iPhone price cut: Official response from Steve Jobs

[corywoolf]

Makes sense for people who bought it in the last 14 days, but come on, the last two months? If you bought it the day it came out, then you could afford it obviously. It sucks for Apple, this will cost them a few million dollars, but it return it may end up helping them. Paying out less then $100 (products @ wholesale value) to the hundreds of thousands of people wont compare to the amount of money they will make from all the new buyers they attract with the new price point. Now if they could just make the phone separate from the 2 year contract (since it's not subsidized) I would be happy. Apple should have just given everyone free Applecare for the iPhone, would have cost them less.

 

[sananda]

The question mark at the end implies an educated guess...

guess, yes. educated, i doubt it.

 

[fanboy]

Thanks Steve, now I'll use the credit to upgrade to the next iPhone iteration.

 

[chipchen]

Wow! I don't even own an iPhone (being, as I am, in the 3rd world backwater known as England), but that's pretty freakin' impressive!

A quick bit of maths says to me, $100 x est. 240,000 buyers since launch day = $24 Million!

Then 'Wow!' seems a little inadequate. 'F**K ME!' seems more suitable

No... think again. They're on track to ship 1 million by the end of September... that means they're probably at 750,000 or so. That's $75 million bucks.

BUT, think of this like a rebate. You know less than 40% of rebates are ever sent in? I'm guessing easily... 33% of iphone owners won't ever know about the price drop fiasco. Maybe in a year or two they'll be like, wow, they're cheaper now. Then of the 67% percent left, I'll bet a third won't care at all. That leaves about 45% left. These people care... but not all of them will remember to submit for the rebate... or even if they do, they've already lost all their stuff, etc.

SO, when it's all boiled down... my guess is about 1/3 of 750,000 will submit for the rebates. That's $25 million dollars. But remember, these are store credits... that means the average spent is probably over $200 if you're getting $100 off... and their profit margin on some of those items are probably so high that they're really only paying about $50 after the fact to you. And inflating Apple retail numbers while doing it.

So in the end, it'll probably cost Apple about $12.5 million dollars. But they've won or won back much more in terms of "praise" and "loyalty."

 

[dwsolberg]

I love Apple

It wasn't the smoothest move to drop the price so rapidly and drastically, but Apple is a company you can love because it's an interaction. I think the $100 is fair, and Apple gets to keep its biggest supporters happy. I know that I've sold a few iPhones just by enjoying it so much.

 

[Palliser]

So $100 in store credit... that's costing Apple about $25 after the profit margin on items are factored in?

....who cares? Its $100 that you would have to pay in store or online...

 

[B. Hunter]

Uh oh.
Did Steve open up a can of worms?

Can't wait for all the iLife whiners to line up for a discount.
iMovie 08 is not the same as the previous version. Its missing vital parts.

 

[note235]

I am happy now.

 

[Bernie-Mac]

You'll get a text message on your iPhone. They know your serial number.... Apple will find _you_.

Really? Thats nice of em

 

[AJsAWiz]

You'll get a text message on your iPhone. They know your serial number.... Apple will find _you_.

I hope not. What if you bought this as a gift for someone. That would mean that they would get the $100 and not the person who paid for it.

 

[bluedevil14]

This is wonderful news for two reasons, first the early adopters will finally stop whining. Second, it shows that Apple cares enough about its customers to pay them $100 dollars for buying their products.

Now if we can only get the airlines to follow Apple's example, the world would be a much better place.

 

[jicon]

guess, yes. educated, i doubt it.

Sarcasm:
–noun

1. harsh or bitter derision or irony.
2. a sharply ironical taunt; sneering or cutting remark: a review full of sarcasms.

I have zero insight in to what sort of profit margin Apple pulls, but I've consistently heard around 50% on items.

Jobs didn't have to do squat, so good on him giving back to the early adopters - but I think it is important to remember Apple isn't truly incurring half the difference in price.

 

[flipperfeet]

I'll take it a step further. Successful companies care about keeping customers, but they don't really care about customers. IF Apple truely cared about customer then when the Apple execs got together to discuss the price cut they would have asked "how will the early adopters feel?," and would have PROactive rather than REactive on this issue. But except for medical companies, business are not in business to care how customers "feel." They just need to keep them happy while they extract as much $ from them as possible.

Dude, you must be so tired; going through life sure that every commercial operation in the world is out to extract any money you have, and that despite companies being run by humans they never do anything with unintended consequences. Wow how do you even walk out the door in the morning.

 

[Electro Funk]

" I'm so special, I'm so special...
See my iPhone, see my iPhone?
I'm so special, I'm so special...
See my iPhone, see my iPhone?
I love Apple, I love Applie

You don't have one, you don't have one...
See my iPhone, see my iPhone?
I'm so special, I'm so special
See my iPhone, see my iPhone?
I love Apple, I love Apple

What the price dropped?
What the price dropped?
Waaaa waaa waaa
I hate Apple! I hate Apple!
Waaa waaa waaa "

I thought the people who lined up to buy them were losers before, and this just re-inforces that even more. Hasn't anyone learned a lesson about technology before? New products are obsolete the day you buy them. Prices drop. New models get introduced.

I love Apple & their products, but I learned my lesson with the 128k Macintosh. Remember that one? $3000 for a machine with a black & white screen, no hard drive, and only 128k of memory. Shoot, Apple owes me big time for that. If I had not paid to be one of the first ones to own one, there may have never been an Apple still around to create an iPhone. Where is my rebate? Waaaa

Big baby prima donna whiners..

do you realize how silly you sound?

I used to post here daily, but with the onset of all the know-it-all i told you so-ers. i have found myself posting in this community less and less often, and just coming to read the rumor round ups... quite sad actually...

go ahead ~ Flame Away ~

waaaaaa poor sissy cant take an argument over the interwebby... waaaaaaa

 

[SthrnCmfrtr]

" I'm so special, I'm so special...
See my iPhone, see my iPhone?
I'm so special, I'm so special...
See my iPhone, see my iPhone?
I love Apple, I love Applie

You don't have one, you don't have one...
See my iPhone, see my iPhone?
I'm so special, I'm so special
See my iPhone, see my iPhone?
I love Apple, I love Apple

What the price dropped?
What the price dropped?
Waaaa waaa waaa
I hate Apple! I hate Apple!
Waaa waaa waaa "

I thought the people who lined up to buy them were losers before, and this just re-inforces that even more. Hasn't anyone learned a lesson about technology before? New products are obsolete the day you buy them. Prices drop. New models get introduced.

I love Apple & their products, but I learned my lesson with the 128k Macintosh. Remember that one? $3000 for a machine with a black & white screen, no hard drive, and only 128k of memory. Shoot, Apple owes me big time for that. If I had not paid to be one of the first ones to own one, there may have never been an Apple still around to create an iPhone. Where is my rebate? Waaaa

Big baby prima donna whiners..

See, I got paid $100 for whining. How much are you getting paid? Who's the loser?

 

[sananda]

Sarcasm:
–noun

1. harsh or bitter derision or irony.
2. a sharply ironical taunt; sneering or cutting remark: a review full of sarcasms.

I have zero insight in to what sort of profit margin Apple pulls, but I've consistently heard around 50% on items.

Jobs didn't have to do squat, so good on him giving back to the early adopters - but I think it is important to remember Apple isn't truly incurring half the difference in price.

no, not half the difference between the old price and the new one.

but i'd be very very surprised if there's an average 75% profit on apple products as you seemed to be putting forward albeit it seems jokingly.

 

[SthrnCmfrtr]

I used to post here daily, but with the onset of all the know-it-all i told you so-ers. i have found myself posting in this community less and less often, and just coming to read the rumor round ups... quite sad actually...

Hear, hear. Even the people on Digg make fun of this place, and Digg users are really in a low position on the ol' scrotum pole, intellectually. Maybe next to YouTube

The problem is that Mac user + Spare time = Elitist tedium, for the most part.

 

[Ha ze]

Makes sense for people who bought it in the last 14 days, but come on, the last two months? If you bought it the day it came out, then you could afford it obviously.

Um.. using that logic people that bought it 14 days ago could afford it too, actually by my calculations, anyone that bought it can afford it.

Apple should have just given everyone free Applecare for the iPhone, would have cost them less.

And the masses wouldn't have cared.

The fact is, it was the early adopters, those people that stood in line and later explained the functions and everything it did to every single person that asked that sold this phone. I know I personally sold someone on it, as I'm sure hundreds of others on these boards did. Everyone here knows that with Tech there is never going to be a time where anything stays consistent, and had it been 10-15% drop, not as many people would have been upset, but the fact that it was 33% shocked and really blew some people away.

This decision is great, do I expect it for everything thing now? Of course not, it's just nice to see that Apple sticks by its products and sticks by its customers, especially the very early adopters.

 

[THX1139]

What is his email adress ?

stevejobs@apple.com

 

[alexf]

Yes, it was a good move on Steve's part, but I think people are being a bit overzealous with their praise. Ethically, this is exactly what Apple should do, regardless of whether that is the "norm" in the business world or not (and there is no business exactly like Apple anyway).

Let's face it: the iPhone was way overpriced to begin with ($600 PLUS a two-year contract? Come on!). Steve hypes the thing like crazy for months and has fans so dedicated that they are willing to camp out for a week in front of the store (sorry, but some people really need to take a closer examination of their lives). Then, only two months after the thing is released, he slashes the price by $200, effectively screwing those die-hard fans.

Now before we laud Steve for his incredible generosity, it is important to realize that anybody in business knows that it is a bad move to isolate and anger your most devoted fans (especially when they have effectively provided free advertising for you). Thus what he did was intelligent business move, and exactly what one should expect from someone in his position. I even think that he should not have had to wait for the angry letters to come in, but should have made this announcement yesterday alongside the new product announcements.

And as a sidenote, it is now obvious how much money Apple must be raking in from these little made-in-China devices.

And by the way, I am not an iPhone owner.

 

[asrai]

Nicely done

Not that I was one of the whiners to begin with, this is fantastic Steve.

I'd love to see Mr. Gates acknowledge his patrons in kind... I might even buy a share of Microshaft stock...

 

[slackpacker]

Thanks Steve!!! I'm Happy now!

 

[yorkis]

Good job Jobs - that was an impressively fast reaction.

But is he going to compensate us Panther users whose operating system is barely two and a half years old, yet no longer makes the minimum requirements to run ANY of the new iPods? Not even the Shuffle - which as far as I can see has only changed colour...

 

[Izzy]

no, not half the difference between the old price and the new one.

but i'd be very very surprised if there's an average 75% profit on apple products as you seemed to be putting forward albeit it seems jokingly.

According to Apple's 10-K filing for the fiscal year ending September 30, 2006, the company's gross margin was 29%. This is for all sales. The company does not disclose the gross margin for each product.

 

[macrev]

Yeah I did. Guess I got lucky. I couldn't get the credit even if I tried (not going to), as they did a refund and reapply, so it reset everything, even my warranty. Its like I bought it yesterday. However I am a little worried that they may just "undo" what they did and try to give me 2 100 dollar gift cards. Just waiting and want to know either way.

I have friends who couldn't get a refund and want to know as well. Plus its nice to know apple taking care of their customers.

How could they "undo". That makes no sense. I think you full of it.