What Jobs' iApology reveals about the iPhone

Summary:Steve Jobs open letter to iPhone customers--and $100 credit--is revealing on multiple fronts. Jobs moved to soothe the concerns of iPhone customers that forked over $599 for the device only to have Apple cut the price to $399 a few weeks later.

Steve Jobs open letter to iPhone customers--and $100 credit--is revealing on multiple fronts.

Jobs moved to soothe the concerns of iPhone customers that forked over $599 for the device only to have Apple cut the price to $399 a few weeks later. Jason O'Grady and Matthew Miller were among those caught up in the price cut.

What are the lessons here?

Lesson 1: Jobs realizes he can't annoy his flock.

Let's face it; Apple is more than a company. It's a religion. And you can't let your flock down even as you expand.

Jobs said he has received hundreds of emails from upset iPhone customers. Jobs says:

There is always change and improvement, and there is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever. This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon.

All true. So why give the credit? Apple needs its loyalists--the folks that buy those first million units of whatever the company dishes out. Give props to Jobs for listening. Jobs writes:

Even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these.

Lesson 2: New customers aren't as easy to win over.

New customers are more conscious of price. And that may mean that iPhone sales may not be living up to expectations.

Jobs writes:

iPhone is so far ahead of the competition, and now it will be affordable by even more customers. It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone 'tent'. We strongly believe the $399 price will help us do just that this holiday season.

I'm not sure how that iPhone newbie helps an established Apple customer, but Jobs message is clear--price matters a bit more than expected.

Cutting prices this soon after an Apple product launch is unheard of. Apple's actions indicate that winning new customers may come at a price.

Lesson 3: The smartphone market is brutal.

In Apple's other product groups--the Mac and iPod--the company commands a premium. The iPhone still is a premium product, but that status only lasts as long as people buy it.

Apple will face unprecedented competition as it scales up. Mobile phone makers copy innovation faster, cut prices quickly and duke it out over every percentage of market share. It's going to be an interesting market for Apple to navigate.

Topics: IT Employment, Apple, iPhone, Mobility

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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