shawnb

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    • Wed Sep 12th 08:13 AM | Rating: 0 0
      Commented on:
      Apple's iPhone Price Cut: An Unfair Blow to Shareholders
      It took 2 years for the iPod to sell 1m, versus 74 days for the iPhone. So why is it so surprising that the iPod price cuts took longer?

      I agree that the iPhone has probably gotten cheaper for Apple to produce due to the higher volume. I also agree that Apple is probably slashing the price to drive sales into the holiday season. This makes sense to me. There is currently no competition to the iPhone. Like the iPod, there probably will never be a true competitor, but it still makes sense for Apple to capitalize on all the recent iPhone hype and get it in as many hands as possible while they can. This will likely yield “Apple converts” who will grow to appreciate the stability, simplicity, and pure functionality of Apple products. That may or may not translate into Mac sales, but considering that most people buy a new phone every 2 years, it will lead to repeat iPhone customers in the future. If Apple can do this while sustaining healthy margins, what is the damage to shareholders?

      Also, I believe Apple cut the price because an improved iPhone (3G and more memory?) is in the pipe and will follow some time after the holiday season. So why not cut the price and sell as many as you can now? I also wouldn’t be surprised if the current iPhone drops another $200 within 6 months and becomes the “low end” model when ver 2.0 comes out.

      I think the outrage over the price drop is amusing. The “early adapters” who would have stood in line (but didn’t have to thanks to Apple’s competent product launch management) were happy to pay the initial iPhone price, and for the past couple months have been proudly showing off their shiny new toy to everyone who will look at it. Now they feel like idiotic Apple tools because they overpaid for that pleasure and it didn’t last nearly as long as they would have liked. They didn’t get milked; they got what they paid for, getting the first stab at the latest technology. In all the media hype I saw, no one ever said the iPhone was cheap. I applaud Apple for dropping prices when they could do so, instead of milking additional customers for the sake of early adapters’ egos.

      As far as alienating Apple’s “fanatic customers”, where are they going to go? I don’t see them migrating to Vista and WM 6.0 anytime soon. In fact, I think the fact that they got their toes stepped on is a positive sign. Personally, my main beef with Apple is that their products historically have not been competitively priced. There is an Apple sub-economy entirely to itself where two- and three-generation old products sell on eBay at ridiculously small discounts to the retail prices of new (and much better) products. I think it’s safe to assume that this little Apple bubble is going to burst as Apple moves from an “exclusive club” to a mainstream product. It may not be good for the egos of long-time die-hard Apple fans, but it is good for Apple and consumers in general.

      Apple owners: welcome to technology reality, where early adapters pay hefty premiums and the overall value of your products fall exponentially over time to the point where you eventually have to pay someone to take it and dispose of it properly. It’s a sad reality, but maybe that means you finally “made it” to the big stage. Or does being on the big stage take some of the fun out of owning something Apple?

      I find Apple’s price cut refreshing. I hope it’s a sign that Apple will be innovators of both technology and value in the cell phone industry, which desperately needs both. Personally, I bought a MotoQ when it first came out in April of last year. I paid $200 for it, and got locked into a 2-year $100/mo contract (450 voice min, unlimited data, and some free texts). It looked cool, but my initial underwhelment due to the anemic software has grown to outright frustration due to the constant glitches and annoyingly unintuitive interface. In the end, I will pay $2600 for this “learning experience”. The Apple fanatics are disillusioned and crying foul over 200?! Go ahead and put your money where your mouth is, and jump ship. There are plenty of people like me willing to take your spot, especially if the iPhone evolves from being media-centric to information-centric (i.e. Exchange support). Besides, you’ll be back.
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