Jobs To Fuming iPhone Owners: Tough Luck - InformationWeek

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9/6/2007
10:02 AM
Eric Ogren
Eric Ogren
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Jobs To Fuming iPhone Owners: Tough Luck

Are you steamed that you paid $599 for an iPhone? Steve Jobs has one thing to say to you: "That's technology."

Are you steamed that you paid $599 for an iPhone? Steve Jobs has one thing to say to you: "That's technology."Uh. What kind of answer is that?

As everyone probably knows by now, Apple had a big old press conference yesterday and dropped some revised iPods into its mix of products. Among the day's news was that the price of the 8GB iPhone was being cut by $200 to $399 just 66 days after the release of the multimedia device. Whether you were one of the many who camped out on June 29th to get the iPhone on opening day, or just decided to pick one up yesterday morning, you paid a $200 premium to be an early adopter. Ouch.

After the event, USA Today had the chance to speak to Mr. Jobs briefly. It reported:

Q: What do you say to customers who just bought a new iPhone for $599? Sorry?

A: That's technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that's what happens in technology.

Mr. Jobs, it may be true that the price of technology comes down over time, and early adopters always pay a price to have the latest and greatest gadgets ahead of everyone else. But c'mon! Prices don't drop by 33% in just two months. Motorola held the price point of the original RAZR (which sold over 50 million units) at a then-steep $499 for a lot more than two months. And when the price did drop, it did so slowly.

And what about your Macs? Even your own computers don't depreciate that rapidly. In fact, they don't really depreciate at all. Prices of entry-level MacBooks have remained in the $1,100 - $1,500 range forever. If the price of a MacBook dropped 33% two months after being released, I think you'd have a run on your stores. If you're going to start lowering prices to entice sales, why not spread the love around to your core business?

Apple no doubt spent gobs of money developing, manufacturing and marketing the iPhone. We know that the components of the iPhone cost about $225-$250, giving the iPhone a healthy margin. That $200 price premium for the last two months likely went a long way to helping Apple recoup a portion of its investment in bringing the iPhone to market.

Now that it is entering what Jobs called the "high-volume manufacturing" phase, you can bet that the iPhone has settled to its intended long-term price point.

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