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]
posted Sep 6th 2007 3:19PM
I'm still $500 richer than the people who bought one.
lol :D
true say
Umm... that depends... on your personal balance sheet.
Who exactly are you comparing yourself to?
I believe Alan is comparing himself to his iPhone-owning doppelgänger.
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.
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
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.
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%.
It better be a Krugerrand, or else !!
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!
Funny thing is: Apple store is now selling a limit edition t-shirt that reads 'iSucker' for $100. In 7 forgettable colors.
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.
I wonder how long this takes to expire. If it lasts long enough, this may be my "free battery replacement" card.
consolation prize to everyone else?
ruins apple's credibility of course. all that was pure profit for apple
Wow, a company that makes a healthy profit... no credibility in that. You're a douche.
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!
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.
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.
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
steve's gone nuts
...via an itunes gift card.
So which email worked, I gotta' ask when UK iPhone will be here :P
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!
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.
"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...
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.
Pfft! It's a $100 Apple Store credit so Steve still gets to keep their money! Still, it's a nice gesture.
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...
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.
Make sure you spend it on their lowest margin items to ensure maximum screwage. Haha!
If someone buys, for example, iLife '08 and uses the gift certificate, Apple won't get $79 profit, will they?
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...
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.
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.
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.
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....
Yeah don't do it! You need something that will play OGG, and 8Track so you can listen you obscure Ukulele music from Norway
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
@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.
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.
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!).
Matt, you can get a plugin for QuickTime that will let you use Ogg with iTunes. Google it.
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.
what is "Apple's own music format"?
@Will: How about a $700 CD player?
Are you kidding? People will still find something to bitch about, bring out the cry babies. Too little too late? Apple Sucks? What else you got geek world?
Just what was needed to keep those that were disenfranchised from dropping off of the Apple bandwagon.
But its a $100 store credit!
i'm happy with money for Apple store, will pay for my 10.5 update!
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.
hmmm...thats betraying his corporate duty to make money. I bet his stock holders are pissed off.
That's exactly what i was thinking when i heard this. There goes all the stock climb from the announcement.
What stock climb? The stock fell more than $10 per share in the 24 hours after the price drop announcement!
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.
Eh, the money stays in the company, so the stockholders won't see any influx of gross revenue. And it's probably a safe bet that most people will blow the $100 on iPhone accessories, which are probably anywhere from 50-80% profit anyway. So it's really not as bas as it seems. Using some VERY ghetto math here, assuming 900k iPhones sold (I heard nearly 1M have been sold, dont shoot me for bad numbers):
$100 credit for each=$90M given back....and probably 80% of those will be 60% profit margin purchases (or better, I'm being conservative here), that comes out to $36M 'lost'.
36M is a lot of scratch, but let's put it into perspective. 900k iPhone customers, and I'd say 700k of them would be pretty jacked about the $200 drop. Now maybe about 80% of those customers are happy again...560k customers have been turned from Peeved-Infuriated to Neutral-Ecstatic. And considering they raked in AT LEAST $200 in pure profit in the first place, that's just whittling away at a 180M.
And again, the gross number stays the same...it's just some numbers behind the scenes that change.
As a stockholder, I think it's a brilliant and generous gesture and makes me proud to hold Apple stock and own Apple gear.
As someone who owned puts on aapl, it thought the whole thing is brilliant as it drove the price down. What most people seem to be missing, and wall street isn't, is that Apple hasn't changed it's estimate of the number of phones the expect to sell. Prior to the price drop, Jobs expected to sell 1 million in September and that number hasn't change, but the margin sure to a giant crap. Let's assume they hit the 4.5 million target at $200 dollars less margin: fat $900 Million of missing revenue. Steve can spin it anyway he wants, but the simple truth is the iPhone isn't selling, the AppleTV isn't selling, and nobody is buying movies off of iTunes (if they were, Jobs would let everybody know) so the Touch may follow the same fate as the iPod classic does just fine as a music player which most people want.
i think that he must have meant the stock climb after the announcement of the iPhone, not the announcement of the price cut. but who knows.
Part of being an early adopter is paying a premium price.....this should come as no surprise to anyone.
Should we be demanding a refund from every company who has introduced a product and then dropped it months later?
Just goes to show you that Apple fanatics are a "special" bunch.
I am by no means an Apple fanatic or fanboy but I can see where their frustration is coming from, please let me know one gadget, phone, or any electronics that receive a 33% price cut 68 days after launch, the answer, none, that is why people are so pissed, if the price drop had come a year after release then people would have been more understanding, yes people expected the iPhone to drop in price, but I don't think anyone predicted it would drop 33% after 68 days, come on be real
I guess it's just more proof that Apple charges too much for their products.
Canon has a cashback after a monh of releasing a new camera, or pre-early adopters adobe products you get new software for old price....
@ Khris
I am an apple fanatic. I really want an iPhone. But I wasn't stupid enough to go buy it the day it came out. Everyone knows how this works. If you want it right away, you have to pay. You can't get mad when they drop the price, and if you do, your a stupid crybaby.
The problem here is, the iPhone was highly anticipated, and when people got their hands on it, the novelty wore off quickly. SO now they are pissed that they basically overpaid for it.
I for one, think its a great piece of equipment and am glad i waited.
Anyways, saying apple fans are a special bunch? No, it doesnt matter what piece of equipment you favor. Microsoft or Apple, some people are just dumb. If Microsoft did this, we would still have a bunch of whiners posting angry comments towards them. Get a life people.
This is a reminder, you by Apple for the brand, you pay it more, and after you get a gift certificate to buy another apple product.
So they chop $200 off the price of an iphone and hes only giving you $100 back, and in the form of a gift certificate that you can only spend on apple?
What an idiot.
At least, he is giving SOME money back, don't you think? Most companies wouldn't even do that. Plus, It's not "Apple", it's the "Apple Store", if you take off your MS-Fanboy hat and actually go into an Apple Store, you would realize they sell most about anything you could find at any Computer/Technology store: Digital Cameras, all sorts of Cables, Games/Software, laptop cases, and hardware from different manufacturers.
But that's what you risk being an early-adopter.
A $100 store credit is still waaay more than most companies would offer.
And so what if its a store credit? Sensible early-adopters should think of it as...
"Ok, we took the risk and it didn't quite pay off, but now we get $100 of free accessories to go with our more-expensive iPhone!"
You just proved to everyone that you can read! I am so proud of you! That's my special boy, that's right, you're my special little boy!
An idiot laughing all the way to the bank with millions of dollars.
Yup, you are SO right.
Excuse me as I roll my eyes...
Giving people $100 out of sheer goodwill ...which goes right back to Apple's store... is being an "idiot"? I think you and I have different definitions of that word.
That's GOOD marketing. I bet the whole thing was planned to show Apple's concern for its customers :-)
I would not be surprised if this were the case.
Google won't be able to do this with a free phone...
I can't believe steve is that kind. great move from apple!
This is awesome!!!! i was hella pissed... i wanted to break apples neck... but now my anger is subsiding.
oops. My comment was supposed to be in reponse to the comment above yours. Sorry. I did not mean to insult YOUR ability to read and regurgitate information, just the person above you.
This is awesome!!!! i was hella pissed... i wanted to break apples neck... but now my anger is subsiding.
@jon, I am not a MS fanboy, infact i hate MS. I have a mac, and an iphone. i have had a few ipods. zunes are the most ridiculous things i have ever seen in my life... and the ps3 pwns the xbox 360.
You said hella? Please end yourself.
Sorry, I can't let this go unchallenged, even though it's totally OT:
The PS3 pnws the 360? Are you high? I have both and the ONLY reason I play my PS3 is Warhawk. XBL is better, the games that come out for both are better on the 360, e.g., actually having a multiplayer aspect - I'm looking at you Virtua Fighter 5, and the 360 is cheaper.
I love Warhawk, and since it came out my 360 hasn't been turned on, but don't tell me the PS3 "pwns" the 360 - it still has a long way to go before that happens.
And no, I don't consider the built-in Blu Ray player a bonus because which format will win is still not decided - sales data to-date != a final victory.
-p-
It is unprecedented!
he had to react. the tv stations will be reporting the outcry tonight. at least the tv stations can also report that apple is giving $100 back.
While this may not make everyone completely happy, I think this is a fantastic way to stop the negativity...way to go, Steve
Completely idiotic. Fuel price fell a few cents recently. I want my money back.
Smart move... well about a million iPhones have been sold and pissing off about one million loyal customers would be bad. Still, it'll cost Apple $100 million but I'm sure uncle Steve has that much money in his pocket.
It won't really cost Apple $100 million. Just $100 million "potential" in lost sales. They'll probably still profit off some people - if they choose to go for some of the more expensive products.
That's assuming all $100M in credit will be taken. How many people get a gift card and use it before it expires? Best Buy makes a huge profit out of expiring gift cards
@Tom
Depends where you live. In California (where I live), gift cards cannot have expiration dates legally. I'm certain this is the law in many states as well. Also, the likelihood of someone not using a $100 gift certificate when they spent $600 on an iPhone is pretty low.
A nice gesture I think, but for some peeved customers - too little, too late.
They'll probably sell of their cards or trade them on a website. Note: I don't own an iPhone, but I think I would still be pissed. Just slightly less.
now someone just needs to yell Apple sucks, and jlivengo can go take a nap or something
Even if it's an Apple Store credit, it's better than what Sony or HP or anyone else that I can recall would do. You normally don't get this kind of generosity without a Class Action lawsuit and even then it's not that high. Kudos Steve Jobs. It makes us new Apple owners more loyal to your company. I still like Windows and would still consider other products instead of Apple's but gestures like these are kind and welcomed these days. Now, my question is, can people that bought their iPhone within the last two weeks return it without incurring a re-stocking fee?
Wow. I have to say, this is very surprising. A surprising week all the way around. As someone else pointed out, this will pay for my upgrading to Leopard (at least, partially). Definitely makes me feel better, even though I'd resigned myself to the "tax."
This does make it seem like they priced it incorrectly, though, doesn't it? If they had planned to screw over early adopters, they wouldn't be giving us $100 credit.
A gift certificate??? People didn't BUY an iPhone with a Gift Certificate! grrr
Apple likes CASH! I like CASH!
The negative for me is that as a stockholder, i lose more money from the decline in stock price. Hopefully they sell enough iphones this holiday season to make up for the loses they are going to have. Im sure thats what jobs in banking on.
Hey its far from perfect but its something!!! Some free component cables...maybe cheap headset
Hmm, I sure could use $100 in the apple store. Never thought getting an iPhone early would score me 100 bucks for the apple store lmfao.
scoring an iPhone now would leave you $200+tx you can spend on iTunes, instead of just $100.
Yeah, I know, at least the glass is (almost) half full
Ha.
So let me get this straight.
Apple cashes in on the early adopters with a $600 price-makes bank!
Just a month later the price of the must-have gadget is lowered by $200 thus "rewarding" late adopters and infuriating said mavens-again making bank off the rush to buy at a lower price point.
The whining begins and Apple extends a $100 store credit to aforementioned pioneers-that $100 is spent at apple and again apple makes bank.
Apple cashes in on the early adopters and their lust for the gadget, woos a second wave with a lower price, appeases whining by offering an "olive branch" in the form of a $100 gift card to the apple store where the money will be returned to apple.
Brilliant, simply brilliant.
While I see your point, I have to...wait...I can't disagree...you're right.
I'm actually pretty happy to get my $100, even if I end up buying an iTunes card and giving all the money back to Apple and the record labels that I hate so much.
I thought the price drop was $200... and after 2 months? They really should give everyone back the $200 for trying to make suck high margins.
I don't know why some people are so loyal to Apple. The products are beautiful but Apple never plays nice.