Apple Drops iPhone Price, Apologizes

Apple has dropped the price of its 8GB iPhone from $599 to $399, making many people happy but generating “hundreds of emails” from angry early adopters. CEO Steve Jobs explains that, “It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone ‘tent’.” Moreover,

[T]he technology road is bumpy. There is always change and improvement, and there is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever. This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you’ll never buy any technology product because there is always something better and less expensive on the horizon. The good news is that if you buy products from companies that support them well, like Apple tries to do, you will receive years of useful and satisfying service from them even as newer models are introduced.

Still, realizing that people are upset, “we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store.”

The store credit idea is smart business on a number of levels. The idea that Apple somehow “owes” it to people who joined the mad rush to be the first on their block to have an iPhone something, though, is rather silly.

Jobs is right: Those who wait can just about always get the same product cheaper or a better product for the same price. Today’s hot new computer is tomorrow’s loss leader and next week’s obsolete junk. Last year’s $1000 digital camera is this year’s $300 entry level model. And, certainly, Apple customers should know this. A smaller, cheaper iPod with a larger hard drive seems to come out every couple of months.

This also points to the economic irrationality most of us have. Either an iPhone is worth $599 to you or it isn’t. If you were thrilled to have this gadget Tuesday, why should the fact that the price dropped Wednesday make any difference?

via Memeorandum

FILED UNDER: Economics and Business, Science & Technology,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.