8GB iPhone Price Drop, 4GB iPhone Discontinued

[MagnusVonMagnum]

It all still boils down to the fact that people are ANGRY that a company LOWERED the price of a product many people said was too expensive to begin with. Never in my LIFE did I expect to see the general public get ANGRY because a company LOWERED its prices. It's almost unfathomable. Only in America? Only Bush-Logic could go so far off into the realms of illogic?

No, you cannot rationalize it. Period. You're angry because someone else is getting a better deal than you despite the fact you willingly paid the price. No one forced you. If I miss out on a 20% off sale, do I get to complain about it after the fact? Can a scream at the store owners for not calling me up personally and telling me about their sale? No, no and no.

If you bought an iPhone and think you got ripped by a drop in price, then you are truly STUPID because YOU are the one that decided to buy that phone. No one else can be blamed. Not Apple. Not Steve Jobs. YOU decided to buy it at their asking price. You knew it would come down sooner or later. So it was sooner. How LONG would they have had to waited to drop the price before you would not be angry? 6 months? A year? 2 years? Get real already. People are having an ego-driven self-centered PSYCHOTIC response over a lousy $200. And if you think $200 is a LOT of money, then you shouldn't have been buying an iPhone in the first place! That is indisputable.

You hate Apple? Fine. Go crying back to Billy Gates. He'll gladly suck you dry. Or you could do the smart thing and support Linux and open software. You want dirt cheap or free? Then support free instead of the richest people in the world. You want quality? Stop buying cheap Chinese made goods laced with poison and defects and support working people in your own country instead. Stop being 'me too' sheep already and learn to think for yourselves. And stop blaming other people for your stupid decisions.

 

[iEdd]

Uh oh. I sense a flaming...

iPhone owners, can you comment on sending/receiving MMS messages? Any major problems?

No problems at all...you can't!

So how do you send pictures/video then? Do have to do it as an email from phone to phone?

 

[phooi]

Per Steve Jobs' letter to iPhone users, "...Therefore, 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..."

This is a store credit and NOT a refund. The use of the credit is for merchandise within Apple owned properties. Will Apple suffer financially for this? Most likely not. Why?

1. Time value of money (TVM). Apple has collected $600 from early adopters. Given that the price of the iPhone is $399, I'm sure that there is still margin to be had.

2. Component cost of technology. With the introduction of the iPod touch, which I'm sure Apple has been planning for over a year, negotiations for technology component manufacturers benefited from economies of scale.

3. Store credit. The $100 is to be used in the retail or online store. Most of the merchandise within the store is over $100. When given a credit, most consumers will be motivated to spend more thus increasing overall sales within the stores.

There are certainly more reasons but I just wanted to highlight three.

When Apple records their sales, it does not include the store credit. The credit will reduce their margins. Given that Apple was able to cut the price of the iPhone from $599 to $399 shows that there is at least $200 worth of margin within this product. Apple only offered $100 after having the consumers cash for over 60 days. Couple that with the principle of TVM, Apple has been earning some rate of return on the 1M iPhones sold to date so giving the $100 is in effect providing a rebate. Finally, the new price decrease will stimulate volume sales thus replacing a high profit, low volume sales model with a lower (not low) profit, high volume sales model (a la Dell).

(Please note that all this is predicated on the fact that Apple did their analysis properly. Given their financial performance in the last 5 years, I think they are...)

Bottom line: I think Apple will be just fine, if not better off. Early iPhone adopters are essentially get a rebate (typically rebates take 90-120 days) and the benefit of saying they had it first. And now more consumers can afford iPhones thus bringing the hurt to companies like Nokia and Motorola before they can 1) get their new products to market and 2) potentially forcing a price war before they can fully recoup the R&D costs of their new products.

 

[majordude]

You hate Apple? Fine. Go crying back to Billy Gates. He'll gladly suck you dry. Or you could do the smart thing and support Linux and open software. You want dirt cheap or free? Then support free instead of the richest people in the world. You want quality? Stop buying cheap Chinese made goods laced with poison and defects and support working people in your own country instead. Stop being 'me too' sheep already and learn to think for yourselves. And stop blaming other people for your stupid decisions.

MagnusVonMagnum for President!

 

[sushi]

Taxes paid by big business not that directly related to affecting prices paid by customers.

Wrong-o.

The corporate business plan, modified through annual plans, account for the costs of which taxes are one. The product and service pricing level is adjusted to balance out these costs.

Here's a simplistic example. Let's assume a balanced budget for xyz corporation. They make only one product called a widget. The cost to make the widget available to the customer is $20. This takes into account $4 in taxes (20%), $10 in other costs (50%), and a profit of $6 (30%). Due to xyz's new tax situation, the tax rate is increased to 25% which is now $5. The xyz corporation now has a $1 shortfall.

This can be compensated for in a variety of ways. Two obvious ways are:

- Increase the cost to the customer by $1.

- Decrease the profit level by $1.

Granted this is a simplistic explanation, but I hope that it illustrates my point. In a more complicated financial model, you would take other factors into account such as cheaper manufacturing costs via increased sales.

But regardless, in the end, the customer pays for the increase in taxes one way or another if the corporation wants to maintain it's profit levels and other factors remain the same.

And, a $70M credit (not rebate) no more paid by the customer than any other manufacturing or sales expense (such as advertising). This was all part of a pricing plan, and is not a rebate at the expense of customers.

If this $70 million credit was not planned for, then it was not part of the business plan.

The $70 million credit may generate more business which can offset the cost of the credit. If not, then Apple has two choices:

- Take the loss.

- Increase or maintain prices on various products for a longer period of time to recoup the $70 million.

It all still boils down to the fact that people are ANGRY that a company LOWERED the price of a product many people said was too expensive to begin with.

Yep, simply amazing! Well said.

 

[Potus]

When you're right, you're right

Per Steve Jobs' letter to iPhone users, "...Therefore, 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..."

This is a store credit and NOT a refund. The use of the credit is for merchandise within Apple owned properties. Will Apple suffer financially for this? Most likely not. Why?

1. Time value of money (TVM). Apple has collected $600 from early adopters. Given that the price of the iPhone is $399, I'm sure that there is still margin to be had.

2. Component cost of technology. With the introduction of the iPod touch, which I'm sure Apple has been planning for over a year, negotiations for technology component manufacturers benefited from economies of scale.

3. Store credit. The $100 is to be used in the retail or online store. Most of the merchandise within the store is over $100. When given a credit, most consumers will be motivated to spend more thus increasing overall sales within the stores.

There are certainly more reasons but I just wanted to highlight three.

When Apple records their sales, it does not include the store credit. The credit will reduce their margins. Given that Apple was able to cut the price of the iPhone from $599 to $399 shows that there is at least $200 worth of margin within this product. Apple only offered $100 after having the consumers cash for over 60 days. Couple that with the principle of TVM, Apple has been earning some rate of return on the 1M iPhones sold to date so giving the $100 is in effect providing a rebate. Finally, the new price decrease will stimulate volume sales thus replacing a high profit, low volume sales model with a lower (not low) profit, high volume sales model (a la Dell).

(Please note that all this is predicated on the fact that Apple did their analysis properly. Given their financial performance in the last 5 years, I think they are...)

Bottom line: I think Apple will be just fine, if not better off. Early iPhone adopters are essentially get a rebate (typically rebates take 90-120 days) and the benefit of saying they had it first. And now more consumers can afford iPhones thus bringing the hurt to companies like Nokia and Motorola before they can 1) get their new products to market and 2) potentially forcing a price war before they can fully recoup the R&D costs of their new products.

Excellent analysis. Comparing the credit to a rebate is spot on.

 

[phooi]

Thanks. I felt that the issues were being confused. At the end of the day, all companies exist to generate a profit. Smart companies recognize the need to include customer satisfaction into their profit equation. Apple made a tactical customer service error in reducing the price of the iPhone but recovered with their store credit and personal message from Steve Jobs.

 

[diamond.g]

You want quality? Stop buying cheap Chinese made goods laced with poison and defects and support working people in your own country instead.

Well then I guess that means we shouldnt' buy Apple goods then huh, since ALL of it is Assembled in China....

 

[NewMacGirl]

The mobile market is very fickle and fashion driven. I think apple have just realised it and looking from the outside its good apple are reacting so quickly. I do feel for the people who spent extra but hey you still have an iphone and I don't even have the chance to get one. I'll get a touch in a few weeks and stay with my very low cost mobile phone plan though!

 

[majordude]

The mobile market is very fickle and fashion driven.

True. For the first time in forever America finally go the cool phone FIRST. Usually Europe and Japan have all the new Sonys and Nokias and we get them a year later if at all.

Me, I am through playing that game. I've spent WAY too much money chasing the latest and greatest.

I'm waiting until the iPhone comes out on Tracfone.

 

[weblogik]

well i was furious , i had a 30 day old 4 gig model and felt ripped off, but i raised a little hell and they still exchanged it for a 8gig model and refunded my card $100... So 100% satisfied with the cust service i received, but felt completely taken advantage of before that...

 

[Goldenbear]

...But regardless, in the end, the customer pays for the increase in taxes one way or another if the corporation wants to maintain it's profit levels and other factors remain the same...

Yup, that's why I always argue that corporations don't REALLY pay taxes. One look at your cell phone bill (with nearly 20% worth of "Taxes and Fees", in the case of AT&T) should prove that to even the most deluded. The "Tax the evil corporations" mantra is just plain silly in light of how things really work.

...You're angry because someone else is getting a better deal than you despite the fact you willingly paid the price...

That's really the crux of it, even if most people will deny it.

As I told a friend a few hours after the price cut announcement, I'm still VERY happy with my iPhone, and I'm still glad I was able to use it the past 2 months. I recently took a trip where, for the first time in many years, I didn't have to lug my laptop with me just to watch movies and check email. That was worth almost $200 right there, just for the sheer convenience!

The price drop just means more people will buy one, increasing the use base, which benefits ALL iPhone users, including me.

 

[otispunkmeyer]

WOW thats some killer depreciation

but look on the bright side, owners of rolls royce phantoms/maybach's lose a hell of alot more in just one day as their car depreciates like a brick in the ocean while it sits in the garage.