Jobs to $599 iPhone buyers: that's tough. He's right, you know

Jobs to $599 iPhone buyers: that's tough. He's right, you know

Summary: In Thursday morning's USAToday, you'll find an interview with Steve Jobs.Steve essentially says that if you paid the full $599 price for an iPhone more than two weeks ago, and on or close to the June 29 craziness, well, then you should have known the price was going to be lowered.

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In Thursday morning's USAToday, you'll find an interview with Steve Jobs.

Steve essentially says that if you paid the full $599 price for an iPhone more than two weeks ago, and on or close to the June 29 craziness, well, then you should have known the price was going to be lowered.

And that it has, to $399.

A few questions posed by USAT tech reporters Ed Baig and Jefferson Graham caught my eye:

Q: What do you say to customers who just bought a new iPhone for $599? Sorry?

A: That's technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that's what happens in technology.

Q: To do this, are you taking a hit on costs? Or have prices really come down?

A: We're in high-volume manufacturing, and we're pretty good on the costs side. We're also willing to be more aggressive. We think we have a real winner, and customers love the iPhone. The product's been extremely well accepted; we want to put the pedal to the metal. A holiday season is approaching; we'd have to wait another year for another one.

Actually, Steve has a point. I get into this a little deeper on my BlackBerry blog.

I write:

One often applicable law of pricing for consumer devices:

When an anticipated device hits the market, charge lots.

Why? Anticipation brings out the Fanboys (and Fangrrls).

Then, after a few months, after the most eager customers have already dug into their wallets and pocketbooks, comes the time where the device needs to gain substantial inroads among mainstream users who sat out the first wave.

If you take a look at what happened today with Apple’s 8GB iPhone being down-priced from $599 to $399, you’ll see a trend line that also happened with the BlackBerry Pearl.

High price at the start to attract the most excited consumers, then discounting to cross the chasm to the mainstream.

And hey, this principle isn’t only applicable to handsets, or even to technology.

You see it in everything from Harry Potter books, to clothes, to movie theater prices.

Hype the debut and ring the ka-ching.

Then after a couple of months, draw down the $$ and market to the masses.

Do you feel "jobbed" by Jobs? You shouldn't. After all, We're seeing basic economic forces at work.

Topics: iPhone, Mobility, IT Employment

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21 comments
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  • Apple is humming

    iphone is great, only problem was the price.
    I think this is a great idea and it will be good for the whole economy.
    Apple is humming and bringing great products to their customers.
    Apple gets an A+.
    daniloreyes
  • My day will be a good one after this hilarious read!

    Steve Jobs sticks it to the Apple fanboys...

    ...AND THEY HAIL HIM A GENIUS FOR DOING IT!!!!!

    I feel sorry (not!) for the morons who stood in line for days on end to get their hands on the iPhone on release day. Guess it must suck HARD knowing that Apple just scammed you for $200.00.
    Scrat
    • Russell Shaw ain't no fanboy

      In fact this is one of the first articles I've read of this does doesn't criticize it.

      But I agree with him and disagree with you - People would be morons to label Apple/Jobs with any extreme opinion, good or bad, for the price cut. It's exactly how the rest of technology industry works. Something starts out high and then drops. If you think Apple has "scammed" these people, well then you sure as hell have been "scammed" on the computer that you are using to type your comments.
      ross2000
      • No he isn't (nor did I suggest otherwise...)

        http://talkback.zdnet.com/5208-9584-0.html?forumID=1&threadID=38399&messageID=704364&start=0

        I truly believe Apple has made a mistake here. In the short-term this will work well for the Christmas buying frenzy, but in the long-term?

        Lets hope the next Apple product is very, very shiny and ridiculously over-priced so as to appease the "trend-setters".
        Scrat
    • Don't you get tired of whining?

      Man - don't you get tired of whining all the time. You must be a lot of fun to be
      around. As soon as I see "moron", I stop reading. If you don't care for Apple, don't
      read the articles.
      Prime Detailer
      • Nope, and thanks for reading! <NT>

        ...
        Scrat
    • Economics 101

      If the buyer and the seller are both happy at the TIME OF THE TRANSACTION then it's a fair price.
      frgough
      • Tell that to the people who are a little bit miffed at Apple at the moment.

        http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9034618

        Looking at Apple's share price at the moment, there is a downward trend (-2% on the day). Not exactly the response Apple were looking for!
        Scrat
    • To a lot of those people who stood in line

      it was worth it to get their hands on it that much sooner. To each their own.
      Michael Kelly
      • Really? You actually know anyone who stood in line?

        Even the most acrid faithful Mac addict must surely feels a little bitter at the price drop, no?
        Scrat
        • There were no lines here

          because there are plenty of AT&T stores around that lines were unnecessary, but yes I do know some first day buyers. I don't see any more (or less) buyer's remorse than with the people I know who bought a Razr for a ransoms fee. They all knew the price would come down and were willing to roll the dice.
          Michael Kelly
          • Razr not an appropriate comparason

            It was originally $600, it took 3 years to come down to $200. Not two months.

            Analogy smashed.

            Find me a product that reduced in price 33% within two months of initial release and then you can make a comparison. Until you do, this must be looked at as a unique situation.
            laura.b
          • What difference does the time line...

            make? If it had been six months from now, there would still be someone who bought at the old price the day before the price drop. That goes for iPhones, or Zunes (20% price drop), or Playstations, or houses. I bought a RAZR at $100. One month later, they were free. A 100% price drop in one month. It didn't matter how long they'd been out. To me, as a purchaser, the price drop was less than 30 days later.
            msalzberg
  • Economics on a faster timeframe

    It's not that everyone didn't know that the prices would drop. All prices drop, especially dramatically in technology. What people are mad about is not that they are cheaper now than they were when they were first released. They are made because they were only released 10 weeks ago and the price is 1/3 lower now. I'm sorry, but that is unprecidented and they do have a right to be irritated.

    Most technology comes down in prices within the first year or so, and if it's a super high-priced tech bit, it may take several years. Remember when the DVD player first came out for several grand? Now they are $40, but it took 4 or 5 years for them to drop down to "affordable for most" at which time they hovered around $100-150 for years before becoming bargain basement. But if 1,000,000 had paid $3000 for a DVD player and then 2 months later they became $100, or even $1000, there would have been plenty of miffed people.

    Please remember that the people who stood in line thought that the pricing scheme would follow normal technology precident. It didn't. They figured it would be at least a year before they could save this kind of money and didn't want to wait that long. Most people, however, probably would have been more than willing to wait 10 weeks. Regardless of whether they deserve it for buying into new tech or not (and they do, you never buy v1 of anything, duh. this was a shaft job, and the fact that it is being defended really shows how far off the mark most people are on it. Reality distortion is not limited to Apple.
    laura.b
  • RE: Jobs to $599 iPhone buyers: that's tough. He's right, you know

    I disagree that it's just a fact of technology. This was planned when the iPhone shipped in June. Apple is not fooling me or the many other iPhone buyers. We got screwed, plain and simple.

    To Steve Jobs: thanks for taking an extra $200. I'll remember this move.
    cyngaines
  • Iphone buggy...

    Do you own an Iphone Mr Shaw? If there is one thing that an Apple supporter would expect it would be to buy a product that works. After all, isn't this the same company that runs millions of dollars in advertising explaining to us how buggy their competition's software is? As of today the phone has been out for ~2 months and it still doesn't perform it's core functions well (Being a phone). The speakerphone is useless and the headset is difficult to hear over any appreciable amount of backround noise. Then there is the ringtone which, again, is difficult to hear.

    But wait, buy today and your $200 premium also gets you an Ipod that randomly stops playing music when surfing the internet and that's only if the internet browser hasn't crashed on it's own first.

    Truly all of us expected a price drop, but not 33% and not within 2 months. The real slap in the face is that we not only paid that $200 premium but we didn't even get a fully functioning phone.

    There was a contingency of us on Apple's own boards telling people that complained about the various Iphone problems to just wait it out and have faith that they would fix the problems soon. Boy oh boy do we look stupid. Not only did they not fix the problems but the devalued our phones by 50%. Thanks Steve. Different kind of company my ass.

    ~ Mike
    mike@...
    • Out of curiosity..

      who forced you to buy an iPhone when you did, at the price you did?

      "Boy oh boy do we look stupid."

      Only for blaming others for your own actions.
      msalzberg
      • Yeah, he looks really stupid

        With his $100 that Jobs just gave him.

        Does it make you feel good to insult others with your holier-than-thou attitude just for your idol to agree with them to the point of cutting in to profits to rectify the judgement error?

        Odd that you were deemed incorrect, and yet stay silent about this, while those you insulted were deemed justified.

        Next time you have an "opinion" you should try to convey it in a less condescending and arrogant way, because now it's YOU who looks stupid.
        laura.b
  • What Jobs not said

    See my small cartoon:
    http://geekandpoke.typepad.com/geekandpoke/2007/09/what-jobs-said-.html

    Bye,
    Oliver
    oliver.widder@...
  • Note to self...

    Wait two months before buying the latest Apple device.

    The iPhone was obviously over priced anyway. I still think they should have waited until mid October. This is a bit early for Christmas and it seems weird.

    Either way it's still $100 more than I'd pay for it.
    T1Oracle