September 06, 2007

Bragging rights

So Apple pulled a fast one -- again -- and is taking the iPod to the next level with the iPod Touch. It's undoubtedly a lovely gadget and a step in the right direction as it allows Apple to cleverly leverage all the technological advances they put in the iPhone.

However, the iPod Touch was not the highlight of Apple's announcements. Predictably, there was quite a buzz when Steve Jobs said that the price of the iPhone was being slashed by $200. Potential buyers were delighted, Wall Street and early adopters... not so much.

While Apple has a documented track record of obsoleting its own technologies with regular announcements, the magnitude of the discount is a first. Whether people look at the $200 or 30% figure, everybody wonders if such a drastic reduction was necessary. After all, if the iPhone was selling so well, why not just discount it $100? And wait for the holiday season to slash it another $100?

Apple skeptics are quick to point out that this is an obvious sign that the iPhone is not doing so well and Apple fans retort that the iPhone is doing quite fine and is on target to meet Apple's objectives. Fair enough, but we're still talking about Apple's "public" objectives. For all we know, they were still internally hoping for a bigger uptake and if they want to meet their 1% of the mobile market target for the end of 2008 (reminder: this represents approximately ten million iPhones sold by the end of 2008), they need to start getting very aggressive now. Even if 1% sounds like a modest goal, only a device under $150 has even a remote chance of hitting that goal, so I'm thinking we haven't seen the last of brutal discounts.

On an lighter note, I find it amusing to see that some early buyers are quite angry to realize they could have saved $200 if they had waited a few months, and Apple zealots are quick to point out that this is business as usual coming from Cupertino.

Maybe early adopters will find some solace in the realization that this extra $200 bought them the right to brag about their new purchase on their blog, and maybe even make up for the loss by getting some extra money from their AdSense advertising...

Posted by cedric at September 6, 2007 09:26 AM

Comments

I am actually glad to see a company slash the price so quickly. How should we feel about paying $200 more for a year or two? :)

But as usual, the problem lies elsewhere. If you are unhappy about the price cut because you spent $600, this means you do not think the iPhone was worth $600.

In the end the price, no matter what it is, is fair if you think what you're buying is worth it.

/me still wants an iPhone though ;-)

Posted by: Romain GUY at September 6, 2007 09:51 AM

If you queue up to get one of the very first models of such a new device, you don't deserve anything better. (Russell was one of those guys, as was John Gruber.) Russell's complaints just seem stupid to me, even more so for calling Gruber a "zealot" (he definitely isn't).

Posted by: Stefan Tilkov at September 6, 2007 10:56 AM

Apple just anounced a $100 store credit.

http://www.apple.com/hotnews/openiphoneletter/

Posted by: Jason Anthony Guy at September 6, 2007 12:50 PM

I think that not only Apple does this trick with rates. Any phone model (and not only phone) after several months of its launching looks down.

Posted by: Daphne at September 14, 2007 06:56 PM
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