Wednesday, September 5 Stick in the Eye to iPhone Early Adopters
So much for delivering a good user experience. Apple must have forgotten the part about not pissing off your customers.
Apple has just announced it will be slashing the price of the lower end 8GB model of the iPhone to $399 from $599, and is dropping the 4GB model entirely. Hmm, so 2 months and 6 days after it became available they do a 1/3 price cut? The early adopters who bought the iPhone are certainly used to the fact that technology gets cheaper over time, but this is going to piss a lot of people off (especially those who got hit with multi-thousand dollar phone bills). If the traffic on the Apple support forum (for example) is any indication, this is indeed the case.
A typical comment from jodestroyer4e:
This is an outright crime. We were beta testers at the cost of $200. Not even 9 weeks and its $200 less. How can that be justified. I am so ******. The diehard core apple fans and customers get screwed. We who waited in line for hours, told everyone how great it is and to buy one. Apple really needs to fix this in a big way and fast.
This price cut is clearly not coming from efficiencies of scale as the iPhone hasn’t been on the market long enough yet. It reflects the large margins built into the initial retail price, according to this report from well-known firm iSuppli. If the costs in it are still accurate, Apple is still clearing over $100 at the lower $399 price. Undoubtedly there are other costs on top of the raw component and manufacturing costs that iSuppli tracks, but that’s still a pretty cushy margin.
Obviously Apple are looking to go big for the Christmas season, but in the long term this is a bad move. A lot of people are coming to Apple from the PC platform, and this doesn’t give a warm/fuzzy feeling to them. And the Apple faithful who took a chance on the iPhone early on, at a substantial hit to their pocket books for the initial phone and then frequently unexpectedly high phone bills, are deservedly feeling ripped off. Especially the owners of 4GB iPhones that are now discontinued (“obsolete”) and are stuck in a two year contract. This is particularly galling given how Jobs walked through the “simple math” they used to arrive at the pricing scheme of the iPhone when they announced it, obviously anticipating concern that it was too expensive and looking to justify its high price.
This comes at a sensitive time for Apple where it is gaining good momentum at converting PC users, many of whom still see Apple as a higher cost option (sometimes rightly, sometimes not). Jerking people around on pricedrops like this will only hurt this momentum.
Doesn’t exactly make me want to run out and buy one of the new iPods either.
Reader Comments (5)
Did people willingly pay $599 for a product or not? Did they not think that price was fair at the time? And the comment about the 4Gb being "obsolete"--this makes no sense. Didn't people choose that phone willingly?
Further, there's no way people can justify seeing themselves as "beta testers" here.It's not like "iPhone 2.0" was released today. Do people think they were "testing" the appeal of the phone at that price? Absurd.
But this really confuses me: "especially those who got hit with multi-thousand dollar phone bills" There's nothing about the price cut that suggests that the calling plans will change. Further, who exactly got "hit" "frequently" with multi-thousand dollar phone bills? People who used their US-based phone in Europe, maybe, and got hit with roaming charges...like they'd have gotten with any other phone? This complaint is just totally out of left field.
Points taken, but I think you are being too rational about it. This isn't a rational issue so much as an emotional one. As I said, the early adopters who bought it in the first two months would expect price drops and know they are buying it at a premium to get the first-on-the-block status. However, this goes beyond the normal curve of price drops for a brand new product. I don't own one, but if I did I would be equally ticked off. (BTW, other people have been calling themselves beta testers - I never considered the iPhone as a beta product, far from it).
Re: the phone bills. No the phone bills won't change. But I have talked with a handful of people who personally have had these huge bills, whereas they'd never had an equivalent experience with another data enabled phone. So they are not each frequently getting hit with a phone bill, but the frequency of this happening appears to be very high indeed.
Also in the forums is some intense schadenfreude with a lot of comments similar to the one above (but less articulate and more angry): suckers, suck it up, you paid for it, you waited in line etc. Backlash against iPhone purchases suggesting some sort of from-the-gutter-uprising against the digital elite drivers of Hummers or something.
My thoughts (having just bought one a few weeks ago) are the same as most others in my boat. But I pulled one out in a Soho pub last night to show my friends and they really had fun with it. At least a little positive in the day :)
Very Interesting
I think the price probably was also a reflection of setting a price point to LOWER demand. Apple knew how many phones they had and a pretty good idea of how many they would sell. If anyone bought their phone in the last 2 weeks, they can get a refund of the difference. Beyond that, people got what they paid for. I honestly do not feel bad for people that spent the money on a non-necessity item like this. Can it reflect poorly on the brand? Probably. An easy thing to do would be for Apple to do something cheap, but nice, like give old users a free, exclusive Apple ring-tone. A little thing like that can go a long way to make early adopters continue to feel special. Like, oh wow, your ring means you are a die hard fan...