Squealing Swine: The Sad Position of early iPhone Adopters

However, Mr Seibold, I think Mr Jobs is the sort who thinks ahead, and so would have contingency plans. In this case, a rebate. And I think any good CEO would plan contingencies.

As I said, I reckon it was a lose-lose situation publicity wise. When ever he announced the rebate it was going to get a lot of cynical press.

Therefore it was better to maximize the benefit to Apple’s customer relationships image. And I thought the timing was just right: let it go a couple of days to gauge the reaction, then hit it on the head before it goes AWOL.

The difference between the iPhone and all the other examples given of price drops is this baby had sold to near a million customers in 2 months. That’s a lot more unhappy customers than any other of the mentioned products - esp, as you say, the 3 Apple TV customers.

I also reckon, Apple would have got a lot more bad press for making the offer up front as the cynics would have been out on force claiming it to be “a half-hearted gesture to buy off the early adopters and why couldn’t Apple have given more?”

This only goes to show how difficult it is for journalists to separate sources from the slavering anti-mac press/stock manipulators.

cf. Rob Enderle’s recent comments.

First—Robotech Infidel, how on earth did you read my comments to mean that I believe Jobs had this pre-planned? Those words, I repeat, were:
“To think Steve Jobs had the rebate planned, especially given his dismissive statement to USA Today—“That’s what happens in technology”—is willful self-delusion.”

In fact, Steve Jobs’ quote to USA Today in an article that was published before the the store credit was announced is the strongest piece of evidence against the credit being pre-planned. It shows that Steve didn’t see anything in the reduction of the iPhone’s price being unusual. Prices drop in high technology. Complaining about that is akin to complaining about the sun rising each day. That quote is evidence of him not seeing the magnitude of the furor from that announcement. He didn’t even try very hard to defend the price drop. He didn’t think he needed to.

Again, “that’s what happens in technology” is the “let them eat cake” line in this story. If he really had a rebate planned, do you really think he would have said that? Do you even think he would have given such an interview? It’s not like it would have been unusual for him to answer “no comment” to press inquiry. Isn’t he the king of the surprise reveal? Of managing the press? Why would he allow himself to look as though he is insensitive to the anger that a lot of the iPhone purchasers felt, if he was going to give them some salve hours later. In the context of that interview, Steve’s Open Letter reads much more like damage control!

...of course I forget explaining why this precedent is dangerous… though it should be self-evident. (But then again, I had thought that the rebate being an ad-hoc solution was self-evident as well.) Now with every new product launch there will always be the thought in the back of the mind of everybody that Apple could dramatically drop the price in as little as nine weeks. That will certainly dampen early adoption of any future product, especially those that are too expensive to be impulse purchases (think Macs)

Sterling, I don’t know how much pre-planning went into the rebate, but I cannot for a second believe that the idea of a backlash against the price cuts never entered Steve’s head, which, if I’m not mistaken, is what you believe.

Chris… the funny thing about this story is that we’re essentially dealing in degrees. A price cut on a telephone isn’t unusual in itself, but it was the degree of the cut—a 33% price drop after being on sale for sixty eight days. Likewise, Jobs was probably shocked by the widespread degree of the anger which was big enough to galvanize the press.

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I wrote: He didn’t even try very hard to defend the price drop. He didn’t think he needed to.

Robotech responds: He didn’t and won’t because it was planned all along, Mr. Sterling.

But he did Robo. Read the Open Letter. In particular, read the second, third and fourth paragraphs of it. That was his full throated defense of the price drop. How you even missed that is amazing to me. I’ll respond to you more completely in the morning, (as it is very late at night here on the east coast).

First, the iPhone is a “phone” with internet communications capabilities. The iPhone is swimming in an industry dominated by oligopolies named Nokia, Samsung, Moto to name a few. This price drop thing is an everyday non-event when it comes to cell phones.

How is this very different from the computer industry which is dominated by the likes of Hewlett Packard, Dell, Lenovo, Gateway, etc. and which price drops also occur so frequently that nobody bats an eye. Well, except with Apple Computers where it is taken as an article of faith that its resale value remains high and where Apple isn’t known for cutting prices, despite the strong industry pressure.

One thing in particular that tingled my Mac senses was when Steve implied in his “Open Letter” that stated: iPhone is so far ahead of the competition, and now it will be affordable by even more customers.

Implied means unstated—as in having to deduce from clues left. What you quote is not stuff you had to imply from his statements, but CEO-speak transcribed here uncritically.  If you want to deduce something look at the last clause from that quote you pulled. If the new price means it can be affordable by more customers, that means its old price was turning off potential customers. Enough perhaps that Apple might not be making its internal targets. Would Apple come out and say all of that. Of course not, no company would say that in a press release. And yes, these open letters are as much PR as any other statement from Apple.

Let me ask you this: If the iPhone was selling like hotcakes at $600, beyond Apple’s wildest dreams, why would Apple cut its price by $200 and leave money on the table. They’ve proven that the phone is so great, people think it is worth $600, and that people see it is worth the price premium. What self respecting CEO would not maximize profits by keeping the price set high.

Sterling, Apple was and is not in the business to gouge their most loyal customers - the whiny first adopters - but to sell you a product that their marketing research think is the fair price for a certain product vs. customer’s reasonable price expectations.

So what changed after sixty nine days to invalidate their marketing research showing that $600 was the fair price for the iPhone? Could it be the customer’s reasonable price expectation? Perhaps the early adopters were not in large enough of a demographic to sustain the $600 phone from Apple. Perhaps Apple’s market research failed.

And even fanboys can be punished too much. Battered wives have managed to leave abusive relationships. Perhaps a few fanboys will realize that Apple is a company, not a way of life. They may even realize that Steve Jobs is a mortal capable of making a mistake like the rest of us.

They may even realize that Steve Jobs is a mortal capable of making a mistake like the rest of us.

Heheh -see, but we believe Steve deliberately tried to get this price-cut thru knowing there’d be a backlash, and knowing he had a trick up his sleeve to appease the mob.

That ain’t fanyboyism or deifying Steve!

On the contrary, I’d suggest those that want to believe this was an innocent mistake by Steve are the ones who might be putting him on too high a pedestal.

Regards the USA Today Q&A, we’re talking about Mr “We’re not going to do a video iPod or flash based iPod.”

I’m sorry, I’ve grown quite cynical over the years of being an Apple consumer and take everything Steve says with a shovel of salt.

For me, it’s not whether Steve intended to give this rebate from the outset, but whether he had pre-planned it just in case.

And I think he would have been surprised he had to give the rebate, but again, I cynically believe he wasn’t naive and that he had it ready as a contingency.

Remember, that $50,000,000 or so worth of rebate means Apple has to sell a sh*t load of iPhones to pay for it, especially as they’ve cuts its margin by $200.

Even if their margin is $200 per phone , they’d still need to sell a quarter of a million more iPhones to cover that rebate.

That’s not a decision you’d rush thru in an afternoon or so.

My logic and cynicism both tell me this rebate would have had to have been pre-planned as a contingency - just in case.

And my reading of Steve’s letter, backed up by his USA Today interview, tells me he was disappointed he had to.