What Jobs' iApology reveals about the iPhone

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.

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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

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  • Jobs let the iPod's success get to his head

    [i]Lesson 3: The smartphone market is brutal.

    In Apple?s other product groups?the Mac and iPod?the company commands a premium.[/i]

    I've been saying [b]all[/b] along that the cell phone market is a [b]totally[/b] different market than what Jobs faced a few years ago in the DAP market. Back then, and even today, there is [b]no[/b] advertising going on for [b]any[/b] DAP. Apple invested wisely into marketing in order to foist an inferior product onto a gullible consumer base and the results speak for themselves.

    If you look at [b]every[/b] single other product that Apple sells, Apple does very poorly any time there is any real competition. Mac sales are a distant, distant, distant 4th, AppleTV isn't even a blip on the radar, and now we have the iPhone, a product that has totally failed to live up to even a fraction of its hype. Don't get me wrong, Apple makes a lot of money from the Mac and from the iPhone but that is only because of foolish Apple zealots who would pay any amount for any product coming out of Cupertino. Once you get past that customer base though, Apple has had [b]no[/b] success in any market with competent competition.
    NonZealot
    • No one else makes laptops

      [pre]Apple has had no success in any market with competent competition.[/pre]

      Yeah, you're right. Apple wouldn't be doing so well with laptops if only there were
      other companies making them. ;-)
      Robertskz
      • ipropoganda

        Yeah, you're right. Apple wouldn't be doing so well with laptops if only there were
        other companies making them. ;-)
        Apple makes laptops? Really? Have you seen one? ;)
        Chippolus
        • Yep, I've seen one

          Looks like something out of a crackerjack box.
          Cute little screws in the side to hold things together.
          Cute little screen, and a BIG price.
          Still has the stupid Mac OX interface though which makes it pretty useless if you want to do any meaningful work efficiently.
          Fortunately it dual boots with XP now so the person who bought it can get things done. She is now a happy camper.
          The_Curmudgeon
          • Happy Campers get work done...

            Cute little screws notwithstanding - who needs a dual
            boot computer, with Parallels on the market? And who
            really needs xp or vista if they really want to get work
            done? (many of todays blockbuster movies are made
            using apple or linux renderfarms, not windows - for
            example)

            The only reason windows is still around is cuz of the
            cost associated with changing a platform. People tend to
            stick with what they have, and all the trouble (windows)
            that comes with it. I've told many people that if you can
            click a mouse button, you can run linux, osx or
            windows. And the people who make the switch love it.

            As for the iPhone, there is nothing like it and nothing
            works as well - so expect the copy-cat innovators to
            have their own ?Phone by Christmas.

            It's real easy to innovate using someone elses ideas...
            spacecase2
          • You said it.

            <i>It's real easy to innovate using someone elses ideas... </i><br><br>
            Apple leads the way here....take BSD, or OS X as Apple now calls it. You know what, i'm not going to give you the long list here (including touch technology from 6 or 7 years ago) but rather would ask you name one thing that could be considered innovation from Apple.
            xuniL_z
          • Newton

            What many people consider the first "real" PDA, with touch screen and handwriting
            recognition. It beat Palm to market, and it definitely beat Windows Mobile to market.
            While not all of the technology was new, Apple put it all together in a device that,
            while ginormous and clunky by today's standards, was very svelte and stylish for it's
            time.

            Too bad Jobs was too stupid to see it's real market potential, along with the market
            potential in licensing Mac OS for other machines.
            nix_hed
          • Windows is around

            because most people like it. You can argue that Linux or OS X is better, but it's your opinion and nothing else.

            I wish we could have an alternate universe experiment where Apple has 95% of the users, because it'd prove what virtually every security expert says: that all OS's are vulnerable to security problems.

            It'd also be instructive, because we'd see people complaining about the limited H/W choices.
            notsofast
          • You wouldn't complain...

            Because limited options are a moot point if you have nothing to compare to. "It only runs 10 programs" or "the programs are so expensive" gain play because you compare it to something with 25 programs or less expensive ones. Mac people don't complain as much about the lack of... You hear PC people thinking of using or switching to a Mac saying "I'll have to give up..." or "where are the..."
            Chippolus
          • I didn't know there was a Mac OX...heh.

            "Still has the stupid Mac OX interface though which makes it pretty useless if you
            want to do any meaningful work efficiently."

            To each his own. I prefer Mac OS and Linux both over Windows, simply because
            they're easier to manage what you're working on and it just plain works (sometimes
            with tweaking on the Linux box, sometimes with finding an open-source driver for
            the Mac).

            Let me give you an example - I just finished building a dual-boot (Vista and XP)
            machine with 3 hard drives and 2 optical drives for a friend of mine. While testing
            the system out, I found that if either version of Windows let a hard drive fall asleep
            and then went to go wake it back up for any reason (OS or Application access), the
            entire user interface was hung (except mouse movement) until the drive finished
            spinning up. Mac OS X, just like Linux, BSD, Solaris, and anything else designed
            with UNIX standards in mind, only hang for the application that needs access to the
            sleeping hard disk; the rest of the system is completely usable during this time.
            The system even ran better while using a Ubuntu 7.04 LiveCD over the installed
            copy of Windows (I could load stuff off of the CD while any of the hard drives spun
            up from sleep mode).
            nix_hed
      • No one else makes laptops?

        Almost 60% of Apple copmuter sales are notebooks, but alas Apple only sells one computer for every nine PCs sold in the world. So explain your comment, I don't get it.
        sy34010
        • it was sarcasm

          jeez lighten up
          mindilator9
      • Apple makes laptops??????????????

        No, they don't make laptops. They place orders for them with the ODMs in Taiwan and China. No retail seller makes anything anymore, it is all outsourced. Apples laptops, which are nothing more than a PC with only one extra chip to check if OSX is indeed on an apple machine.

        Apple computers, desktop and laptop, come off the same manufacturer production lines as the Dells, th HPs, the Sonys, the IBMs all are made by a handful of companies you never heard of like Compal, Quanta, Wistron, BenQ, Clevo, etc.

        As soon as a run of Apple PCs are done the same people do a run of Dell or toshibas, and change the name and case, and do not add the apple OSX check chip.

        iPhones, ipods, same thing.

        In other words they are made by the same people, with the same quality control, or lack therof, as the rest of the PCs and gadgets.

        Don't believe it?
        http://www.engadget.com/2007/05/29/quanta-wins-order-for-2nd-iphone/

        http://www.insanely-great.com/news.php?id=7414

        http://www.tgdaily.com/content/view/33474/122/

        http://www.emsnow.com/newsarchives/archivedetails.cfm?ID=18408

        Just do a search on the above names followed by orders for laptops, or desktops and it becomes clear.

        I am still surprised at the folks of both Windows and apple persuasion who think the brand name on any computer or electronic gadget makes it better quality wise. Since the same components can be ordered for any PC that can be found in a Mac, just not the other way around, except for the OSX check chip, which has been hacked anyway with illegal OSX installs working fine on select PCs with similar or the same hardware.

        Steve changed the name of the company from Apple computers to what?

        That irritated some of the Apple folks out there too.

        This not a slam on Apple. Just reality of the market and who makes computers in reality. And that Macs with intel inside, are just another PC with an extra chip.

        Iphones are just another phone made by the Taiwanese and Chinese, by the same manufacturers of the other cell appliances and phones.

        If you love them, great, if not, buy something else. But the price change this soon is an indicater of several things negative. Not the least of which is the mark up on apple items.

        So that apple 100 buckes redeemable for only Apple products might only be a $50.00 value in the cost to Apple.

        But there was no markup on the dollars the consumers paid.
        AreV
        • Bingo

          And thats why I build my own PC. I hear endless nonsense about how inexpensive OSX is compared to Windows but reality is quite different. It doesn't matter how hard you cry or scream about it, a custom built PC from a reliable builder can always be built better and cheaper with Windows (and even cheaper with Linux)then an Apple computer in a similar performance/price range. OSX counts for some of that price difference for sure, so you had better love the OS on an Apple because you are paying for it big time.
          Cayble
          • easy

            I use macs cause they are easier. Everything about them is easier. Sure, I pay more for this
            ease of use, but it is well worth it.
            ethman42
          • Yeah right!

            Look, your idea of 'a little extra' might be a grand or two, but that just means you're living in denial. The average joe will always prefer the flexibility of choosing what their hardware and software combo is over a shrink wrapped option.

            The truth is Steve Jobs has always been a snake charmer and there are a lot of folks (you included) that fall hook, line and sinker for his smoke and mirrors salesmanship. Unless Apple release a version of their OS available for installation on a standard PC they'll never really compete with either Windows or Linux distros as far as market absorption goes.

            The 'Apple package' may suit the minority - but it sure as heck will never suit the masses. If Job's wants to persist with his exclusive products for the rich - fine then the only real winners long term will be PC parts manufacturers. Why? When Apple prices itself out of existence we'll all have to choose our own system specs again .. surprise, surprise - that's the way it should always be.
            thx-1138_
          • Addendum

            They do a great line of MP3 players though - i think maybe they oughta focus on those more.
            thx-1138_
          • Average Joe != you

            [i]The average joe will always prefer the flexibility of choosing what their hardware and software combo is over a shrink wrapped option.[/i]

            Wrong, the 'average joe' will always prefer a computer that 'just works' in exactly the same way their TV, stereo or cooker works, they press a button and it does what they want it to do, no argument, hassle or faffing around. They neither know nor care about software combos, technology or flexibility, they just want something that goes on the net and doesn't catch viruses. Macs do that rather well. And let's not forget, Windows is only the most popular OS because it's licenced to several manufacturers and installed by default.

            [i]Unless Apple release a version of their OS available for installation on a standard PC they'll never really compete with either Windows or Linux distros as far as market absorption goes.[/i]

            Now this I do agree with, it would be nice to be able to buy MacOSX in the shops and whack it on my PC should I want to, trouble there is the market for Apple hardware will very likely dry up and Apple, unlike Microsoft, make their money from hardware.

            [i]The 'Apple package' may suit the minority - but it sure as heck will never suit the masses. [/i]

            To use a technical term, BOLLOCKS!! While the masses may be buying PCs running Windows, the fact is these PCs are bought in much the same way as the 'Apple package' they're sold as a 'shrink-wrapped' option as a Dell package, a Compaq package, an eMachines package, a Packard Bell package, a Sony package or an Evesham package from High Street stores like Argos, supermarkets like Asda and Tesco and department stores like John Lewis.

            You might build your own PC from scratch, but you aren't the masses, the masses are more like ethman42
            GeoNorth
        • Good point -

          The hardware isn't the problem in today's world. Quality
          is very high in all electronic devices. What makes the
          difference is the software that runs the hardware. OSX is
          Unix based, i.e. over 30 years proven reliability.

          And yeah, you can run OSX on a pc. Whats your point?
          To run an os that works should be the goal for any
          computer out there. But to stick with an os that gets
          more difficult to operate with each new version is pretty
          stupid.

          Don't get me wrong, I'm not just knocking MS - but it is
          playing catch up with osx and linux both in all the
          devices they run.
          spacecase2
        • This will burn like acid in my mouth...

          But to be fair, I have to begrudgingly admit that WHO you outsource to makes a big difference... You are right about everything being outsourced, but while Dell seems to cut every corner to toss the cheapest box on the market that they can, Apple does not seem to stoop to the dollar store disposable parts that other companies do. I have yot to see an Apple product that was made like a plastic razor. I repair computers, and see a TON of plastic razor computers. (It pains me to say anything good about Apples - Oh the humanity!) Mind you, they cost quite a premium, and when they sell enough computers to show up on the radar as being a serious computer manufacturer, things may change.
          Chippolus