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The Great iPhone Price Drop Uprising of 2007

Macworld logoAs probably everyone other than Bill Gates probably heard, Apple dropped the price of the iPhone by $200 yesterday. And, very shockingly to me, this somehow upset a number of those who bought iPhones back in June. Over on the Macworld forums, I've been involved in some interesting discussions on the matter. Basically, my position is as follows:

  • Nobody was kidnapped, dragged to an Apple Store, and forced to spend $599 on an iPhone. Everyone who bought on June 29th did so freely of their own will. (Note that I'm a possible exception to that statement, as I was asked to stand in line by my employer. But since it was their money, I didn't really mind.)
  • Whenever you buy any piece of technology, it is a known fact that it will get faster, smaller, more feature laden, and cheaper in the future. Knowing this, I have always treated a technology purchase as a pure sunk cost--whatever you pay, whenever you pay it, it's gone. If the item's price changes in the near future, oh well. I made my decision, I have the piece of technology, and I don't really care if it's cheaper.
  • People are claiming the "value" of their iPhone took a $200 hit yesterday. There's only one way I see that as a true statement: if the user was planning on selling their iPhone on eBay today. However, since we're all on two-year contracts, I don't see that as a big market at the moment. So if you were going to keep your iPhone and continue to use it, your phone's value is unchanged: it's just as important to you today as it was yesterday.

So basically, I'm amazed at the number of complaints over this issue. In one of the forum threads, I asked those who felt this was an issue to explain what they would have done had Apple announced a $200 price increase instead of a drop. Would they have all rushed out to their mailbox to drop a check in the mail for Apple? Not surprisingly, it seems that wasn't a popular suggestion. People want something for nothing, basically.

You've probably also read by now that Apple has decided to grant a $100 store credit to all those who bought iPhones prior to the price drop. Hopefully this will silence the criticism, but I doubt it since it leaves $100 "missing" from the pockets of those who are complaining. From my seat, though, Apple didn't have to do this at all. When you choose to buy something, you're basically fulfilling a contract with the product supplier: I agree to give you this much money, and you agree to give me the product. Anything that happens after that (outside of normal "price protection" windows, which are not 60+ days in length) is just something that happens.

Anyway, am I all wet in my thinking? This demand for a credit due to a price drop seems unprecedented to me; nobody complained when iPod Photos plummeted $200 a few short months after their introduction. Why is the iPhone different?


10 thoughts on “The Great iPhone Price Drop Uprising of 2007”

  1. Completely agreed. Actually, that example of what people would do if Apple increased the price $200 is a very good way of showing people that they're demands are unreasonable. I had never thought of it that way. But man, were people bitching! Sheesh.

    BTW, might want to change the tab order of your text fields in the comment area -- currently it goes name, e-mail, website, spam question, comment text.

  2. If I had paid $599 for an iPhone, I would feel royally steamed.

    The only reason I would have bought such an expensive phone and agreed to be shackled with a two-year contract was so that I could have something that the "little people" couldn't have. By lowering the price, Apple has made my sacred talisman available to the lesser kind. By draining off some of the precious, precious aura of smug superiority from my iPhone, Apple devalued not only the phone, but my self.

    Fortunately, I didn't spend $599 on a pricey status symbol, so I can view this with magnanimity.

    Apple doesn't owe anything to the angry early adopters, but I think the $100 credit is a wise move. It doesn't pay to upset your most extravagant customers.

  3. What if Apple had doubled the amount of storage instead of lowering the price. Would everyone demand a replacement iPhone with the new memory?

  4. I think there is a difference in this case because of two things - time and quantity. If Apple had cut the price by $50, I don't believe there would have been any complaints. Or if Apple had cut the price by $200 six months down the road, again there would be virtually zero outrage. It is the unprecedented nature of the price cut (so soon and so much) that has caused these widespread complaints.

    You are logical and present arguments that cannot be rejected and I agree that once I buy a product (and I am happy with it), there is no reason for me to complain about changes to it in the future. But you ignore the human feel of the issue. I think Apple's $100 rebate rights this issue by reducing the impact of the quantity and time.

  5. snooglix: I guess that's the part that just "works different" for me. Once I've made a purchase, what happens to the price (outside a small price protection window) is really irrelevant. It doesn't affect my usage of the device at all, obviously. As for the impact on the iPhone's "value," relative to a two-year contract, this move has no impact at all: the only thing that will affect the phone's value at that point is the retail price at that time, as well as demand for used iPhones (which personally, I think will be quite low, given what the new ones will feature by that time).


  6. Annoying but every since I've been buying computer/IT bits and pieces it has always been, if you need it or want it, then buy it, if you want to save money wait.

    On quite a few occasions, something I've bought is on special in the following week or so.

  7. I'm not about to agree or disagree with robg.

    I did buy an 8GB iPhone June 29 at 7pm after waiting inline for 3 hrs at my local AT&T store. It was fun inline and I had lots to chat about with others in front and behind me. There were many kindred spirits around. It was a fun experience and a first for me wrt lining up for a new product. My wife even stopped by while I was inline and gave me coffee and cookies, and took pics of me standing inline with all the other early adopters.

    When folks in front and behind were in the AT&T store along with me we all gave each other a big hug as we got the last of the 50 or so the AT&T store had in stock.

    I must admit the $200 price drop was massive and soon after the build up to June 29. Did I feel a little miffed? Yes but soon got over it as wife and me had just bought our son an 8GB iPhone for his birthday (a major one) just the weekend before the $200 price drop. Soooo, we got the $214 (including tax) back from Apple with their 14 day price matching policy and then to my surprise another $100 AppleStore gift card token.

    I'm I please - you bet yer I am.

    Then there's all the fuss about no Corp discounts on iPhone and the extra $20/month if existing AT&T customer. Total nonsense. My existing AT&T contract with 25% Corp discount on monthly service is still intact and the $20/month is actual only $10/month as it all turns out to be.

    I was able to toss the clunky Palm Treo 650 (which never did work well with my car's BT hand-free setup thru the radio HU) to Craigslist for $150 and a lucky young lady. I actually paid more for that Treo 650 than I did for the iPhone.

    I'm very happy with my iPhone and greatly appreciate the price cuts and AppleStore gift token. Even without these goodies I would still be very happy.

    The iPhone is one very cool slick high-tech practical toy/phone/MP3-player/Emailer/Maps/Notes/Video-player/Stocks/Camera/Calendar/Weather/SMS/4-bander/Photos/YouTuber/Clock/Calculator/Web-browser and who knows what else Apple will provide in the future.

    Oh - and BTW the iPhone sync-s perfectly with iTunes/AddressBook/Calendar/SafariBookmarks etc whereas the Palm Treo 650 was a dog to sync with Palm Desktop or the Missing Sync products. I'm not sad about leaving the Treo 650 behind at all.

    My wife is anxious to have an iPhone as she can hear better on it that her hearing-aid-boosted Nokia special phone AND without her having to use the hearing-aid switch.

    Wife will get my hand-down iPhone RevA when Rev2/3 with GPS comes out within next 12 months or so.

    The iPhone has made my life more enjoyable and Apple in a strange way helped with their pricing strategy.

    I cannot believe Apple thought out this pricing strategy ahead of time - but if they did they really are an excellent marketing company.

    For the record - I was not part of "The Great iPhone Price Drop Uprising of 2007” but did reap it's monetary rewards.

  8. It happens all over the world and it is the same in Poland. It happened to me a few times to buy expensive electronical goods and then watch them get cheaper. Now, I always wait :) but you are right, people sometimes get furious. Greetings from Gdynia, Poland.

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