, he is just lowering the price so that they will reach that goal.
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Les Filip said 8:34PM on 9-06-2007
The Zune price was lowered in response to the market conditions, which included the iPod. The iPhone price was lowered in response to NO other product or competitor. Apple only wanted to "ride the curve" of supply and demand. Thank you, Steve.
Les Filip
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Absent One said 8:36PM on 9-06-2007
To make way for the 16gig iPhone which will ring in at the old $599 price is my bet.
Now to get to the mall and grab my $399 8 giger. :-)
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Fritz Laurel said 8:37PM on 9-06-2007
I agree with all the above. Was there other news from yesterday?
Most of all, though, I LOVE Fake Steve's take on it all:
http://fakesteve.blogspot.com/2007/09/dear-early-iphone-adopters-yeah-we.html
Cheers,
FL
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HarmfulDose said 8:39PM on 9-06-2007
I'd buy one now....as soon as the unlock is unlocked
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andrew harrison said 8:48PM on 9-06-2007
i'd say it's almost obvious that the 4GB was dropped completely because the price point for flash memory dropped, the 8GB's price was dropped to fill that hole, and there will be a 16GB at $599 very soon.
i imagine it will be released when they make an announcement about europe getting the iphone [and hopefully australia, but i reckon we won't see it until next year]
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Jake Kushner said 8:54PM on 9-06-2007
An "Open Letter" to Steve Jobs:
Dear Steve,
As an apple stockholder, and a long time user of apple products for many years, I am very disappointed by some recent actions taken by Apple.
On June 29th, less than three months ago, I purchased an iPhone. I paid $499 for the 4GB model. Just yesterday, I discovered that now, not even 90 days later, Apple has decided to discontinue the 4 GB model, lower the price to $299 for the remaining stock, and lower the price of the 8 GB model to $399, less than I paid for a 4 GB model. I feel wronged and misled by Apple. Such a quick price reduction indicates that Apple pre-meditated this reduction before the initial release. Many of the customers who purchased the iPhone on it’s release weekend were long time, loyal, Apple customers. I know that I am not the only customer who feels angry about this issue.
The loyal Apple customers who purchased the iPhone at its initial release, waited in lines for hours and paid a premium price, feel taken advantage of. I feel that I should be reimbursed for the $200 more that I paid for my iPhone, or be given a free upgrade to an 8 GB model.
I read your public response on apple.com to this issue, but I still feel that the solution you are offering is not adequate. As I mentioned, I would like to receive a free replacement or some kind of upgrade to the 8 GB model. I work in the technology field, and I am very aware that new products are release very quickly, but I also feel that Apple has not done anything like this in the past, and that this marketing strategy was, as I said before, planned from the beginning. I expect, and would greatly appreciate, a response to this letter.
Thanks,
Jake Kushner
President, JK Media
iphonecomments@jkmedia.net
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Lastof said 8:56PM on 9-06-2007
They had to drop the price, so that they could announce a 16GB 3G iPhone at the Apple Expo in Paris at the end of the month.
They were getting the early adopters used to the pain they will feel. ;)
(But, seriously, if they do give Europe a 3G one, it will have to be Europe only now, since I think that likely to upset the early adopters, likely some of Apple's core fanbase, least.)
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Pirana said 9:00PM on 9-06-2007
This blog has some musing as to why possibly Apple dropped the iPhone price with the iPod touch launch http://www.standandcount.com/index.php/the-beat-goes-on-17
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artifex said 9:02PM on 9-06-2007
I wondered how long it would take the whiners to hijack yet another thread. 9 posts. Hello, Jake!
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Charles said 9:02PM on 9-06-2007
The price drop is obvious. Apple set a price point on the iPhone so it would be easy to "sell up" from the iPod Touch. If the iPod is $299, it's an easy sell to spend just another $100 for the iPhone. Apple's success in the iPod line is largely due to well calculated prices on different models, which encourages customers to buy a slightly more expensive, more feature-filled model than they might initially have wanted. That is "selling up."
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Angel said 9:09PM on 9-06-2007
@Jake - You were wronged and misled? Does the iPhone not function properly? I don't get it. At what point in time would it have been ok for them to drop the phone by $200 or discontinue the 4GB IN YOUR EYES? Three months, four months, a year? What?
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GadgetGav said 9:10PM on 9-06-2007
@ Jake Kushner... Good luck with that request for a response. Steve Jobs said he'd read emails, not blog comments and he didn't say he'd replied to every one of those... You bought a product at a price you'd seen before you handed over the cash. Did you think you were getting ripped off then..? Did you really *have* to have the product at any cost..? You will get your $100 rebate from Apple like everyone else who bought an iPhone up until 14 days ago. Your 4Gb model now cost you $399. Yes, that's what the 8Gb now costs, but that's the way it goes. I had an original 5Gb iPod. The new 160Gb one is smaller, lighter, higher capacity, has a color screen *and* it's cheaper. There will always be more for less, it's just that this happened sooner than we thought because they're gearing up for the biggest sales quarter of the year. If the iPhone had been launched in January instead of announced, no-one would have been surprised.
As for the non-story about 'Why did they drop the price', well obviously to fit the overall pricing structure. $100 premium for the phone functionality is OK, $300 is not. And $499 for an 8Gb iPod touch would not have worked either. Expect a 16Gb phone at $499 before long.
Look folks, Apple took advantage of the hype / demand for the iPhone and set the price high. I dare say they could have put another $50 or $100 on the price and sold almost as many, we'll never know. Those of us who really, really wanted one while they were still a novelty paid the premium for that. Get over it. The new price is probably what they were planning all along, but didn't want to flood the market in the first few weeks. Does anyone remember the problems the AT&T activation servers had even with the number of phones sold at the high price. If it had launched at this price, those problems would have been worse and the launch would have received more negative press.
Personally, I'm surprised and glad I'll be getting $100 back.
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daniel said 9:16PM on 9-06-2007
Because the new 'special price' is only until Jan 31 when the version 2 comes out. The version 2 will have newer features and have a $70 price reduction.
Expect rumor sites to have the new rumors around November.
Also you can see this link for a hint:
http://www.wireless.att.com/cell-phone-service/specials/iPhoneCenter.htmlbetter
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Phil said 9:17PM on 9-06-2007
I'd bet if (when) they roll out a 16GB model, it will cost $100 more. Just like the ipod touch.
why drop the price? To make room for another product that sits between the iphone and the macbook.
http://cheeseheadtech.blogspot.com/2007/09/apples-announcements-today-of.html
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drew said 9:18PM on 9-06-2007
marketshare, emerging mobile web standards
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jake kellogg said 9:19PM on 9-06-2007
I think Apple killed a couple of birds with one stone. They pleased a lot of people in one fell swoop and covered their asses at the same time. By dropping the price, we (Apple devotees) see them as being benevolent and gracious. Their gesture has put the possibility of an iPhone $200.00 closer. At the same time, they made sure that the general public, who were skeptical about buying an iPhone and who didn't want to pay $499.99 for a 4gig model were just pleased by the availability of a more affordable phone. Lastly, they addressed the analysts issue of not selling enough phones by dropping the price, pleasing mac fanboys, and pleasing everyone else who was holding out. That's why they are Apple right?
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Matt said 9:23PM on 9-06-2007
I'm just thinking that maybe at first Apple didn't intend to introduce the iPod Touch until MacWorld because maybe they thought their would be a parts supply shortage or that manufacturing would be more difficult for the iPhone then it turned out to be. When they figured they had a good grasp on the manufacturing process for the iPhone maybe they decided to push up the release of the Touch since it's so much like the iPhone. This could have necessitated the price decrease that was planned to happen at MacWorld since that would have been a more normal 6 months for Apple. Maybe Steve also heard about Nokia's presentation with the iPhone knockoff and the order they placed with there multi-touch maker so Steve wanted to go all out before the competition threw a knockoff onto the market. Just my theory.
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