How much is Apple loyalty worth? About $50M, says Jobs

How much is Apple loyalty worth? About $50M, says Jobs

Summary: Many customers who bought their iPhones when it first came out two months ago complained about missing out on yesterday's $200 price cut. "Curse You, Steve Jobs!" screamed one headline. Well, Stevie boy says he's sorry and will give $100 in store credit to early adopters.

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Jason O'Grady reports that Steve Jobs will be giving iPhone early adopters a little bonus: $100 of in-store credit. Many customers who bought their phones when it first came out two months ago complained about missing out on yesterday's $200 price cut. In an open letter Jobs responded:

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. Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple's website next week.

Some estimates put the number of customers eligible for the credit at about half a million, meaning that Apple is expected to take roughly a $50 million charge for this gesture. Given headlines like "Curse you, Steve Jobs!" just a few hours ago (before the announcement), it seems like a small price to pay to keep the faithful happy. Bless you, Steve Jobs.

Topics: IT Employment, Apple, iPhone, Mobility

Ed Burnette

About Ed Burnette

Ed Burnette is a software industry veteran with more than 25 years of experience as a programmer, author, and speaker. He has written numerous technical articles and books, most recently "Hello, Android: Introducing Google's Mobile Development Platform" from the Pragmatic Programmers.

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9 comments
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  • $100 retail minus ~50% margin --> ~$50 per person...

    minus the fact that they will likely spend more than $100 to get the $100 means like ~$30 a person or less... since some of the diehards here might actually take the $100s and purchase another iPod or iPhone it might actually result in a profit for Apple

    at $30 a person that probably means about $15mil worst case and might result in a net profit best case scenario...
    doctorSpoc
    • The iPhone's a great phone and no one's dying hard about it.

      The iPhone is a great phone warranting purchasing as many as you need. The $100
      credit will be well spent on buying another one.

      With your callow attitude I doubt you would even know anything about it.
      YinToYourYang-22527499
  • RE: How much is Apple loyalty worth? About $50M

    Let's see if Nokia and Sony Eriscsson will do this as well. The N80 which I bought last
    year for ?200 (in Europe) was such a bust it's off the market. Ironically whereas
    Europe is generally a tougher mobile phone market than the US, consumers here
    expect phone model price to fall at this pace (599-->>399) and perhaps even more
    dramatically after 6-9 months. After 12 months phone models generally approach ?0
    with a 2 year contract.
    help4mac
    • Too long

      "The N80 which I bought last year for ?200 (in Europe) was such a bust it's off the market."

      12 months is a long time. In the case of the iPhone it had only been 2 months. Apple has a 14-day window for price matching normally, but the guys who bought one 15 days ago or stood in line 2 months ago for one were a little annoyed.
      Ed Burnette
      • Everybody knows prices are going to drop

        Thats just the way it is in the technology industry. People who paid $599 for their iPhone did it so they could be the first one their block with one. They knew they were paying a premium to be first and they knew the price was going to drop. Granted 2 months was a rather quick turn around, but it was inevitable and they knew it.
        Tigertank
        • Show me another single case where a ....

          ... product was reduced by 33% within two months of being on the market. In your rush to defend Apple you left your common sense behind.
          ShadeTree
          • non sequitur

            ((( "Show me another single case where a
            product was reduced by 33% within two months
            of being on the market. In your rush to defend
            Apple you left your common sense behind." )))

            Nothing that Tigertank wrote defied the laws of
            common sense. The whole post was right on
            the money: as a rule, prices can go down
            quickly in the technology market, and
            particularly in the cellphone market, and early
            adopters know this. Period.

            You seem to be up in arms about the 33% part.
            Well, what is the "correct" percentage that
            Apple should have used in reducing the
            iPhone's price? 32%? 1%? What's the answer?
            And what is the "correct" span of time before
            Apple is allowed to reduce its prices? If nine
            weeks is too short, how about ten weeks? A
            year?

            The answer is, there is no right answer. In your
            rush to defame Apple, you left your common
            sense behind. The crux of the matter is that
            Apple did right by both its past customers and
            its future customers by reducing prices and
            giving the $100 credit.
            buddhistMonkey
      • Wrong Focus

        Maybe you folks should take the focus off the $200 (or $100) rollback. You are
        again tripping over yourselves trying to find the way in which "Apple has shown its
        stripes" once again, and shafted consumers. This issue will evaporate within days.

        What will be left is a massive trojan horse. The new iPod Touch and the iPhone
        price drop is a move to accelerate growth of sales for multitouch/OSX devices.
        These devices are entry level Macs. This is a platform move. What about this don't
        you understand? If ZDNet would take its collective head out of it's rear and
        address the real issue, you'd come to understand how the 15 year long Windows
        IT make-work project will be directly threatened by a grass-roots consumer shift.

        What we get instead is an insipid party line that continues to characterize Macs as
        overpriced fashion accessories and computers for girls. Just keep on bargain
        hunting folks, when your job is pulled out from under you, you'll need those skills.
        Harry Bardal
  • RE: How much is Apple loyalty worth? About $50M, says Jobs

    Why would you perpetuate the myth that spending $100 in Apple's store costs Apple $100? Your thank-you letter in in the mail from Jobs' P.R. people.

    Maybe $25 - $30, not counting what they make on the new item you didn't intend to buy now anyway.

    But I must agree with those who say nobody pays more than it's worth to them. 'What the market will bear' is no more than people will pay. This ain't water in the desert, it's a great shiny-blinky thing. If hundreds of thousands of people paid $600 in June, Jobs priced it right.
    wp2008