“The Cupertino, Calif., company said it would cut the price of the 8-gigabyte iPhone to $399 from $599 – an acknowledgment that the company overreached when it launched the phone just over two months ago. Investors sent the company’s shares down 5% on the news,” Cheng and Charny report. “‘Consumers had been priced out of the iPhone,’ said Trip Chowdhry, an analyst at Global Equities Research. ‘At the old price levels, they couldn’t hit their targets.'”
MacDailyNews Take: Apple is on track to hit their publicly-stated target of 1 million units sold by September’s end. The question is whether Apple is being very aggressive to get even more sales or were they not meeting unstated, internal goals? One thing’s for sure: Apple going to sell a ton of iPhones.
“‘We’re going to get even more aggressive,’ Jobs said during a company event on Wednesday in San Francisco. ‘We’re going to get even more aggressive. The customer satisfaction is off the charts,'” Cheng and Charny report.
“Questions about its high price have dogged the iPhone since its launch. While sales have been strong – the company said it is on track to sell 1 million units by the end of the month – the potential market was limited,” Cheng and Charny report. “‘You have to speculate that even though Steve said it would sell 1 million units at the end of the month, it’s not as fast as he would like,’ said Van Baker, an analyst at research firm Gartner Inc. ‘I’m not surprised by the price cut, but I’m surprised by the magnitude.'”
“Wall Street was concerned that Apple was going too far in sacrificing margins for the sake of sales. Shares closed down 5.1% at $ 136.76, not far above the day’s lows,” Cheng and Charny report. “Baker said it will be interesting to see how the other handset makers react to the price change. The move might not win Apple any fans among existing iPhone users.”
More in the full article here.
I feel really dumb…but i guess Engadget said it best
$200 was not a bad price to pay for 2 months of smug!
But seriously though, the iPod touch is really dumb. What they should have done was just sell iPhones unbricked. That way people could quit complaining, have the same device, and eventually realize, wow, this thing would be great for a phone, and decide to activate it with At&t;to unlock all the phone features.
“CEO Steve Jobs said the company is on its way to selling 1 million iPhones in the United States by the end of September.”
Whatever happened to the goal of 1% marketshare/10 million phones? Is Apple “on track” to acheive this goal in a decade? No. Apple has dropped the price because they are not selling fast enough. The iPhone is a great advance but still falls short of what most want so they’re not buying.
I think Steve is just being aggressive, as always. And it’s going to work, too.
Not a misstep at all. Historically, Apple will lower the price on the premium version of a product right before they introduce an enhanced-feature set version at the old price point.
Look for iPhone 16GB (or something similar) real soon at the $599 price point.
Dude, that’s 1% market share by the end of NEXT fiscal year!
Maybe they overestimated but I think it has more to do with the upgrades that are on the way. Obviously there’s going to be a 16GB model soon. They can easily get another $100 for that. And they might be able to get another $100 for a 16GB 3G European spec. That puts them right back at the $600 for the flagship model but makes the entry level a little more palatable for the masses. Seems like smart marketing to me, nothing more.
With the volume expected with the iPod, Apple received deep discounts on the Flash memory costs as well as Touch components. These savings were passed onto iPhone buyers.
Apple is a company with a cult following, which advocates and even supports its products. Today they made a major move to kill the cult. Not a good strategy. Today they created 1,000,000 unhappy customers. Some will keep their mouths shut instead of advocating Apple so they won’t lose their friends. Others won’t talk about Apple because they’ve been made laughingstocks.
Cutting the price won’t move merchandise as quickly as it would if they hadn’t severely damaged their greatest assets: their customers’ goodwill.
Hey,
I paid for a week of smug. I’m okay with that. Prices go up and down. If you thought it was too much, you should have kept your money in your pocket. If $599 was okay with you then, it should be okay with you now. If it wasn’t, you shouldn’t have paid it.
It isn’t a new phenomenon to overpay for new tech. If you want to be on the bleeding edge you have to pay for the privilege. Sometimes a lot, sometimes a little. If you think $200 is a lot, you shouldn’t have bought an iPhone.
I’ll admit it stings a little, but all the oohs and aahs I got from my geek friends for the last week were easily worth $200.
on 1% market share I second Freddy the Pig.
There gonna be 16GB model at the premium price point soon. Not only that adding ring tones will be an extra money for apple.
less entry price = More iphone users = more ring tones = more revenue for apple
Great marketing strategy
“on 1% market share I second Freddy the Pig.”
So, 1 million in 2 months adds up to 10 million in a year? Interesting math.
To Rip Ragged,
I talked to two Apple employees today, one on the phone and the other by chat. After discussion, they both agreed with me, and they both promised to pass my suggested remedy to the corporate offices. One was even VERY enthusiastic about it.
To anyone who wants to whine instead of being smug – I’ve got a big ol’ hunk of cheese just waiting for ya…
Never underestimate the ability of some to take really good news and give it bad spin. This decrease in price more than offsets the penalty Verizon will charge me to switch to AT&T;. Steve just took away my remaining reason for not getting an iPhone!
Finally, I don’t feel so bad being in Canada and cursing Apple for not making the iPhone available to us, rather, Rogers for not having a data package to match it.
All the nay-sayers, like Balmer, tried to cut down the iPhone cuz of the price point… the only thing they could say was a downside about it. WELL F*%$ BALLMER NOW!
It’s an aggressive move: the money is in the Plan – not the device. (If you bought an iPhone 14 days ago you can get the difference refunded. )
There are still holes in the product line: an iPhone without internet (don’t count on it), and a large-storage capacity for the iPhone and the iPhone touch (inevitable).
How do you think those RAZR owners who paid $600 when they first came out feel? The price on the RAZR dropped almost as fast.
Nothing new to report here. It’s called the consumer electronics business. Anything you purchase will be outdated/cheaper the day after your purchase it.
I just think of that $200 as extra cash for Apple’s R&D;to create even better products in the future. Would you rather be stuck using a zune or windows mobile phone?
@Ken
Very nicely put.
Today Apple did kill my goodwill as a customer.
I won’t be waiting in line for launch day of an Apple product anymore, and I certainly don’t think that I’m alone.
If you account for the fact that it’s about to be released in Europe and Asia within the next year – then yes… I’d say the 10 mil is totally reasonable.
I feel for all you folks that feel ripped off, but on the flip side – I’m ecstatic… because I’m gettin’ me one of those babies this weekend!
well, i gotta say, the drop was shocking, but when I saw the 4gb iPhone was out for $299? I ran out and bought it.
but honestly, i have never seen Apple betray the early adopters so quickly and so mercilessly.
See what happens? Everyone complains when Apple prices to high. Now they complain when they lower prices! How can lowering the prices be a bad thing people? This is great!!!!! More people can afford the iPod and the iPhone now with even more features. This is totally absurd to be complaining about the lower prices especially knowing that all the features and more are still there.
I’m just amazed how anyone could complain!
@ Brau
“So, 1 million in 2 months adds up to 10 million in a year? Interesting math.”
Momentum, holiday buying, international sales, snowball effect… take your pick… it will happen. Look how iPod sales increased as time went by.
My take… I paid $600 day one and although it stings a bit, it doesn’t bother me all that much. Of course, I more than made that amount by purchasing stock just before the January announcement. As well, I think some others have provided some good insight here…
– 16gb/3g in next 6 months (Macworld or Europe rollout)
– Makes sense with iPod Touch intro
– The foot is in the door… let’s go for the leg
If you’re a bummed early adopter… buy some stock before it starts heading back up… it will and you’ll get your $200 back plus some.
It may be that Apple had no choice. As I understand things, this agressive price move is a twist of the knife, as it were. Other smartphones will now have to move even further down the price point ladder to stay alive past Christmas shopping season. Also, whatever the number of unhappy customers may be, it is fewer than if they had waited longer. Furthermore, the product line could do with a little less hype. Sometimes, less is more. Finally, most of the early adopters are loyal customers and will not buy products other than Apple products, especially in this case, since they have a multi-year contract.
I think this price drop was planned all along.
Today Apple did kill my goodwill as a customer.
I won’t be waiting in line for launch day of an Apple product anymore, and I certainly don’t think that I’m alone. —MikeK
Aw, quit yer bellyachin’! Rip Ragged got it exactly right. Anyone who buys new technology expecting to get a “good deal” is seriously out of touch with reality. Instead of moaning like a spoiled child, you should be grateful that you could afford to be the first kid on your block to bring home this amazing new gadget that just might change the world in its own small way.
I bought an iPhone the first day and I have no buyer’s remorse about the new lower price. But, a lot of people are pissed, including some of my family members with iPhones. Apple really needs to do something to quell the disgruntled or many people will hesitate to buy Apple’s next great product for the first 9 weeks after it is released.
My general reaction to the big price cut after only 9 weeks can best be expresses with a simple: WTF? Apple never does this kind thing, especially when the thing is selling like hotcakes. But then again, I bought the first Mac in 1984, within days of its release. The price was so high, however, that not enough other people bought the first Macs. Instead, they bought cheaper IBM-PCs with DOS. Apple let the market get away when their product was so new and innovative that the market was theirs for the taking. I suspect Jobs is not going to repeat that mistake. He knows he has a white hot product and he wants to absolutely crush the competition before they even have a chance to offer alternatives. It is a great strategy by Apple, but they shouldn’t leave their early adopters feeling screwed in the process.
If you are upset, write to Apple and express your feelings (http://www.apple.com/feedback/). Maybe they will make amends so people don’t think they are dealing with Microsoft.
I believe that the sails are faster than Steve expected. NOT slower.
As I said in response to Steve Jack:
If I had a product that took me years to make, lots of money spent in development, and it was an absolutely new thing that would be impossible to predict how good it would sell…
I would want to have a bigger margin at the outset.
I think the iPhones that were built in June sold out too soon. That couldn’t be more reassuring. Now, the material prices for the same technology must have gone down a little. And there are new iPods that steal some of the thunder from the iPhone.
It makes perfect sense from a business perspective to slash the price to a less “anxious” price point that can compete with Apple’s own iPod touch.
Add to this that the iPod touch will be sold internationally months before the iPhone can become available. It will also sell to those who are locked in with non-AT&T;carriers and with those that have a tighter budget in the US. This is essentially going to be publicity for the iPhone. People are more likely to call it “phone-less iPhone” than “iPod touch”.
Anticipation for the iPhone internationally, and immediate acceptance once it is released can only get better this way.
Then comes the technical issue of 3G and battery life, which would mean that the next batch of iPhone, especially those sold internationally, will have more expensive components.
So I would expect an 8G and a 16G iPhone with 3G capability to be released by the end of the year. The price points would have to be below the $600 mark. So if the “more-expensive-to-make” 8G model stays at $399, and the 16G goes for $599, it would be extremely reasonable pricing.
All this while maintaining at least 25% margins. This is how it should be in my opinion.
I would clearly feel the punch if it was me buying the iPhone yesterday. But if I was selling it, I think I would do exactly what SJ did if sales were so good upon rolling out a new product.
So is the 4GB iPhone EOL’d?
to ripped rag and others.
if it’s been less than 14 days you can get your money back or store credit. it’s been part of apple policy for years.
but honestly, i have never seen Apple betray the early adopters so quickly and so mercilessly.
Anyone else here remember the Mac IIvx? A bigger shafting than this iPhone price change.
@Brau
“So, 1 million in 2 months adds up to 10 million in a year? Interesting math”
What the hell are you talking about? The 10 million dollar mark was expected to be reached by the end of 2008. Go back and watch the Keynote.
Apple should reimburse everyone who paid the premium, overinflated price! Huge miscue by Apple who is certain to disenfranchise hundreds of thousands by this move. I, for one, am ticked at paying the extra $200. Had I known, I would have waited to buy. This was unforseeable. I hope Apple is chastized thoroughly in the press for this. It’s unforgivable!
I’m so glad I bought my 8gb less than 10 days ago.. PRICE MATCH GUARANTEE! I’ll be receiving my $200 credit in the Apple Store tomorrow afternoon!
@ qka,
Hold your tongue mate, everyone knows that it isn’t a shafting if it comes from Apple. Apple doesn’t do anything wrong…ever.
Don’t cry. $599 seemed like a lot… but you PAID it, right?
You whined about the supposedly high price… but you PAID it, right?
Now the price drops 30% and you’re whining about that, too! Give me a fucking break! EVERY tech item you buy either drops in price, is obsolete or both the second you open the box.
THIS move is ALL about market share!
MORE people buy iPhones and get a BIG taste of the Macintosh experience. They tell their friends… MORE iPhones, MORE iPods and MORE Macs sold! It’s all a good thing.
Been a iPhone owner for 19 days.
… and stopped recommending Apple to anyone today.
That’s just how abusing customers works.
Belly-achin’? Well… maybe.
Lost sales for Apple? DEFINITELY.
All my Apple purchases are on cancelled. Won’t be recommending Apple for a while.
The real reason Apple does this sort of sh*t is its customers are pacifists. Sell ’em something shiny and you can screw them over, control them, steal from them.
When Aperture dropped $200, Apple offered a $200 coupon good in the Apple store (online and physical). Maybe that’s what will happen here.
The real question is…was the iPhone over priced to begin with? Most in the press said yes.
Many on here said it wasn’t expensive enough for what you get. Apparently Steve didn’t agree with you.
A 33% drop in just nine weeks for an entirely new product that we’re told is selling phenomenally is unusual. How long did it take for the iPod or any other Apple product to get a price reduction?
Normally, Apple just gives you a better second or third gen for the same amount.
MPC Guy,
It’s called controlling the whole widget…LOL!!!!
But this is exactly why corporations don’t single source anything unless they absolutely have no choice.
Bought my 4gb iPhone about 7 days after it launched.
Absolutely love it! I have been exceedingly happy with it. Everyone I meet oogles it…they all ask to touch it and ooh and ahh. So my smug quota is met.
I’m keeping a positive attitude. Now I have a collector’s item in my pocket.
I gotta admit, I was surprised by the price drop.
I have to admit, I’ve been curious about how well the iPhone has been selling after it’s initial outstanding weekend. From the sounds of it, it hasn’t been selling all that well if Apple had to drop the price. Especially when you figure that, with the price drop, Apple considers themselves to be “On Target” to hit 1,000,000 phones sold by the end of September.
For $599, it was too pricey (at least until they had an SDK). At $399, I’m far more tempted to buy one and wait until Apple has an SDK.
I think Apple smells blood in the phone arena. And they made an excellent move. Get their iPhones in hands of people before any competition comes. All these knock offs from Nokia, and others, won’t be here for a while. Apple has a good couple of months to really get people to buy them.
For the price cuts, eh, it’s technology. I don’t regret buying my 8 gig iPhone at all. I just wish I could get rid of my Treo 650……..
The guy I feel sorry for is my friend who has been drooling over an iPhone, but couldn’t justify the price. He just bought a Blackberry and was still having problems getting it to sync with his Mac. Hopefully he can return it and get the iPhone instead.
I’m disappointed that I spend an extra $200 for my iPhone. I had debated about waiting until around Christmas for it, but decided to get one instead. New technology drops in price quickly, but this was surprising.
@MPC Guy
I think we’ve talked before, so I know you’re not stupid.
But I’m sure Apple won’t worry about missing you with the 10 people this price drop will ADD to their sales.
It’s capitalism.
Good will is terrific, but it doesn’t mean squat to the shareholders.
MDN: “…Apple going to sell a ton of iPhones..”
1 ton = 1000kg; iPhone weight = 135g => 7408 iPhones
Apple needs to sell more than a ton of i phones to meet their goals.
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For goodnes sakes, I don’t know what they were smoking when they thought to sell 10 mio. iphones in less than a year for 500+ bucks a pop.
maybe I remember the Keynote an MWSF incorrectly, but I believe that I heard the claim of 10 million unit sales by the END OF 2008. This would make the period 18 months to sell 10 million phones, or somewhat more than half a million a month. Apple is looking like they’ll make 350,000 or so a month so they might be coming in just a little short, hence a kick in the backside for sales.
Besides, one model of iPhone can’t stand by itself. It’s gotta have upgrades, it needs CDMA to work in Japan, it’ll eventually need 3G, especially in places where 3G is well deployed. There’s gotta be slots to slip in more capable phones at higher prices. It looks like Apple is heading toward making the CURRENT iPhone the low end model instead of making a stripped down “iPhone nano”
Last time there was a price drop on one section of a product line was when Apple dropped the 5G iPod price by $50 (if I remember correctly) days before the Zune was released, causing MS and Toshiba massive headaches and zero profitability. Maybe Apple knows of a new Zune/Nokia/Sony, etc phone due for imminent launch.
I want my iPhone too so that I can star whining!
Damn it!
Apple is gaining volume production and is interested in axing the use of hacking. If you lower the price you nix it and get the profit from the monthly fee. It is cheaper than throwing patches and other updates.
Plus all the other phones coming out will have to face increased pressure at millions of units flood the market. That will put a bullet in the Zune, since it must further cut profit and make more lose in MS bottom line. May force them out of the mainstream even further.
Smart move if you ask me and I feel no such ill feelings from the price cut. I purchased the first day and will keep this phone as a moment when the phone industry changed!
It’s obvious. The price drop is designed to make potential buyers of the iPodtouch to think about upgrading to the iPhone. iPod prices were set way before the iPhone. The iPodtouch has to be priced higher than the iPod video but not so high as to make the additional Wifi capabilities and touch interface seem too expensive. The price difference of $100 to add phone capability is perfectly reasonable.
If anything, this new pricing should make us wonder about how much $$ AAPL makes off of the ATT contracts. I bet the iPodtouch has low margins, but the added revenue of people switching to a high margin iPhone for just $100 will make it a wash.
There’s a very critical point all the whiners and moaners and complainers are missing about the dramatic price drop:
NEW FEATURES FOR IPHONE.
Your iPhone’s new features are paid for by a larger pool of subscribers. If you want your iPhone to never see new features, Apple needs fresh customers, lots and lots of them.
This was the only way to make it happen.
To those who feel ripped off. The difference is not exactly a small mortgage is it? After all. You have been the first people to enjoy a little piece of history for two months before anyone else in the USA and 4 months before Britain and gawd knows how long before the rest of the planet. You bought your iPhones right off the bat while they were still toasty warm and cooling nicely. Maybe they will be worth more up to certain serial numbers in many years to come like first edition books!!! You got yours along with the rich and famous. Don’t people pay a wedge more cash to go to a movie premiere?
I think the Dow Jones are pretty dumb dropping Apple’s share price because of this. America isn’t the whole world, but it has been a privileged test bed for the rest of the world with the iPhone. This baby is going to be better VFM on a global scale now and as long as Apple are sensible and still maintain a good margin (and you can bet it’s cheaper because of potential volume discounts on components rather than not hitting goals as Dow Jones put it) then Apple are set to make a killing in the entire mobile phone world market.
Apple often cut their prices when a new model or related product is coming out and the iPod touch is basically the iPhone sans-phone so it was inevitable that once popularity and a chunk of the initial development costs were gleaned back that the iPhone would go down in price.
Yes $200 for two months of gloating is a fair price to pay as engadget put it.
We, over in Britain, have had to wait and are still waiting for another couple of months for the iPhone and many here would pay the full original price to get one. Those complaining are like spoiled brats. Deal with it. You’ve had a 4 month privilidge over the rest of the world which is $50 a month or £25 a month. It’s peanuts!!!
And to the guy who said Apple should have just sold the iPhone unconnected and then connected it when people decided it was worth it. Dude. Engage brain before pressing submit will ya!!! I can see the reaction right now:
30% – 50% would just use a dodgy app to unlock the phone and ram their old sim card in it. The other 50% would say, that’s “bollocks pal, I’ didn’t want phone technology in my iPod and I’ll be buggered if I am paying an extra wedge of cash for those bits.” (insert your own expletives and regional dialectic terms into the last fictional quote).
The iPod touch is great. I want one, but if I get one my kids will nick it off me in a flash!
A rather envious British Mac Head who really can’t wait for his iPhone (and it had better be on O2).
So at $599 it was too expensive, but at $399 it’s too cheap. You can’t make everyone happy, I suppose…
Look. You know that Apple will still have 25% or better margin on the iPhone at $399. Plus the extra ongoing revenue from AT&T;depends on the number of iPhones sold. So any business decision that gets more iPhones into people’s hands is a good one.
The only people who have a real reason to be unhappy are Apple’s competitors, and the wireless carriers who are not AT&T;. The iPhone at $599 was dangerous. The iPhone at $399 is an unfolding disaster that will continuously undermine them for years to come. They had no answer at $599. What can they do now…?
I don’t think RIM or Palm have any worries about the iPhone price drop. As far as their key market is concerned, its well protected. Simply because the iPhone lacks access to Exchange or Corporate mail/calendering systems. No worries for them at all. Now if Apple announced ActiveSync capabilities, and other SmartPhone standard features, at 399…. those guys will be squashed like tiny little bugs.
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British Mac Head,
You cheap bastard, buy one for the kids too. Social Service will say that is cruel and may remove your children otherwise.
Hurry and apply for council residence so you can afford more Apple kit…LOL!!!
COYS!!
I’m really surprised at the posts here which are questioning the chance Apple had of selling 10 million by the end of 2008 at the old price.
Before the end of this year, the iPhone will be on sale in Europe, which has a population much greater than that of the U.S.
From the beginning of next year, the iPhone will be on sale in Asia, which has a population many times that of Europe and the U.S. combined.
Most market research organizations predicted sales of between 15 and 20 million by the end of 2008 and that was AT THE OLD PRICE.
Wake up! Some of you doubters are projecting U.S. sales on world sales!
I just bought four (4) iPhones about 3 weeks ago at an Apple store. That cost me $800.00 more than it would have today. I am very disappointed and disillusioned. A rebate of the difference, even for store credit is certainly in order. $800.00 is a huge amount of money for me.
Blah blah blah…
Apple does this every time, cut the price of something new after a short while. The stock was tanking before the announcement already as it always does.
A bunch of people talking that have no clue.
“Simply because the iPhone lacks access to Exchange or Corporate mail/calendering systems. No worries for them at all.”
Oh boy… They should be very very very afraid. Leopard server is coming within few months and it kicks Exchange server to places where it really hearts. iPhone and Leopard server will make a so powerful combination.
They should be scared like crazy. They should really hope and beg that Micro$oft buys them out. That is the only rescue.
Otherwise there is NO MERCY and I love it!
Here comes another lawsuit…….
Add this to all the guessing: Sales volumes are higher than forecast, not lower as most automatically assumed. We can afford to sacrifice some margin because we’re selling so many more iPhones than we predicted. And the lower price simply accelerates that trend.
I bought mine on June 29th. No regrets, no angst, my goodwill isn’t damaged.
The phone market is cutthroat, here today gone tomorrow, fashion business. What is hot today is dead in six months.
From my visits to the Apple store recently I saw lots of lookers at the iPhone, but not one buyer. (Me included.)
The price drop will make me reconsider…
I think the Nano is the biggest mistake.
Half-sized iPod classic with 1/20th the space? Why buy it? The slim size was the reason to buy it – the new stubby, fat shape makes little sense to the person on the go who does not need the screen.
The people who paid $600 thought the phone was worth $600.. in fact, many came on this site and argued that the price was a steal for such wondrous technology.
If you thought it was worth $600, then you paid $600. And if you didn’t think it was worth $600 you SHOULDN’T HAVE BOUGHT IT. It’s that simple. We really have become a society of entitlement. This whining and boohooing is just over the top.
Of COURSE Apple had to lower the price. They just introduced an iPod touch for $399 with 16GB. A PHONE is worth $200 more with less GB? Yeah, didn’t think so. The pricing fits into the iPod line now. For $399 I can have an iPod touch, or an iPhone, depending on my needs.
Still, the bottom line is this: IF YOU DIDN’T THINK IPHONE WAS WORTH $600, YOU SHOULDN’T HAVE BOUGHT ONE!!!!!!!
to roughly quote ChrissyOne from six months ago:
The massive shareholder selloff dropped AAPL to values not seen since… late last week.
Come on folks. This is ridiculous.
Rip Ragged, you’re so right.
If the price was good when one bought the phone, and was a fair price for the last two months, why is the former price now no good?
First, there are posts all over MDN’s comments sections that “the iPhone price is too high”, they’ll “never sell enough iPhones at that price”, “Apple is just greedy”, “I’m waiting for the price to drop before I buy an iPhone”, etc., etc., etc..
Now, we read here that people are upset, rending garments and spinning in circles, telling friends and family to avoid Apple products, and writing anti-Apple graffitti on bathroom walls, because Apple dropped the price of the iPhone.
I hope Apple ignores these illogical whiners.
I suspect that Steve Jobs already knows that the way to succeed is to NOT try to please EVERYONE.
This is a normal thing, prices are always dropped.
When I bought my 20″ iMac, it was 2 weeks before they introduced 24″ and lowered price on 20″. Well, that’s life. In today’s fast paced world of computers, you have to live with it.
Another thing, I got $200 credit after they lowered price of Aperture and guess what, it was a reason why I decided to buy that iMac, so in a way lowering price and giving credit to recent purchasers is good way to get even more business.
Steve Jobs/Apple are crazy like foxes.
You have HOW many guys sitting on the doorstep, ready to release unlock software?
Let’s drop the price, so any consumer that was on the fence over price will act. Granted, it’s still with AT&T;service, but if, by dropping the price, AT&T;will remain happy, then it’s smooth sailing for Apple. Their partner is happy, their sales are increasing per unit even if the cost per unit is going down.
Just sounds like smart marketing to me.
Many, many MANY, early adopters have warned you to wait for iPhone Rev 2
Did you listen? No. So don’t bitch now.
iPhone 2 will have more hardware features, more RAM and other tweaks as Apple responds to the market. Then it will stay like this for a good 2-4 years with little change until it grows tired and a radically new design is implemented.
iPod 1 sucked really bad.
Apple lowering the price so much on iPhone 1 also is telling us they perhaps are not doing so well in this market.
For christsake you can get phones for nearly free, the market for phones is saturated and contracts are tying people down.
Most just want a slim, cheap, low cost per month, no frills phone.
The feature rich iPhone’s biggest problem is it’s LOW MEMORY.
People HATE synching to a computer.
The iTMS on iPod and iPhone was a SMART MOVE. Remove the computer and sell the phone/iPod touch to more people, WHO HATE COMPUTERS.
Early adopters need to quit bitching. If you’re dumb enough to overpay for 1st generation hardware, you pretty much should expect this sort of thing.
Waaaahhhhhhhh!!!
The iPhone’s no longer obscenely expensive so I don’t get to feel like I’m in some sort of exclusive club!!
Wahhhhhhhhhh!!!!
I definetly feel shafted, I’ve been a big fan of Mac for a while now, and have been an advocate and actually moved people to the Mac platform, but I’ll never jump again for new technology from Apple. I don’t like feeling really really screwed, that’s why I left Microsoft in the dust.
I bought an iPod Photo when they first came out. I think the price was $599. Within just a few months later they came way down. Wasn’t that to $399 as well?
Is the a rare misstep or a tried and true formula?
The move might not win Apple any fans among existing iPhone users.
The overwhelming majority of “existing iPhone users” are already fans, so this statement rings pretty hollow.
It seems that the analysts who complained about the high price and now complaining about the low price of the iPhone. Which means the analysts are not to be trusted. Up is Down, Down is Up; they are in the society of the flat earth. Surely Apple needs to have more storage in the iPhone, and the 16 gig chips are on the way, and the 4 and 8 gig chips are inadequate. So despite a higher price, when it becomes available, the 16 will outsell the 8. Did anybody comment that the price of some of the ipods also dropped because they were not selling? If you look at the whole pod & phone product line, the price points are a good fit. Apple stock will go up, but what will happen to the “smart” phone people? The market will sort this out, and Apple will sell iPhones and build its market share very quickly at the reduced price, while still making an excellent margin. But the big point is the pod line is ready for the Christmas season. Holidays come in the summer for most people, here in northern bear country.
Sign this!
http://www.ipetitions.com/petition/appleiphuckedme/index.html
The real mistake Apple made was in pricing iPhone so high. Some bean counter and some markting person thought they could charge a premium for this cool new technology. Well, they could and they did.
But the problem was that the initial pricing was too high for most consumers.
This price reduction corrects that mistake, opening the door for far more consumers to consider purchasing the device.
It also reduces or eliminates a sales objection to the enterprise market. (Yes, I know. Reducing the price is necessary, but not sufficient, to cater to the enterprise crowd.)
But by far the most important and strategic reason Apple reduced iPhone prices – and introduced the iPod touch – is that Apple wants to replicate its success with music in video.
The reason iTunes is so successful at selling music is because the iPod is the de facto standard for portable music players. This gives Apple a large amount of leverage when it negotiates with the record labels and other music industry players.
However, Apple has very little leverage with video and media content companies (except perhaps Disney, where Steve Jobs is a director).
The reason NBC and others can walk away from iTunes (and woo Amazon instead), is because they can afford to. Apple is simply not dominant in the (previously non-existent) portable video player market.
So by reducing prices and introducing the iPod touch, Apple at a stroke increases vastly the potential installed base of Apple-badged portable video-capable platforms.
Now do you see why Apple dropped iPhone prices two months after its introduction? Apple is setting the stage for dominating the portable video player market. And that in turn will ensure that no media or content company will be able to walk out on Apple again.
From here, the risks for Apple is execution, execution, execution. But this is where Apple excels – Apple is its own best competitor, routinely destroying a successful product by deploying an even more attractive and successful product. And the large memory and component purchases ensure Apple can deliver high value product at prices few competitors can match.
Current shareholders long on AAPL should consider this news a strong positive for the medium and long term. Ride out the short term share weakness.
For those considering entering AAPL long, give the market some time to digest yesterday’s announcements. Look to start scaling into a longterm position over the course of September (the markets are routinely weak during September, historically). Or you can wait until October, when new money seasonally comes into the market, plus there will be the catalysts of Apple’s quarterly report on Oct 18th and the release of Leopard.
Has anyone considered that AT&T;might be kicking in more bucks to Apple for the iPhone as about 25% of iPhone customers are new AT&T;customers?
The misstep was not dropping the original price, say, the week or even day before launch. I think component costs came down a great deal between announcement and launch. And since Apple is accounting for the devices on a subscription basis, the extra $200 hasn’t even had a material impact on financials.
The ipod line has always had an inevitable drift to sub $400 prices. Remember the original video ipod started at $599.
I’d feel bad if I’d spent the extra $200. OTOH, Apple’s willingness to cut prices is a big part of the ipods success.
And hey at least you didn’t spent an extra $249 on the Zune!!! Or an extra $200,000 on your house…
my aapl shares took yet another dump following a mac press event.
JAYZUS CRHAAAAAAST!
One more point: When you listen to the complaints and see petition drives, etc, just remember that these are irrelevant.
Why? For two reasons:
1. Because the number of customers pissed off at Apple’s price reductions is, from Apple’s own sales data and projections, limited to less than one million.
2. The pool of potential customers who previously wouldn’t consider the iPhone, but who now will after the price reductions, is much larger than that – perhaps millions more.
So Apple can easily afford to take a one-time hit among early adopters, in exchange for a appealing to a much larger potential customer base. And given the strategic imperatives vis a vis video dominance I discussed above, reducing the iPhone prices now makes a lot a sense.
It’s tough to understand the complaints of “being screwed by the price drop” when it comes to the purchase of an unnecessary luxury item; albeit one that was worth the “cool” factor.
Being screwed is more applicable when you have little-to-no choice in the purchase decision — gasoline, electricity, food, water, housing — that sort of stuff. And even then, you still have options that affect the cost.
I submit that we accepted the initial high price (grudgingly or otherwise) because we wanted the cool item and had decided that the likelyhood that any price reductions would be a while into the future (perhaps after Christmas) and be a nominal amount (perhaps $50). We hoped that the “Generation 1” device didn’t have any fatal flaws. Under those conditions, we decided it was an acceptable price to pay to be an early adopter, to bask in the glow of all we met.
Well, we guessed wrong about the time until the first price drop and the amount of it. Guessing wrong is part and parcel with speculation — we are “screwed” less than the folks that schemed to purchase multiple iPhones when the were first introduced so they could make big profits on eBay. They guessed wrong and paid the price, but at least they had the balls to actually try and make a go of something.
Membership in the exclusive “cool club” just got easier. Be satisfied with being among the first to have a really useful phone and an icon of our age and quit bitching about how “now they’ll let anyone join” and how your status has been diminished.
For all you people bitching about being early adopters and saying things like “Apple never does this kind of thing” you are completely and totally mistaken.
Remember when the iPod photo came out, the 60 gig model??? When it first came out it was $600. Then in 2.5 months it came down to $400 dollars.
Pay attention people. The same with your mortgages!! pay attention to what you are signing.
Bitch, moan, cry… come on you were the first to have it, so there!! haha
“Today they created 1,000,000 unhappy customers.”
no.
i know 4 iPhone users. the strongest reaction was that one said “bummer.”
they all agree it was worth every penny for those 2 months.
so saying every person who bought a phone is going to be mad is clearly BS.
MW: you are using “bad” logic.
With Apple now launching an iPod touch, and the iPod nano, a few things are reaching large economies of scale for Apple – memory and screens.
The touch uses the same screen as the iPhone, and both the touch, iPhone and nano use an 8 GB NAND flash memory fill. The touch and nano will deliver huge buying power to Apple, and thus Apple is very likely to squeeze out healthy margins on the $399 iPhone, even though they have lowered the price $200
“Apple is on track to hit their publicly-stated target of 1 million units sold by September’s end.”
Who’s your source, MDN?
Those people complaining about a LOSS of $200 is complete crap.
The iPhone is the best phone on the market at any price – today you can buy one for $399.
Yuo will only lose $200 if you sold your iPhone today, and what could you replace it with…. only another iPhone comes close.
In fact, it’ll probably be 2 years before anyone else has a phone that comes close to what iPhone can do, so you have to write down your depreciation over the time you intend to have it. Couple that with the price plan you have over 2 years, and the percentage difference in cost of ownership between an ealier adopter iPhone, and one as priced tro day is very little.
Quit whining and be grateful that you could afford the worlds greatest phone, that on release day, everyone was hailing as the best value smartphone on the market (which is now even better value).
This is a GOOD news day
Was anyone paying attention when Jobs announced the iPhone? Anyone at all? He said they intended to cut the price as quickly as they could.
Add the fact that every competitor was selling against the iPhone’s price, and the motivation is clear: give them nothing to sell against. Now the iPhone is cheap compared to most of it’s crappy competition.
And to the whiners who are complaining about having paid more: GROW UP! You wanted to be first on the block, and you knew that if you waited the price would come down.
Some of you are so friggin’ stupid!
The goal of 10 millions is BY THE END OF 2008!!! NOT 2007!!!
And however many iPhones a month they’re selling NOW is irrelevant. They haven’t gone international yet.
Do you understand this?
Sheesh!
One again, Wall Street analysts are looking at short-term profitability rather than long-term strategy. Twits.
A chicken in every pot – an iPhone in every pocket.
Again, using the hockey analogy, Apple skates to where the puck will be, not where it was. I’m not surprised by the cut, or the amount, just how soon.
Is this a rare mis-step, or is Apple just skating hard, fast, and far to where the puck is going?
Consider the average pro rated cost of terminating a cell phone contract early. Let me just pick a number, say $178. Hmm, if I want to get an iPhone 8 gig, thats $600, plus $178 to kill the old contract. NOW with the $400 pricing, I actually save $21 to make the switch, compared to the price on Tuesday.
So where is the puck going? Huge holiday consumer sales of less expensive iPhones? sure. Huge after Christmas sales to enterprise because of integration with existing MS exchange anal apologists (via software firmware updates) , and perhaps new features, integration and services in Leopard server? I sure hope so.
Maybe Apple is just worried because they set the goal of 10 million phones (1% market share) by the end of 2008, and the anal-istas are saying it will be 2.5 – 3 times that much, and are trying to meet/ beat those expectations to protect stock value.
Or is Apple just trying to bury the so called smart phones and create their own catagory by removing the price barrier. After all, in July they outsold every other smart phone handset on the market. Maybe for Oct/Nov/Dec quarter they want to outsell every other smartphone model/ makers’ combined sales?
Whatever is happening, us mere mortals may not see it coming, but I’m glad that Apple has an idea, and is headed in that direction.
“Been a iPhone owner for 19 days…. and stopped recommending Apple to anyone today.
That’s just how abusing customers works.
Belly-achin’? Well… maybe.
Lost sales for Apple? DEFINITELY.””
BREAKING NEWS. Buy your new car in Aug, pay new car price, but it in Sept-Oct, get a huge break. WISE UP. (Plus, people are saying that there is a 14 day grace period ?? )
Its easy to double think what Apple should do. Maybe just sell the company and give the money back to the shareholders???
” width=”19″ height=”19″ alt=”grin” style=”border:0;” /> And maybe not!!!
Like one guy here reminded us. Apple skates to where the puck will be!!! We do not see the international market and multi- product competitors, we just see out side our window. Its a complex world out there. And for all that I have just one thing to say:
S—W—E—-E—T ! ! ! Am I ever going to be buying some Apple products this christmas. BIG TIME.
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My only complaint. Why, oh why, did I not buy Apple stock at 50$ like I had planned. 🙁
en
iPhone needs 32Gig capacity to properly combine a video capable device with a phone. Ipods with more than 32Gig aren’t adding to useful watching on a trip ( battery life 7hrs) its just adding to bulk storage capacity.
$600 with 32Gig – and the same with the touch and you then have a complete winner.
I’ve owned Apple products since the company was founded and have been diehard fan. That is, until now. I am extremely disappointed (actually, I’m angry) at this marketing tactic and feel Apple needs to compensate in some way those of us who trusted them to deliver a quality product (which the iPhone is) and trusted them to stick by their guns on the price for much longer than the three months the phone has been sold. Sure, we’ve been able to use the phone for three months. And sure, one expects price cuts on products. But this price cut comes way too soon. There are many things Apple can do to thank those of us who were early purchasers. One would be to offer $200 worth of coupons for future Apple Store purchases. Another would be to get AT&T;Wireless to provide 10 months of the $20 data service at no charge. Another would be to make the phone even more valuable by adding software that would allow it to reverse-synch to our Macs, effectively turning the iPhone into a modem that will allow us to use the Edge network instead of subscribing to Verizon’s or Comcast’s or AT&T;’s broadband services. In short, Apple needs to do something very special to thank their loyal customers for believing in them and their products. I hope the Apple folks are reading this and other comments and I hope you’ll make sure they do by sending our comments directly to Steve Jobs. You have my permission to do so with my comments. I would love to love Apple again as much as I have for many, many years. Thanks for giving me the opportunity to comment. Tom Engleman.
If Apple had announced a ‘speed bump’ upgrade ie the 4Gig now had 8 and the 8Gig now had 16, nobody would be bitching – that’s just what happens in Apple produce life cycles – it’s because they didn’t announce an equally expensive top model that everyone now feels somehow cheated.
When the iMac went from 80gig HD to 160 Gig – were there protests in the street ? – No.
“Been a iPhone owner for 19 days.
… and stopped recommending Apple to anyone today.
That’s just how abusing customers works.
Lost sales for Apple? DEFINITELY.
All my Apple purchases are on cancelled. Won’t be recommending Apple for a while.
The real reason Apple does this sort of sh*t is its customers are pacifists. Sell ’em something shiny and you can screw them over, control them, steal from them.”
You’re retarded if you really believe any of this.
This is such a funny thread. Dozens of people put forward their outstanding cases for why early adopters should not feel shafted…but early adopters keep adding their same whining posts as if they didn’t read anything prior to posting.
Grow up already, early adopters! Take some responsiblity for you own decisions or go back to Microsoft crap if you think that’s so much better. I waited in line for hours, got the 25th iPhone sold in my state. I still LOVE Apple and will continue telling the world how great Apple is!
A price drop of $200 make me think only one thing….We gonna see pretty soon the second generation of iPhones, probably couples weeks before christmas. Bigger storage and more features….so get ready and start to save money.
I find it amusing that they think the share drop is because of the fear of reduced margins and therefore reduced profits, or that there is some kind of deep analysis required concerning the drop.
Correct me if I am wrong, but Apple’s shares have ALWAYS dropped after product announcements, regardless of the pricing.
It’s profit taking on the share increase that happens with in tandem with the expectations. I would think anyone who watches Apple stock can predict this like clockwork.
so who knows where all of the now discontinued 5th gen 30 gig videos that are still in stock will be sold and for how much? no one is gonna pay $249 for it anymore when you can get a new 80 gig classic for same price. would be perfect to use while i am here in iraq and not have to worry about losing out too much if it breaks from the conditions over here.