Apple's New Offerings and Price Drop Induce Buyer's Remorse

I've got to hand it to Apple (AAPL), cool factor, aside: Apple's product offerings are getting more confusing, not less. Trying to remember which product sold at which price with which memory yesterday and what it sells at today is like trying to keep track of which shell is hiding the pea.

The big change, aside from sharply lower prices for the iPhone, is the the intro of the iPod touch, which is likely to get wide acclaim. However, this is really little more than the iPhone without the phone -- in other words, the best part of the iPhone for a hundred or two hundred dollars less than the iPhone; a few thousand dollars, less, if you include the total cost of the contract required with the phone.

"So," emails one money manager who has long been dubious of the hype surrounding Apple, "who in their right mind would want an iPhone when you can get this? If I was AT&T/Cinglular (T) I would be furious. Heck, if I bought an iPhone I would be furious because I just paid $2,000 [including the contract] for a ...phone when I can get this thing for $299 and keep my old cell phone...I wonder how many sudden iPhone returns they start getting now...talk about buyer's remorse."

As for Apple's stock: I've learned not to go anywhere near that subject. Cult stocks have minds of their own, and this one is likely to continue to create buzz as long as it rolls out new products and as long as its stores are packed which, for now, they are. (At least in San Diego.)

Comments

[peter02l]

Where did this money manager get his phone that it comes with no monthly charges, Toys R Us?
As for who might want an iPhone now, that would be someone who for a $100 or $ 200 more can get a phone and an iPod in the same device. And also get features like mail and google maps.
Who is this money manager, or are you too embarrassed to disclose?

2007 Sep 06 04:43 AM

[David Lentz]

It will be interesting to see if the iTouch has any impact on iPhone sales. I know it will not in my case, as I decided against the iPhone solely because of the lousy AT&T service contract, with inadequate bandwidth for similar amounts that one would pay for a competitor's service with decent bandwidth.

But I'm very likely going to pick up an iTouch this year, so in my case, there will be increased sales for Apple, but zero impact on AT&T's wireless (and bandwidth-less) sales by me. I suspect there are others who were either holding back because the iPhone price was too high (note that the ridiculous service contract did not, nor is it ever likely to, get a price cut) -- in which case the iPhone price cut should draw them in -- or were waiting for some similar device that was not hobbled by a premium-priced service contract for not-a-lot of service.

I'm guessing that the iPhone will continue to sell very well, ahead of expectations, and that the iTouch will put spurs to Apple's revenues, as the profit margins on those devices should be even higher than on the richly-priced iPhone.

While there are always those who have the bad luck to buy before an unexpected price cut, in the end, those are ripples of disappointment on an otherwise smoothly flowing stream of contentment, and will fade away quickly. These kind of events rarely have any significant impact on the sales or reputation of a company's products.

I doubt that anyone who bought an iPhone in the first month or two could reasonably be categorized as a price-conscious bargain shopper. When Lexus announces a 10% price cut ($200 off the $2000 cost of iPhone+service contract is abot 10%, no?), I don't see it doing anything but improving sales, which is what Apple said their intentions were. I'm inclined to believe them.

2007 Sep 06 11:50 AM