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It turns out when you're reporting about Apple it's completely fine to be a conspiracy theorist. If you were to report about the US Foreign policy in such a manner, you'd be labelled a unAmerican nutcase.

Hey Bob, it's one million by the end of the quarter not the year. I'll agree that it'll be closer to 2 million though.

Another complete moron writing his blather. God, I'd like to see these tiresome asshats disappear.

Got to love Americans and their conspiracy theories. I don't know much about business or marketing but I do know that the unit cost depends on how many units produced. Therefore, if the iPhone is more popular than Apple predicted and if they have they have a new item which uses many of the same components (the iPod touch) then the reason would tell you that the unit cost will go down. Secondly, if you consider supply and demand you can also assume that if you lower the price you will increase demand. This is a good thing if you know that the supply will meet the demand. This was a golden oppurtunity for Apple and they took it.

I live in Canada and I can tell you that there was no way I would pay $600 for a cell phone, but at $400 I might consider it. Heck I might even get two. I know my 12 year old son wants to buy the iPod touch but I won't let him for at least another year or two and then only if the price drops. I will be getting my first iPod very soon as I suspect many people in my office will this Christmas season. This is the best group of products that Apple has had in a long time and they are going to rock the world this Christmas.

Buy Apple!

Cringely is an idiot of the first order.

I hear Bill Gates is ging even further than Jobs by offering to pay half the cost of counselling fees for those poor f**ks that received a Zune and 3/4 of the fees for those that received a brown zune.

So you can see Jobs is a tightfist!

You are right, G.
R.X.G represents the same level of ineptitude that many foriegn correspondents exude.
A little fact, a little fiction, and a whole lotta opinion.

MW:days, as in "Days of Daze"

Cringely is right. Anyone who doesn't believe that Steve Jobs planned this whole scenario is the moron.

I thought it was a fairly well-thought-out article. Cringely's a fairly insightful guy.

Cringely is a fool and we should never pay mind to fools.

Nice to know that we can push any buttons we want and can make Cringeley sing to any tune.

"If you were to report about the US Foreign policy in such a manner, you'd be labelled a unAmerican nutcase."

Or elected President. Either way.

"I'm going to try to see if I can remember as much to make it sound like I'm smart on the subject." --George W. Bush, answering a question about a possible flu pandemic, Cleveland, July 10, 2007

"More than two decades later, it is hard to imagine the Revolutionary War coming out any other way." --George W. Bush, Martinsburg, W. Va., July 4, 2007

"Apple keeps an undeserved $50 million..." WTF? Jobs/Apple continually build a better mousetrap. My old mobile sucked the life out of me. It made me misserable every time I went near it. Jobs produces a device that is absolutely fabulous, giving me constant satisfaction & pleasure. I happily paid the $600, and felt not the slightest pang of regret at the $200 drop, although the money is more significant to my finances than it is to many other people's. Jobs earned the money from me fair & square. It's the best of capitalism.

I get weary of people criticizing Jobs when he does so much good for us undeserving geeks.

If you don't like the Apple experience, go enjoy the Zune phone; a product patently designed by Soviet engineers.

"Cringely is right. Anyone who doesn't believe that Steve Jobs planned this whole scenario is the moron."

Do you agree with Cringely because he is right, or is he right because he agrees with you?

"I can tell you that there was no way I would pay $600 for a cell phone"

I wouldn't either. That's why I got an iPhone instead.

Check out all of the things it has in addition to the phone:
http://www.apple.com/iphone/specs.html

You're welcome.

I find it amusing that all the early adopters are bitching like a bunch of whiney children. They overspent on 1st gen hardware just to look cool and now they're pissed that their exclusive little club is open to a lot more people.

Personally, I'll buy an iPhone when it's not tied to ATT (or any specific carrier) and gets a bigger hard drive.

Suckers. Steve played you.

Cringely is good, not always right but he does better than many commentators and often has good insights.

Inevitably writing something with breadth and depth some things are omitted, in this case mostly how complicated decision making is. In good planning there are many if:then provisos so yes maybe it was planned from the start but no because other plans were laid which were not implemented.

The higher price to limit demand is very plausible, who would have paid for the riot control had the price been set at $399

"Those who do use it will nearly all buy something that costs more than $100."

Leopard, anyone?

Daring Fireball let's Apple off the hook with a simple:

"When a product is in high demand, it’s natural to charge a high price."

That may be true. However, the iPhone did not exist until January when it was introduced at MacWorld in January. The device was demoed and the technologies were laid out in detail. The prices for the iPhone models were also revealed at that same event. The value perception was created by that keynote, based on the device's abilities and attributes. So, there was no high demand for the iPhone that merited a high price. The price and value perception preceded the demand.

What happened was that later, 68 days after the iPhone was made available to the public, at an event for the company's new iPod rollout (that happened to included an iPod with the very same new technologies* that set the iPhone apart from all other phones… technologies that did not exist in any consumer product on the market at that time… technologies that in great part created the perceived value of that product), Jobs essentially said, "We can actually sell this device (iPhone) for much less than we stated earlier because the technologies in this product are not special. They're in this new iPod for $299 and $399. I am now revealing that your iPhone's true price is and was $399 and you simply overpaid."

*The telephony technologies in the iPhone are not the technologies that make it unique or advanced or special. Multi-touch, Accelerometer, Proximity Sensor, OS X, and the holistic software approach are the technologies that created the perceived value of the iPhone.

The biggest whiners have been those that attack the early adopters. And they keep parroting the word "whiners" because they're unclever, have nothing of value to add, and can only participate in the classic "beat-up-the-kid-that's-already-getting-beat-up" syndrome.

I have to wonder how Mr. Cringley actually knows all this. Surely, he's not talking out of his ass. Nahhh. Couldn't be.

I bought the iPhone on the first day .I waited in line, It dosent bother me at all about the price dropping. I got so much enjoyment showing it off where ever I wanted to ,Im 58 years old ,Im not nornmaly a showoff its been alot of fun!

I'm trying to figure out this line: "He has finally placed millions of people in the role of every key Apple employee — being alternately seduced and tormented."

I don't recall ever being tormented by Apple. Seduced maybe, but not tormented—unless I've blocked that from my memory b/c it was so horrible, lol.

"I happily paid the $600, and felt not the slightest pang of regret at the $200 drop"

This is the brilliant part of jobs plan. Having been in tech for 30 years he knew this was early for a price drop. He also knew it was a bigger drop than most would expect at first. What he didn't know was what the reaction would be exactly. SJ figured some would be as the above comment showed --- still pleased and accepting that is the way it goes. He knew others would be pissed off. The only thing he could not really know is the percentage of each --- he may have indeed misjudged the reaction but he had a fallback --- the store credit plan. He had probably sketched out some terms but it may be true that the details were not worked out yet.

"I find it amusing that all the early adopters are bitching like a bunch of whiney childre..."

HERE'S REALITY: In a reputable survery, the iPhone showed the highest customer satisfaction of any smartphone by a wide margin at the original prices. I'm an early adopter who has been very happy with my purchase, and probably like almost all early adopters am pretty stoked I'm getting $100 to the Apple store. I was happy before, and now I'm even happier.

This Cringely guy is a real tool. This is such an obvious hit piece. He probably makes peanuts doing what he does, and is damn jealous of SJ.

People are always going to be on the verge of a price drop. If he waited 6 months to drop it, there are going to be people that bought it one or two months before that and are going to feel "raped", "ripped off", and, "they want 'their' money back!"

Or when a new model is released just after people bought the previous one, people will be complaining about "obsolesence".

In my opinion, R.X.C is often wrong but usually entertaining:
1) Because he writes well - nice crisp conversational style.
2) Because he is imaginative and doesn't allow his speculating (90% of his articles) to be fettered by facts.
The result is his articles are often fun to read because they don't just reiterate what everyone else is saying, though they're often ridiculous (this one may be less so than most). Problems arise when people mistake his speculations for fact-informed opinion, which, unfortunately, happens often. I think that's what drives Mac lovers crazy. But if you can accept him for what he is, a wild speculator who often has original opinions, he can be fun to read.

Sorry but I think that Cringely is still sore that Jobs stood him up years ago. Apple does what it does because the world works that way. Its not an evil plan to dominate the world (unlike Microsoft who really likes the word "dominate")

Remember that market forces affect Apple like everyone else. You plan for sales. That does not make them bad. The only bad "sale" is a going out of business sale. Everything else is gravy.

en

magic word : "three"

Robert X. Cringely is not like you or me. Don't put us in the same basket as him.

My thoughts are that the price was made high more to keep demand down and less to get some kind of free publicity out of it. Apple and more importantly, ATT couldn't have done enough pre-release testing to ensure that the system wouldn't crash that once a couple hundred thousand were let loose into the wild. A $299 price for the 4gig model could of brought a 10-fold more buyers/users into the system bring with them greater risk of the system crashing.

To me, it seems that Apple had a problem when it announced the iPod Touch. This is basically an 8 GB iPhone without phone capability for $299. If you wanted to add the phone connectivity, then the jump was to a $599 device. So, you would be paying $300 just for the phone. That's pretty expensive in today's marketplace, where they give cell phones away for free.
The iPhone price had to come back in line so that the differential is now only $100. Someone at Apple had to have figured this out well before Wednesday's announcement. That smells like Apple knew what they were doing all along and, just maybe, Cringely has hit the nail on the head.

Cringley, as usual, is full of it. I'm w/G Spank--I was satisfied with my purchase before, and now I'm even more satisfied. Everyone who bought an iPhone at the higher price (including myself) did so willingly. And we all expected the price to eventually drop or new models to come out with better features at the same price. But this happened faster than expected, so SJ threw a bone to all the whiners. Still, glad to get the Apple $100 credit!!!

IMO-
I don't think this was planned originally.
I think Steve saw how well the iPhone is really doing.
Who knows - we might find out later that Apple has already sold 1 million units.

I think Steve sees that the product is doing well and he wants to OWN the market.
He wants to strike when the iron is still hot and he wants to blow the expectations out of the water.
Plus the more units he has out there the less chance for anyone who launches a me-too product to get in.

So what does he do, he figures that he will lower the prices to make it nearly impossible for someone new to come into the market and at the same time sell more units. Who knows he may announce he has sold 2 million by the end of September.
Remember during the end of June quarterly report they said they would have a small hit in margin - this might have been the reason.

Oh and by the way, I personnal feel that if Apple had announced
the price drop and intro'd a new model I wouldn't have feel so bad.
It was just the 33% reduction and not a new item to replace the original price-point.

" . . . where they give cell phones away for free."

And you always get what you pay for too.

Ballmer can never get past the chapter on "Torment."

I think he's giving Steve Jobs way too much credit here. He's not God (or Satan, which is more like what he's saying), for crying out loud. It's possible the $100 credit was a planned contingency depending on reaction, and a price drop was certainly in the cards. But to imagine that he orchestrated the whole thing from the get go in order to yank people around in this way seems a bit... paranoid.

Apple is sort of like SONY but perhaps smarter.

SONY was willng to CUT the PRICE of the Playstation3 down in order to gain market growth. They did this knowing the Blue Ray HD DVD was inside yet, THAT DEVICE ALONE costs more then the intial price of the PS3.

APPLE was willing to cut prices... after they meet a goal in numbers sold.

IF it is all about profits... and Steve's ego... why would he offer a 100 rebate. Which cuts PROFITS on inital sales.

I believe Apple has SURPASSED expectations on sales... and this is why they CAN offer the money back. AND that REVISIONS and DEVELOPMENT on the intial iPhone have been done for improving supply and demand for manufacturing the iPhone.

I saw Apple drop prices similar when Steve wasn't at the helm.

...is classic Steve Jobs -- hahahah
LIKE - like you know him personally - eh Robert X. Cringely...
LOL

Cringely stop walking the shadows of others.

I really do not understand the spin that iPhone owners are putting on the price drop. Apple cuts the price (as they were bound to do sooner or later) so that many more people can afford to buy this amazing device, and current owners see it as Apple "punishing" them? That's psychotic!

Advice to iPhone owners who feel "betrayed": Next time, spend the money on a good therapist instead!

I can only imagine that all those early adopters complaining about the iPhone price drop have never, in their entire lives, bought a new car.

Yeah, I know it's not the same thing.

Without even driving it off the lot, a car immediately declines in value.

If you bought an iPhone (for sensible reasons, presumably), its value is still the same today as the day it was bought. By buying one at the original price point, you showed the world that cost was not a major (if any) consideration.

So what changed?

Nothing.


Now, if only Apple would pay as much attention to all those complaining about the lack of a midrange (mini-tower) Mac.

One only has to look to the dead silence concerning any other phone that initially commanded a high price then debuted as "free" with a service plan. No howls of protest there. No threats of lawsuits. People simply didn't care.

Apple produces products no one else does, and people will pay the prices they command. And if their ability to mass produce these technologies in short order allows them to drop the price significantly in order to broaden the appeal, then they will do that.

Does it suck? Yes. There are lots of reason to complain about being in a market economy.

buffalo hit the nail on the head. The initial $599 and $499 price points were to control demand. Given what we know happened, $399 and $299 price points would have occasioned utter chaos, and made wait times too long for people to get the phone. It is far better to do it this way and be prepared for the holiday onslaught.

The most important element of the iPOD touch is that it prepares the world for VoIP. That is the future and all you need to do is add a speaker to the the touch and ATT and all other carriers are obsolete.

I've been reading Cringely for years and he never fails to say something outrageous or insightful. Not sure what the hostility is for, he has been a tech writer since most of you haters were still pooping your pampers. He knows everyone in Silicon Valley and is always miles ahead of the usual cast of idiots you might read about on MDN. Only the brilliant Daniel Eran Dilger can cut through the bullshit better than the Cringe. He most certainly does NOT hate Apple.