On The iPhone Price Drop
This being my birthday, I was able to sleep in and just sort of do nothing all day. This gave me a lot of time to read the Interwebs which is all ablaze about Apple’s $200 price drop of the iPhone.
Being both an Apple shareholder and in the “iPhone $600 club” myself, and having paid the “stupid tax”, I do have an opinion on what is now known as “the drop” (as opposed to “the catch“).
First of all, anyone who bought the iPhone at $600 either thought it was worth $600 or returned it.
Second, early adopters always pay more for the ability to use cutting-edge technology.
Third, the price of technology, especially cutting-edge technology, drop very rapidly as the costs of mass marketing come down, and companies, in general, owe nothing to the customers that bought the product before the price drop.
So why do I feel like Apple owes me at least an apology?
Because of the time frame.
A 33% drop in less than 70 days? I sort of feel used (and not in the good way). I, and many others like me, were expecting to get about 6-months of use out of the iPhone before a price drop.
As a shareholder, I want Apple to sell as many iPhones as possible. The price cut is a nice way to help convince those on the fence to get off it (lower profit margins aside). But, as a shareholder, I’m also concerned about the time frame of the price cut and how it looks to potential customers…those same customers on the fence that the price cut appeals to. How would someone, who is considering purchasing an iPhone, feel when it looks like Apple used its most loyal customers, and how would they feel if Apple drops the price again in two months?
Does Apple owe the “$600 club” anything? No. Should they do something, like…say…give a $100 store credit for those in the “$600 club”? Yes, if only to look like the company they portray themselves to be. The iPhone is a new product line for Apple. It would be a shame to start it off on a bad note.
On an aside, the timing of the price cut really does make me wonder what is up Mr. Jobs sleeve. He stated that the price cut was to go after the holiday season market. First off, why so early? The holiday season doesn’t start until Thanksgiving or maybe Halloween (if you want to stretch it), both of which are more than a month away. Why not reap the extra $200 per iPhone for at least another month? Secondly, why such a large price drop? Why not a $50 or $100 price cut now, then another $100 closer to the holiday season? Even though the iPhone is reportedly selling well, such a large price drop, so far from the holiday season, makes me wonder what the real reason is for. Perhaps the European version will be 3G and that will also be offered here in the States for, say, $200 more than the 2.5G iPhone? Perhaps there will be a 16GB version? All I know is that the explanation of going after the holiday season does not sit well with me based on when the cut was made and how much it was made for.
Update: Looks like Mr. Jobs read my thoughts and will in fact give all in the “$600 club” a $100 credit to the Apple Store. Looks like Leopard will only cost me $29 now.
