Banner Logo
Home
The Real Kato
About Me
Twitter
Facebook
Frozen Lunches
Links
Kottke
Daring Fireball
Amalah
Secret Agent Josephine
Dooce
Contact



Archives
Most Recent

2024 March
2007 September
2007 August
2007 July
2007 June
2007 May
2007 April
2007 March
2007 February
2007 January
2006 December
2006 November
2006 October


Categories
All Categories 

bloggers 
books 
commentary 
dating 
food 
funnyhaha 
interesting 
life 
movies 
music 
politics 
reviews 
science 
site-business 
sports 
style 
techwatch 
television 
theater 
travel 


Recent Comments
On College Football 2022: Week 6 Recap and Week 7 Pre...
Ken said:
Yeah, we've both had our share of hope and disappointment in this game. Let's just hope for a good b...
On College Football 2022: Week 6 Recap and Week 7 Pre...
Dan* said:
I'm not sure how I feel about this game. On one hand, I feel pretty optimistic that we have the tale...
On College Football 2022: Week 1 Preview
Dan* said:
Glad to see you'll be back writing football again, Ken! Congrats on the easy win today. You didn't ...
On College Football 2021: Week 10 Recap and Week 11 P...
Ken said:
Yeah, sorry one of our teams had to lose. I've come to appreciate Penn State as a classy and sympath...
On College Football 2021: Week 10 Recap and Week 11 P...
Dan* said:
Hey Ken, congratulations on the win yesterday! Some really odd choices by our coaching staff in that...


<< Previous: More Michigan Self-F... | Next: NFL Recap >>

About the iPhone Price Cut
Thursday, 2007 September 6 - 10:29 pm
Free money from Apple! Even for those of us who are not outraged.

Apparently, people were up in arms about the fact that Apple reduced the price of the iPhone by $200.

Up! In! Arms! There are all kinds of arms in the air right now.

I'm not sure I entirely understand all the outrage. I was an early adopter who paid $600 for an iPhone (and another $600 for Amy's iPhone). Am I angry that Apple cut the price of the phone? Nope. If I didn't believe it was worth $600, I wouldn't have paid that much for it.

If Apple had priced the iPhone at $399 to begin with, then in all likelihood, they would have sold out faster, and then they would have been selling on eBay for $600. So early adopters would still have paid $600, but a bunch of line-squatters would have pocketed the additional profits instead of Apple.

I'm an Apple stockholder. As I said when the iPhone was first being introduced, Apple first obligation is to maximize its profits for the sake of its shareholders. Apple isn't supposed to sell products as cheaply as possible; it's supposed to sell products at the highest prices the market will bear. Does that means they should "take advantage" of Apple fans and gadget freaks by selling their hottest things at premium prices? Absolutely. Sony should have sold the PS3 for $800 when it first came out; Nintendo should still be selling the Wii for $350, which is the typical current selling price. Why let retailers and eBayers claim all the additional markup, as long as demand is outrunning supply?

And still, iPhone buyers complained. A $200 price cut was too much, too fast, they said. You are punishing us loyal Apple fans, they said. And the most surprising thing is that Apple succumbed to the whining, and is now offering a $100 store credit to everyone who purchased an iPhone at the original price. As someone who bought a couple iPhones early on, that suits me just fine. But as a stockholder, I'm thinking that a $100 million writedown isn't so great for Apple's bottom line, even if that money is being used to spread goodwill.

As to why Apple reduced the price, I'm sure there are many reasons. Naysayers and haters will assume that the iPhone wasn't selling well. But I don't think that's the reason for the cut; after all, it was just recently announced that the iPhone is the best selling smartphone in the market. I think the real reasons are:

- Apple wants to aggressively target sales in the holiday season;
- Component costs are lower, partly because of higher volumes of parts that are common with the iPod touch;
- A lower iPhone price fits better with the pricing of the newly-announced iPods

Whatever the outraged early adopters say, Apple isn't out to screw people. No one forced us to buy the iPhone at $599. We did it because thought it was worth it. And it was.
Permalink   Bookmark and Share
Posted by Ken in: techwatch

Comments

There are no comments on this article.

Comments are closed for this post.
Login


Search This Site
Powered by FreeFind