Steve Jobs gives all iPhone owners $100 back

El Jobso is "confident" Apple's made the right decision to lower the price of the iPhone yesterday -- and really, we can't fault them for knocking some cash off the top to attract new buyers, why is cheaper gear a bad thing all of a sudden? But even given the outcry, we definitely didn't see this one coming. In another open letter to his people, Jobs states that he's giving all iPhone owners a $100 Apple gift certificate (details to follow in the next week -- it goes without saying this will only apply to people who bought before the price drop). Well, that's mighty kind of you Steve. And definitely unprecedented in the consumer electronics industry that a company would give cash back to early adopters -- those most accustomed to buying a gadget first, asking questions later, and bottling their complaints when said gadget later drops dramatically in price.

[Thanks to everyone who sent this in]

[Alan @ Sep 6th 2007 3:22PM]

I'm still $500 richer than the people who bought one.

[haqman @ Sep 7th 2007 7:19AM]

lol :D
true say

[JLynx @ Sep 6th 2007 4:14PM]

Umm... that depends... on your personal balance sheet.

[Mark @ Sep 6th 2007 4:31PM]

Who exactly are you comparing yourself to?

[Dues @ Sep 7th 2007 2:56AM]

I believe Alan is comparing himself to his iPhone-owning doppelgänger.

[Kevin @ Sep 6th 2007 3:22PM]

consolation prize to everyone else?

ruins apple's credibility of course. all that was pure profit for apple

[tony @ Sep 6th 2007 4:14PM]

Wow, a company that makes a healthy profit... no credibility in that. You're a douche.

[Randavance @ Sep 6th 2007 4:19PM]

I think it was genius. I'm no apple fan boy, but I know a good business man when I see one, he planned it all out from the start.

He charges about 300 more then it cost him to make.

Then he drops the 200 extra off to make it look cheap to all the non-early adopters, even though it is still over priced.

Now he gives back 100 to those who already purchased it, but in store credit, the day after he just released a whole new line of products that all cost over $100. And theres no point in them buying a shuffle, nano, or a touch, they have an friggen iphone, they're going to spend it on either profitable overpriced accessories, or on one of those new macs!

It's possibly the greatest act of business in the history of the world. Rock on Steve!

[Muu @ Sep 6th 2007 4:23PM]

Or music, assuming it applies to the Itunes store as well.

That'll REALLY get things going, since that'll be $100million being tossed into Itunes sales.

[Dan @ Sep 6th 2007 9:56PM]

Randavance: "He charges about 300 more then it cost him to make."

Yah, I really hate how he's doing that. I also hate how video games are sold at ten times their cost... idiot.

[Mike D @ Sep 7th 2007 11:42PM]

I honestly have to say to you.. fall off a bridge. oh and stop taking pay if you live you don't deserve to earn money for your work

[DT @ Sep 6th 2007 3:23PM]

Wow, good for them! That should make 90% of people feel better...the rest are going to want Steve to personally deliver a $200 gold coin to their doorstep.

[Calviin @ Sep 6th 2007 3:40PM]

It's an excellent gesture. Imagine if Sony did the same with the PS3, where we would me now. Whether its for a phone or for a videogame system, 600 "bones" is a lot.

http://i4.photobucket.com/albums/y108/Calviin/600Bones.jpg

[Jason Carroll @ Sep 6th 2007 3:41PM]

Ha! I agree, some people won't ever be happy. For me...this is all I was after. I bought this 16 days ago (ya, I know, it sucks) KNOWING that it was worth $600...at least in my mind (though it brings to light my materialistic nature). I complained not because I felt screwed, but because I was SOOO close to the 14 day policy and $200 is a lot of money. $100 to the store is a reasonable and generous offer. Thanks Apple.

[Ben Nolen @ Sep 6th 2007 3:56PM]

Except I have no need for a $100 gift certificate from Apple. I'm not an Apple fanboi. I only bought the iPhone because it was a nice phone. I don't intend to buy anything else from Apple for a while.

Guess I will have to sell it on eBay for 80%.

[gene_woodward @ Sep 7th 2007 11:21AM]

It better be a Krugerrand, or else !!

[gfar @ Sep 6th 2007 4:54PM]

Well it IS pretty nice of them. But I definitely recall getting a $100 cheque (not a gift certificate) back for my Dreamcast.

Coffee. Tea. SEGA!

[Zeek @ Sep 6th 2007 4:54PM]

Funny thing is: Apple store is now selling a limit edition t-shirt that reads 'iSucker' for $100. In 7 forgettable colors.

[Thinker @ Sep 6th 2007 11:29PM]

Don’t compare apples with oranges. The iPhone cost apple $200 (I’m guessing) to make and they sold it for $600. The PS3 cost Sony $800 to make, and they were selling it for $600 - but just dropped the price to $499. Sony is losing money on every PS3 they sell hoping to make money on their games and Blu-ray Movies. I own a PS3, and it is awesome! I don’t own an iPhone, but giving $100 credit is the right thing for Apple to do. Some might say that Apple should have given a $200 credit. Come-on, don’t you think the joy you felt being one of the first few people to own an iPhone was worth it? Anyway, good job Apple.

[Dean Croshere @ Sep 7th 2007 1:43AM]

I wonder how long this takes to expire. If it lasts long enough, this may be my "free battery replacement" card.

[Evan Lugh @ Sep 6th 2007 3:23PM]

So which email worked, I gotta' ask when UK iPhone will be here :P

[pinsleric @ Sep 6th 2007 3:23PM]

Thank you Stevie, by doing this I am sure you have re-instilled faith in your company! I know there are some who were pissed that people were complaining about the price drop, but still, if you found 100 bucks on the street I'd pick it up!

[LegendZ28 @ Sep 6th 2007 3:47PM]

I can't even imagine another company doing something like this. Just when I started to lose my faith in Apple (not just because of the price drop, but because of some very poor customer service I got at the 5th Ave Apple store a few weeks ago), they go and do something to prove me wrong.

[TJ @ Sep 6th 2007 3:55PM]

"Just when I thought you couldn't get any dumber, you go and do something like this... and totally redeem yourself!"
-Harry from Dumb and Dumber

Ah the American Classics...

[matt @ Sep 6th 2007 4:01PM]

Microsoft did this with the original Xbox (in the UK at least). Ok, they didn't give you money, but they gave you an extra controller and two games.

[Rich @ Sep 6th 2007 3:23PM]

Pfft! It's a $100 Apple Store credit so Steve still gets to keep their money! Still, it's a nice gesture.

[Paul @ Sep 6th 2007 3:27PM]

I totally agree with you. All he did was ensure that the majority of the people who have already bought iPhones will spend more money on Apple's website while making them feel like they did not get as badly screwed over by the price drop.

Its a win / sorta win situation.

Kinda brilliant...

[simon @ Sep 6th 2007 7:09PM]

Ill definately agree with that... That does suck that you have to still spend it with apple though, this basically makes them less of a profit when you buy something else. They never cease to amaze me, their profit margins are crazy high, and people still dont mind. At least theyre trying to do something for their customers though.

[Jason Carroll @ Sep 6th 2007 3:47PM]

Make sure you spend it on their lowest margin items to ensure maximum screwage. Haha!

[Calvin @ Sep 6th 2007 3:59PM]

If someone buys, for example, iLife '08 and uses the gift certificate, Apple won't get $79 profit, will they?

[Ray-- @ Sep 6th 2007 3:59PM]

whats also brilliant is how that jacked up the profits before earnings were reported... resulting in a higher stock price... and now giving $100 that has to get re-spent at appl insures it stays put... but somehow makes ppl feel better...

[Quix @ Sep 6th 2007 4:18PM]

My theory says Apple planned this from the beginning.

Hear me out. This is how Apple might have calculated this approach. Assume Apple decided $399 was a profit sweet spot for the iPhone before they even released it. By tacking on another $200 at the launch announcement in January, they got a lot of heat from the blogosphere and the tech punditry, but demand/hype for the thing remained in the stratosphere (perhaps to Apple's surprise?). Had it not, Apple could have simply announced a new lower launch price in the weeks leading up to June 29. Bam, instant hype boost. But it turns out such a move was unnecessary. Tens of thousands of customers lined up outside Apple and AT&T stores all over the country, snatching up every iPhone they could when the doors were thrown open despite the $599 price. Suddenly you have a product with huge perceived (and real) demand that still commanded a very high price tag. And a $599 product that is flying off the shelves and being waved about gleefully by ecstatic mobs of buyers on TV news suddenly has a perceived value of $599 for millions of customers, including those who wouldn't (or couldn't) pay the $599 entry fee.

Now, two months later, you drastically slash the price $200, to your originally-decided price point of $399. Wow, only $399 for a product with a perceived value of $599??? What a deal! Waves of customers swarm the Apple Store once more snatching up these new "bargain-priced" iPhones for "only" $399. Talk about keeping the momentum going.

Now, of course, you are left with the serious problem of hundreds of thousands of irate Apple customers (like me) who feel burned by the too-much too-soon price cuts. Brand loyalty is not a commodity tossed aside with little regard. So what to do? Why, offer previous iPhone buyers a $100 credit at the Apple Store, of course! "Apple loves us!" the customers cry, and the company image rises even higher than before due to their good will and stellar customer service. And the $100 we suddenly have to spend at the Apple Store doesn't really cost Apple $100 at all, yet boosts sales quantities (read: market share) going into the holiday buying season, and we customers are just grateful to Apple for letting us spend $100 more dollars at their store.

Well played, Mr. Jobs, well played.

[Meh_Whatever @ Sep 7th 2007 2:21AM]

I agree with Quix. In fact, a couple of hours ago, before I read here, I posted nearly the same thing on another site. ;)

I think it's rather brillant, this move from Apple.

[Matt @ Sep 6th 2007 3:24PM]

That's called looking after customers...

I'm starting to like Steve more and more - first starting the DRM dropping spree, and now this. The open letters make a nice personal touch too.

I used to be an iPod hater and buy from companies like iriver (still great products), but now I might convert.

[TDG01 @ Sep 6th 2007 3:29PM]

Nah....don't bother....Stay away from the light!!

Tons out there w/better sound quality and broader format support...

It's the freakin iTunes integration that gets me!! It's difficult to look past how easy they make everything....I've already been zapped....

[fred @ Sep 6th 2007 3:41PM]

Yeah don't do it! You need something that will play OGG, and 8Track so you can listen you obscure Ukulele music from Norway

[Matt @ Sep 6th 2007 3:44PM]

Yea, lol, that's my only [quite very major] problem - most of my music is in OGG, and like most I'm not a big fan of lossy-lossy transcoding

[suntiger @ Sep 6th 2007 3:52PM]

@matt: www.rockbox.org . Replacement firmware for the iPod that not only looks better, works better, and plays OGG, but gets rid of iTunes as well - it just plays whatever's on the disk.

Quite handy if you're into the hardware but not the software. Unfortunately won't work on any of the new ones, but it does work on a 5g, and they shouldn't be too hard to find.

[John @ Sep 6th 2007 4:05PM]

You know, with open source firmwares like rockbox (which support an insane number of codecs), i really don't see how it's an issue that the ipod natively supports limited file types. In the non-tech world, flac and ogg aren't even spoken of. The main staple of digital music is mp3, and even with intense marketing, wma is still hardly used. Apple's own music format is only successful because the ipod is so successful, and most people don't even deal with file types in the first place as long as it works properly.

As far as iTunes integration goes, you can use other products aside from iTunes. Most media players come with some kind of proprietary media player that it's supposed to sync with. Creative media players come bundled with MediaSource, and even my first mp3 player, the RIO 500, came bundled with its own media software. Hell, Microsoft even made a program to come with the Zune, despite Windows Media Player! It's standard practice, yet somehow Apple gets hounded with it constantly. Sure, iTunes isn't right for everyone, but it must work great for a lot of people or it wouldn't be successful.

[Matt @ Sep 6th 2007 4:13PM]

I know, I used to have rockbox on an iriver H320 and was quite active on the forums.

However it will be a while until a port for these new players happens, and I don't have the programming knowledge to help out unfortunately (PHP is my limit!).

[johnny5 @ Sep 6th 2007 4:25PM]

Matt, you can get a plugin for QuickTime that will let you use Ogg with iTunes. Google it.

[Will Cosgrove @ Sep 6th 2007 6:09PM]

Actually, Stereophile said the iPod output was about equivalent to a $600 CD player and was one of the best ever tested. So good luck finding something better.

[CraigJ @ Sep 6th 2007 10:25PM]

what is "Apple's own music format"?

[Zennalathas @ Sep 8th 2007 5:28AM]

@Will: How about a $700 CD player?

[Tom Boucher @ Sep 6th 2007 3:25PM]

i'm happy with money for Apple store, will pay for my 10.5 update!

[Nick Catalano @ Sep 6th 2007 8:49PM]

Didn't even think about that. I guess a lot of Apple iPhone customers are going to pony up the $100 in October anyways... so most mac users who can do math will find that this isn't all that bad of a deal.

[m16 @ Sep 6th 2007 3:26PM]

hmmm...thats betraying his corporate duty to make money. I bet his stock holders are pissed off.

[Matthew @ Sep 6th 2007 3:31PM]

That's exactly what i was thinking when i heard this. There goes all the stock climb from the announcement.

[andrew @ Sep 6th 2007 3:45PM]

What stock climb? The stock fell more than $10 per share in the 24 hours after the price drop announcement!

[TJ @ Sep 6th 2007 3:51PM]

ummmm.... what stock climb from the announcement. I don't know how closely you follow the stock but it finished quite low yesterday. People buy, buy, buy, all day as the hype builds, and as soon as the announcements hit, they sell. Stock goes up for the first part of the day and then crashed at the end. Over the next week it evens itself out. Smart stock holders will realize that the money he is giving back is for the most part coming right back to the company, and that the volume increase in sales at the lower price point will more than make up for the drop in MSRP.

My 2cents anyway.