Entertaining note from Apple's (AAPL) Steve Jobs to iPhone buyers on the price cut issue. Two issues: First, he had to do it; and second, in reading many AAPL analyst reports this morning, most (but not all) were more sanguine about the subject than Wenesday's stock price decline would suggest.
Why? Because the lower price will open up the market, and the elasticity of iPhone demand is high. What's more, recall that most analysts were more nervous about overly high iPhone prices when it was launched in June.
That said, consumers are clearly (and rightly) pissed. It's one thing to be an early adopter and watch later buyers get lower prices and more features, but it's bringing the early adoption penalty to new heights to nail people with materially lower prices within two months. With that in mind, the Apple $100 rebate announced yesterday is a good thing, and the right thing to do.
To return to the point, however, I still think Apple made the right move in cutting prices, and anyone who says it had entirely to do with tepid iPhone interest needs to get out from their bear-logoed tinfoil. Bringing a rebate into the mix squares the pricing circle correctly.
The preceding said, I'm more nervous about Apple because of the rebate than I am because of the price cut. The rebate, while perfectly appropriate in the context, makes the pricing decision seem rash and ill-considered. Apple had to know cutting prices by 33% within two months of launch would annoy recent buyers, and that it would lead to all the caterwauling that had Apple CEO Jobs claimed to have received and read "hundreds" of emails. I bought the price cut more as a practical and planned market matter before the rebate than I now do afterward.
Mind you, I'm not buying either that Jobs read "all" the emails he has received on the subject. My friend Herb claimed earlier today by IM that Steve only reads his blog. Dreamer.
