Current Events

We interrupt your regularly scheduled rant to ask: Did you catch the fracas that broke out at Apple yesterday?

For anybody who may have missed it, Apple announced yesterday that they were dropping the price on the iPhone by $200 (or roughly 33%). No one is sure exactly why; most analysts are blaming it on the entry of competing products into the market, and the fact that the original price was a bit steep for the casual user. Granted that an iPhone replaces a cell phone, PDA and iPod all in one discrete package, not that many people are going to need to replace all three of these functions at the same time, and even if they do, they can acquire a low-end PDA for under $100 and a quite good cell phone for even less with a two-year plan. Add in $149 for an iPod Nano, and you’re still not half as expensive as the iPhone.

Personally, I doubt both reasons were decisive. There is nothing on the market that can really compete with the iPhone, and even if there were, it would lack the utter “coolness” factor that appeals to the technophiles. The price on the iPod has never really dropped; Apple has introduced cheaper models of the device, but they’ve never really offered lower prices – except when a new generation or new product was in the wings. Maybe there’s a new gismo coming; maybe the 2nd generation iPhone has cleared beta testing faster than expected.

In either case, the people who had acquired iPhones at the original price went ballistic when the news was announced. They started bombarding Apple (and Steve Jobs specifically) with irate emails and flaming both the company and the executive everywhere they could. The company’s initial reaction was complete indifference, with Jobs actually telling the early purchasers that this is just what happens with new technology. However, once news of that crack hit the Internet, the flame war turned into a complete conflagration.

Later in the day, Steve Jobs called a press conference where he spoke about the importance of taking care of Apple’s loyal customers, and offered everyone who had bought a iPhone at the original price $100 worth of free iPhone services. The flames began to die down almost at once.

Now, granted that Apple should have led with that offer and avoided the flame war, it’s still an act of genius. All of the people who waited until the fall to purchase an iPhone get to feel really smug about waiting, all of the people who want to give one as a present this holiday season have a new incentive (lower price), all of the people waiting for the second generation iPhone release will be able to get one – and the people who bought one early get a benefit that COSTS APPLE EFFECTIVELY NOTHING! It’s even possible that the entire flame war was a calculated effect; it certainly got everyone talking about the iPhone without actually costing Apple a dime.

Genius. Merely genius…