Steve Jobs proves you can't please all the people all the time

Steve Jobs proves you can't please all the people all the time

Summary: The iPhone price drop debate rolls on. Over the weekend Apple co-founder Steve Wozniak waded into the discussion saying that the price drop was "too soon, too harsh."

SHARE:
TOPICS: CXO, Apple, iPhone, Mobility
41

The iPhone price drop debate rolls on.  Over the weekend Apple co-founder Steve Wozniak waded into the discussion saying that the price drop was "too soon, too harsh."

As that $200 was knocked off the price, the iPhone was transformed from a luxury item to an item that was within the price reach the masseThere's no doubt that the price drop was too quick and too much, even within the context of technology where prices drop at a speed that's enough to make your head spin and things become obsolete at a pace that is staggering.  But what the backlash against Apple's price drop shows is that Apple isn't in the technology business, it's in the luxury goods business, and companies dealing in luxury goods just don't do drops.

A good example of this rule in action is the luxury watches.  The CEO of Rolex was once asked how the watch business was going.  "I have no idea," he replied with a snort, "we are not in the watch business, we are in the luxury business."  Companies such as Rolex and Omega keep their authorized dealers on a tight leash and any in-store discount that you are offered is a token gesture (as I discovered when buying an Omega Seamaster Professional Planet Ocean earlier this year).  Another given is that prices rarely drop (except on end of lines, and even then it's usually the dealer that initiates the discount in order to get rid of old stock).  In the "if you have to ask the price, you're in the wrong shop" segment of the market, prices usually stay fixed or go up.  This is what makes the goods "luxury." 

This is how I see Apple.  People don't buy Apple products because they're cheap; they buy them because they feel they are getting a quality item and that this gives them membership to an exclusive club populated by like-minded individuals.  If you want cheap, look elsewhere buddy.  This is a great business model if you can pull it off, and for years now Apple's managed it brilliantly.  But when it came to the iPhone it seems that Apple changed the business model.  Initially, given the price of the iPhone (especially when combined with the service plan), it was, without a doubt, at the luxury end of the market, but as soon as that $200 was knocked off the price, the iPhone was transformed from a luxury item to an item that was within the price reach the masses.  Anyone who had bought an iPhone expecting it to be a symbol of their status got a slap across the face.

Now, I'm not saying that the price drop was wrong.  Personally I think that the iPhone was prices too high but that's not what matters, because if people are willing to pay the price, that's fine.  What's wrong with the price drop is that it's changed how many iPhone customers perceived the product - as a luxury item.  I don't think that the uproar has much to do with the size of the price drop itself but more to do with the fact that the price drop changes the status of the iPhone from luxury item to just another piece of consumer electronics.

Thoughts?

Topics: CXO, Apple, iPhone, Mobility

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

41 comments
Log in or register to join the discussion
  • Spot on

    Well written. I do agree and have made a similar case myself on occasion (though not so well written). Apple is a luxury brand (well, probably more of an interesting blend of luxury and commodity).
    mtgarden
    • Write on (as in Summons)

      Yes, indeed. But demeaning the status symbols of the affluent can be perilous. After all, most of them have very good lawyers. Aggravate them with diminished status and then crash their hardware and there has to be a lawsuit there somewhere. Maybe even a class action suit.
      Sagax-
  • RE: Steve Jobs proves you can't please all the people all the time

    I disagree. The actuall phone is a comodity item that gains its cool status through the interface. It is still made of circuit boards, glass and stainless steel (?). I dont really see how you can call an operating system or a user interface a luxury item. There is no real luxurious tangalble here. If the phone were made of titanium and the front face were Swarovski crystal, then I think this argument would have more merit. Besides this, if someone needs an iPhone to feel superior and elitist, then they have bigger problems to deal with.
    smartin684
    • luxury

      "It is still made of circuit boards, glass and stainless steel (?)"

      And a Rolls Royce or a Bentley or a Ferrari is still made from steel, wood, plastic, rubber etc. But it's not the same as a Toyota or a Honda, is it? It's the looks and finish(and brand name) which are its USP, in the end it does nothing other phones don't do as well, but its high priced and people buy it for its 'coolness' value. Just as a Ferrari isn't a car to commute to work in or pick up the kids after school, the iPhone isn't a 'phone', it's a style accessory.
      balaknair
  • What's funny...

    ...is that John Carroll has said this for quite a while now about Apple products in general, and has been belittled for saying it. Yet, when the price drop (and subsequent uproar) occurred, Apple apologists were quick to point out that the iPhone was as much about style as technology, and that's why people were willing to pay the price. And that's fine - if people are willing to pay extra for what they perceive to be a luxury item, more power to them.

    This event has proved John right, although I'd bet no one who criticized him will ever admit it. My guess is that people are just upset that the iPhone was degraded from status symbol to "mere" consumer product, a long drop for an Apple product.

    Carl Rapson
    rapson
    • I wouldn't give it a complete downgrade yet

      Beth Anne isn't going to be texting her bff Jill on an iPhone anytime soon. Most people still use the free/cheap phone that came with their service, and I don't see the iPhone reaching that status in the next few years, if ever. It is still very much a high end product, however rather than being a Lamborghini it's merely a Mercedes Benz. And Apple would be very happy selling a Mercedes. Heck, even now an iPod is at most a Buick.
      Michael Kelly
  • More nonsense from the usual suspects

    I buy Apple products because in over 15 years of use I have had no major issues to
    speak of. I'm a little tired of getting the "so called" experts opinion of why people buy
    Apple products. You admittedly just dabbled in using Apple products. So why exactly
    does your opinion matter? By the way I use both a Mac & PC on a daily basis. How
    about you? I do not buy anything to feel like I'm part of a club. Buying a product does
    not make me feel special. This is a typical opinion from someone who doesn't have a
    leg to stand on.
    SquishyParts
    • True that

      These people complain cause it's too darned expensive and then these same people complain when the price drops.

      Go figure.


      P.S. How dare Apple ruin my iPhone Bling Team agenda. Hahahahah!!! :)
      Kid Icarus-21097050858087920245213802267493
    • re: typical fanboy response.

      the typical fanboy response... that feels they have to rush to apples defense no matter what...

      your just like a politician who attacks the soapbox speaker instead of the real issue (the article)
      pcguy777
  • My thoughts exactly Adrian...

    [url=http://talkback.zdnet.com/5208-9584-0.html?forumID=1&threadID=38399&messageID=704364&start=-9986]A valuable (sorry for the pun!) lesson should be learnt here...[/url]
    Scrat
  • I own Apple but perfer PC MS Windows

    Thanks Adrian for our honest opinions. They are a professional insight on things. You're right about Steve Jobs though in this article to say the least.

    I own an Apple in my professional world and like the Apple, but it's a PC Windows world in the reality of things. People who have good luck with Apple, well good for them, I also have good luck with Apple and sure there's problems with the Apple hardware and software too.

    Who cares, if you're happy stay with what you know, I'd say. I prefer MS Windows and the PC and it pays the bills...
    Kromaethius
  • Wozniak

    raises his hoary head again. Talk about someone living on the glory of past achievements.
    frgough
  • Steve Jobs like upsetting apple carts.

    The iPhone is a world changing device; the Smart Phone
    manufacturers have nothing to compete against it, so they pay people
    to lie about the iPhone. Thanks Adrian for adding your 2 cents.

    The only problem with the recent price drop was that Apple did not
    introduce a new iPhone at the $600 price point that has all the
    features that the pundits say is missing-- G3, unlocked, enterprise
    push applications, compatibility with IMAP, etc. But, many of those
    features will be coming anyway.

    The iPhone is a Version 1.0 devise with all the deficiencies that first
    products are heir to. Despite this, 85% of iPhone users are satisfied or
    very satisfied with their purchase. Of course, they are regular people;
    they don't have the expectations of the Smart Phone pundits.

    Will Apple unlock the iPhone? No, but other people will, so that they
    can enjoy the poor service provided by other phone companies. Will
    Apple open the iPhone to third party developers by providing a SDK?
    Not likely, because that makes the iPhone too vulnerable to the
    crackers, hackers and malware makers. But, Apple will be supplying
    applications inexpensively through iTMS. Will Apple produce gold
    plated or diamond encrusted iPhone for the luxury crowd or the jet
    setters? No, the iPhone is for the common people. I expect further
    price drops.

    Many people forget how new the iPhone is; it is only been 13 weeks
    since its introduction. Who knows what surprises that Steve Jobs has
    in store for us. I think it's all a plot to get the fools to make rash
    statements before Steve just mows their arguments down. Thanks for
    adding your contribution, Adrian.
    UrbanBard
    • Are you related to Mike Cox?

      That has to be the funniest response to this story yet.
      balaknair
    • Shocking Little Secret...

      [b]Will Apple unlock the iPhone? No, but other people will, so that they can enjoy the poor service provided by other phone companies. [/b]

      FYI... AT&T/Cingular SHARE their networks with T-Mobile - completely, entirely and universally in the US. This only makes sense since both providers operate on the same frequencies.

      It's:

      a.) cheaper to put up only ONE set of cell towers and share the expense of building and maintaining them than to put up many redundant towers to offer the same coverage.

      b.) more "neighborhood-friendly" to have only ONE tower obstructing the view instead of having two, three or more of them and pissing off the people who live in an area.

      and c.) having only ONE tower in an area also lessens the cumulative radiation being broadcast. There's some research out there that cell phones can cause brain cancer, but here's a hint - the cell towers ALSO broadcast the same radio frequencies - at a MUCH higher power level than a cell could. Living next to a tower may not be good for you. Of course, this hasn't been proven one way or another with 100% certainty.

      So to say that T-Mo's service isn't as good as AT&Ts is silly since if you're talking on an AT&T cell, you might be using a T-Mo sponsored tower.
      Wolfie2K3
  • I'm surprised you're taking any flack for this, Adrian

    Especially because when you are scrolling the boards and 70% of the comments regarding Apple have more to do with the way it looks than anything else. Once you have decidedly declared that the systems are similar on their own merits (that usually takes a solid 400 posts or so) you generally have a 100-post or so refresh on the "style" issue.

    It is baffling to me that the same people who can only think of "because it looks so much better sitting on my desk" when faced with the facts that Apple PCs and Windows PCs are nearly identical when the same price-points and specs are used are in this thread actually denying this. LOL.

    Great. But just a week ago you were ranting over the way it looked. So which is it? Form or function? It's okay if it's both. But it never is. It's always "Other phones do more than the iPhone" countered with "yeah, but none look as slick."

    Reality is, it's form when that suits the conversation, it's function when that does.

    God forbid you put out something that has upheld the (very vocal) beliefs of Apple users!! Even worse that it's a complement (comparing Apple with a Rolex or Omega is a compliment, after all)!! Now what will they fight about? Who is the shill paid to give Apple bad press in this one?

    Wait, now I see why there's grief being flung at you, Adrian! It's because you were right. Apple is not infallible. They may have made an error that offended their customer base, and someone called them out for it - not just called them out, but actually explained why they were all so pissed. How dare you take their side, Adrian? Didn't you know that they are supposed to be the mistreated minority?

    Some people just don't have enough to bitch about, you know?
    laura.b
    • Reason for the grief

      it's the snotty condescending attitude that people who include style as part of their purchasing decisions are somehow stupid. But only when style is part of the computer-buying decision. For all other buying decisions, incorporating style in your purchase is expected.
      frgough
      • Okay, but still -

        I'll give you that on a normal occassion, I just don't understand how that applies this time...

        Adrian was noting why this was a problem for many users. He wasn't snotty or condescending, and actually echoed what MANY upset users voiced as the reason that the price drop bothered them.

        So, normal grief - understood.

        But how about THIS grief?? Are we to think that any comment regarding Apple, good or bad, are to be met with antagonistic replies that make claims of MS allegiance and funding and the possible comment regarding looks, personality, and verility (only the more zealotous lot hit those point, though)?

        After all, as I said before, he seems to be on your side here. Hell, he's even comparing your cell phone with a Rolex.
        laura.b
      • Not quite true

        There's nothing stupid about favoring Apple products because of their style, or even the Apple name. Anyone who says otherwise is just trolling. Let it slide right off, like MS fans are supposed to do. Find an argument that incorporates the importance of style and design; don't attack the blogger personally.

        The "snotty condescension" really comes from those who deny that style (and the Apple name) is a significant part of their decision. They try to justify their purchase based solely on technology, when it's apparent that the technology just isn't that much better, if it is at all, and certainly not worth the price to a lot of people. At least be honest about it. Several posters here have, and haven't been called "stupid" (that I've seen).

        That denial, and the elitism inherent in the attitude that anyone who doesn't favor Apple "just doesn't get it" (or is a shill), is what sets people off.

        Carl Rapson
        rapson
    • You ARE aware that there's more than one "Apple user"

      There are people who think that Apple products are great because they look cool.
      There are people who thing that they're great because they work well. There's
      people who think that they suck, but all the alternatives suck worse. There's people
      who have lots of different Apple products. there's people who only have one.

      Ever consider that, just maybe, different messages might be coming from different
      people?

      That maybe you're (unconsciously, perhaps) trying to put words in other people's
      mouths (which often results in putting your foot in your own)?
      Resuna