Apple Inc. (NYSE:AAPL) and its CEO Steve Jobs clearly didn't see this one coming. During the Apple announcement yesterday of its new line of iPods, Jobs also announced an unexpected $200 price drop in the only two month old iPhone. After that annoucement of a $200 price drop, those who already own the iPhone unleashed their fury on Apple. Internet message boards were clogged with furious consumers, and AT&T Inc. (NYSE:T) stores around the country have been packed with users demanding they be able to take advantage of the price cut as well.
The most interesting part of this story to myself, is that yesterday evening and 
early this morning it appeared that Apple and its CEO were completely fine with this decision. In fact, Steve Jobs was interviewed by USA Today after the decision and was asked specifically what he would say to customers who had just bought an iPhone for $599 instead of the current $399 price, his response was "That's technology." So basically at this point Mr. Jobs is telling those consumers that it's just tough cookies for them. Interestingly, just a few short hours later, we get an open note on the Apple website from Steve Jobs telling all those who already had an iPhone before the price slash they would be eligble for a $100 price credit at Apple retail and online stores. In the note Mr. Jobs apologizes for the price cut and says that the company wants to do the right thing for the very valued iPhone customer.
So, earlier this morning Jobs said tough cookies, and now he's apologetic? The outrage must have been very significant for there to be this quick of a turn of events.
What does this news all mean to Apple and its stock? Well the news certainly isn't helpful to the company. The price drop of $200 in itself raises some questions about the iPhone, and this media gaffe certainly won't help anything. Apple is clearly the leader in innovative technology right now, but it had better improve its public relations quickly before it turns off those valued customers.
What do you think about this price drop and the ensuing price credit Apple is now offering? Do you think this was a desparate attempt by the company to regain customer loyalty or a genuine apology?
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iPhone is worth every dollar according to customer satisfaction surveys. The price cut stemmed from Steve's realization that Apple should leverage the iPhone success for the lion's share of the handset market rather than be complecent with the lucrative profit margin out of 1% of the market share. Having lost the war with junky IBM-compatible computers, Steve made the right decision to 'go for it' this time.
Early iPhone adopters got pride and user satisfactions out of the iPhone. Now an unexpected bonus of $100. I believe the majority of them will be happy with it. For the a few greedy, let them be.
Yes, I believe Steve is sincere!
Posted by: Anonymous | September 6, 2007 5:42 PM | Permalink to Comment