Apple iPhone- anatomy of an outrage
Early adopters comprise a group of dedicated geeks who are the first to grab a new device hot off the press for a number of reasons. There’s the "I gotta have it first" group the "I love new technology at all costs" group and there’s the "I have one you don’t" group. One thing I can say with certainty about early adopters, they always expect to pay a premium that some even deem the "Early Adopter’s Tax". It’s a fact of life in the technology sector that the devices that said sector produces will always drop in price over time. How much time is acceptable for that price drop is at the heart of the iPhone rebate debacle.
There is no question that the Apple announced price drop of $200 for the iPhone touched a nerve. Never have we seen a knee-jerk reaction of such magnitude that it made mainstream news. It’s been discussed on major websites (like jkOnTheRun), and mainstream publications, heck it appeared on my local news and even the major network news in the US. So if the only people affected are early adopters and they expect the price of technology to drop over time anyway why did this produce such a backlash that Apple felt the need to step in and offer a $100 store credit?
If you follow the commentary on every web site that has discussed this outrage a common theme emerges among those who did not grab an iPhone at the launch. I should point out that I’m in that camp, I did not buy an iPhone then and do not intend to buy a discounted iPhone either. Even though I am personally unaffected by the rapid (and large) price drop that Steve Jobs announced, I can sympathize with those who were outraged. I am certainly an early adopter where mobile technology is concerned so I can see both sides of the arguments that are flying around with such vitriol. The "quityerbitchin" contingency is being typically vocal and telling the early iPhone adopters to quit whining and take it like a geek. A lot of examples are being mentioned where other products had price drops after launch so the iPhone outraged should shut up and are merely getting what’s coming to them. This argument doesn’t work here, though, because the iPhone is unlike any other device that came before it.
The iPhone is the most hyped, longest discussed product ever prior to launch. We’ve heard from Apple and everyone else that the iPhone was the be-all for everyone, and that it would cost only $599 for mobile nirvana. That price point is significant in this whole discussion because even though the iPhone was only released a couple of months ago the price and the product has been hyped for months and months. When you hear something like this for so long it’s inevitable that the mindset is formed that this is what the device will cost for the foreseeable future. Those who raced to by the first iPhones knew that the price would be dropping in the future, they were simply blindsided that the drop came so quickly and was so steep. They were the ones who stood in line, in many cases for hours or days, to avoid a shortage that never materialized, so they were already feeling a bit played by the Apple hype.
The end result of this Apple price drop announcement was taken by most to be a total "in your face" kick to the groin. It was done in the global public forum and could only have been the equivalent of a "screw you" from Apple, even if that was not the intent. Apple loves their loyal customers so I am confident they did not want to tick off this customer base, but let’s face it, if you go public with something like this there is no surprise that the most loyal of customers felt like Apple was ridiculing them in front of the entire world. Because, intent or not, that’s exactly what Apple did. Otherwise this would not be big news, and nothing would have happened. As long as Steve Jobs insists on creating the big splash, he has to be prepared to be hit by the tidal surge.
I also was very surprised at the price drop but have not intend to buy a Iphone from the start. I have had many cell phones and have not be able to use any of them outside because the screens are so weak in daylight and I do not like the candy bar or bricks so finally I found the samsung sync which screen is very clear but had to return it because of a missing cover to a AT&T store I saw the iphone for the first time after paying 700 for a razr and treo 650 when the first came out the Iphone is worth what they paid for it, we all knew it would come down but it is my belief that they are doing this because they are dumping stock for a new model come out after the season with all the missing features that people have complained about then we will be listing to more complains and you know that most people will never be quit and need something to complain about. It took a little long for the moto to reach give a way but I lost 700 thats how the computer and cell phone world is like.
HOLY CRAP! I am daily dumbfounded by this non issue. Seriously, it is starting to tick me off that news/blog space is actually wasted on this non issue.
New product comes out, early adopters pay premium, product sales cool off so company drops price to make product hot again. MOVE ON,nothing to see here… Not only do Apple fanboi’s have a superiority complex, but now they feel as if Apple should resign from the Capitalistic world and veer from their business plan just to please them.
I just bought an 08 corvette. I wish I could tell you it didn’t depreciate 10k as I drove it off the lot, but unfortunately it did. It was the price I paid to be the first on my block with one. I shudder to think what it will be worth next year, but oh well. While it’s not the case that GM dropped the price on me, I think it is a similar parallel to new technology and bleeding edge adopters.
How about a nifty new Pentium processor or how about a new ATI/NVIDIA graphics card? Hell the flagship card I paid almost 600 bucks for 4 months ago already has 2 models above it.
Even though I’m not a big Apple fan, either of the products or of the ideaology, I must admit they are a CLASSY company offering the $100 credit. In my years of being an early adopter of technology I have NEVER EVER heard of a company offering such a credit because of a price drop.
Hell there was even an article floating around the blogs about someone who dissected the iphone and put up what it cost Apple to make it, pretty obvious they were making a ton off of it. The whiners should have shed their tears at that point.
At this point there are not 2 sides to this story. Apple is a business, get over it. You wanted your shiny new toy the very first day it came out, get over it. Wow.
Well, and early adopters include the people who see a product solving more problems than it introduces.
Hype has to do with the size of the reaction, not with the fairness. Most early adapters have lost money to the pricing decisions as well as the failure of products, either commercially or because they didn’t do what they were supposed to, or because they did it poorly.
That myriad companies no one has ever heard of have taken people’s money, or better known ones than Apple, and not delivered, or delivered a product that was worth a lot less, doesn’t make this less outrageous.
Most successful retailers pony up when they sell something at a price that falls shortly–for the customers who feel abused and complain. Not doing so loses customers, and retailers that fail to adopt that policy fail. Apple heard, came up with a compromise policy, and it sounds significant if not ideal.
To the folks yelling quit your bellyachin’, I’d say, mind your own business. If someone can get redress from a bad policy, product, marketing plan, a shady company, or whatever, more power to you. Why should someone complain about that? Sheesh!
Spot on commentary.
Apple is, as has been pointed out, a for-profit business. Of course they can do what they want with pricing.
However, to so widely hype the iPhone before launch to a broad audience that undoubtedly included a lot of non-geek, non-early adopters who were swept up in the “must-have” tide of PR and then only two months later cut the price by one-third really is tantamount to insulting all those who bought the phone in the initial rush. The message is, “We squeezed everyone who would pay the absurd premium, now we want to sell to the people who aren’t nuts.”
Six or eight months later you could chalk it up to economies of scale and cheaper components or clearing the shelves for a newer product.
Not eight weeks later though.
No matter what their rationale (poorer sales than they expected, I imagine), it amounts to basically calling the early adopters chumps.
As noted, Apple can do that if it wants, but its quick reaction to correct that impression indicates they realized it probably isn’t a very good idea to send the message to hundreds of thousands of customers that their still new phones only worth two-thirds of what they paid for them.
I came over to your blog after seeing you quoted in the Times, but I feel insulted by this analysis. Not every iPhone owner is the idiot that you portray us as.
Like Kevin’s comments earlier, this was a very well-written opinion (that I enjoyed reading and appreciate you sharing). Similarly, it’s not very reasonable. I totally agree with your condemnation of Apple, but I completely disagree with your defense of the outraged early iPhone adopters.
I have an iPhone. I didn’t wait in line, and I didn’t get it on day-one. I would have, but I have a job and a family. Plus, there was no shortage in my area. I like it, but I don’t love it. I have it because I am pretty entrenched in Apple technology by this point. Apple stuff works for me, and I am not going to fix what ain’t broken. My life does not revolve around my technology (I have kids). I am getting my rebate-credit and, like most people, I guess I’ll use it to upgrade my OS when that day finally comes. WHILE I AM AN EARLY ADPOTER, I AM NOT AN OUTRAGED ONE. What upsets me about your analysis is that you fail to separate the upset early adopters from the ones, like me, who don’t really care.
Please don’t stick up for me, or if you insist, then do a quality job of it.
In fact, what has dismayed me over the last several days is the insistence on the part of the jaded early adopters is the dualistic view that a). somebody is wrong here, and b). it’s not us. This is not a novel refrain in the world. “There are evil doers out there, but it’s not us.” “There are bad drivers, but I’m not one.” “There are lousy football teams, but mine’s not.”
The elusively obvious reality is that just because “they’re wrong” doesn’t me that “we’re right”. Chances are good that we’re wrong too. It’s rare when one party is truly right and the other is truly wrong. It is even more rare when both parties are truly right. It is depressingly common when all parties are wrong, whether or not they can see it, let alone admit it when they see it. And in this case, both Apple and its injured fanboys are wrong (so I guess it looks like I’m right, kidding).
Apple has already come out and said “we were wrong” when they announced the price cuts. I don’t think that it makes sense to over analyze their share of the blame. They’ve done it for us. They were wrong for charging us too much for our iPhones. Had they lowered their prices slowly, we may not have caught on as quickly, Even though Apple is a faux-monopoly, in this case they ended up competing against themselves with the introduction of a very similar product at an awkward price-point. I must admit, the timing of this was strange. After following Apple for 20 years, this seems to suggest that they are planning to roll out something quite epic next time and were willing to absorb a PR hit now to make way for it.
In any case, this “confession” was all that the lowest common denominator of the iPhone early adopters needed to hear before immediately jumping to the conclusion that “then we’ve been unjustly wronged”. Granted, not everybody lunged at this conclusion, but those who did were probably also those who just after the announcement that Apple was going Intel switched their chorus from “Apple is better because it shuns Intels hardware” to “Apple is better because it uses Intel hardware”. It’s the “unjust” part that I find fault with. I think that you put it better than I could: “As long as Steve Jobs insists on creating the big splash, he has to be prepared to be hit by the tidal surge.” Agreed. The tidal surge IS Mr. Jobs’ fault for creating the splash, but what about the people who rushed to jump in when they saw the gigantic splash? Should we truly honor their surprise and outrage at getting soaked and sucked under? I’ve seen enough clips on America’s Funniest Videos to cast my vote. For my own part, I didn’t get an iPhone because of the hype (which if you look back was not created by Apple, it was created by the same fanboys who complained), I’ve been waiting for a phone from Apple for a long time. They released it. I bought it. I use it. I can’t wait until a generation of iPhone comes along that makes my e90 irrelevant, and this is not it.
The problem here is that if Apple was wrong for over-charging us then we were wrong for over-paying them. For my part, I don’t feel like I was over-charged. I tend not to buy something if it’s too expensive. Of course, if I really need something then I may not have the luxury or price sensitivity, but the iPhone is not a need for me. Hopefully, no iPhone early adopter has lost hold of their impulse control to the point of buying something despite it costing more than its perceived value. That sounds like a relationship with alcohol that I was had to confront.
The sad part about this is that the outraged early adopters apparently starting being wrong THE DAY that they picked up their iPhones and DIDN’T EVEN REALIZE IT until Apple let them know via the price cut. After all, few were upset that they shelled out 600 bucks for a phone (which was cheap compared to my e90), but many became enraged when they found out that others could join the iPhone party later for less cash. Neglecting obvious parallels to certain stories in the Bible, I don’t understand why we’re sticking up for these people.
Perhaps I’m just bitter because the same people who you are trying to pacify are, in my opinion, the same ones who will forever keep Apple from being a serious, dominant player in the consumer computer market. Don’t believe me? Look at what the most vocal advocates of linux do for its image with their zealous and elitist attitudes and comments.
Thanks for trying to telling me that I should feel bad for my decision to by an iPhone so that you can come in and rescue me by making me feel better because it’s not my fault. If I need this abuse, I’ll pay my therapist to do it.
In the meantime, I BEG the outraged early adopters: DON’T quityerbichin, just do the honest thing and append yourself onto the list of evildoes that yerbichinabout. I like my iPhone. I like my rebate-credit.
Good luck with this site.
Tangential to the immediate discussion, but JK, how do you see the iPhone price drop affecting other smartphones, e.g. the HTC Advantage? Do you think this puts some pricing pressure on them to compete?
This was not intended nor did it state it was speaking for every iPhone owner out there. It was my explanation for why I think the outrage was so strong, so nearly global, and so vocal. The fact that we’re still discussing this proves that out. I am very careful to never imply I am speaking for anyone and did not intend to do so here either.
asiriusgeek, competition like this will always pressure the competition to have competitive pricing and that’s a good thing.
Yea, I guess I would of been pissed if I had stood in line all day and found out that sixty days later I could have got one cheaper and without the wait…good points made by all.
“Yea, I guess I would of been pissed if I had stood in line all day and found out that sixty days later I could have got one cheaper and without the wait…good points made by all.”
Sorry JK I don’t understand your reasoning here. Technology is always getting cheaper and easier to acquire. It is just like the boys and girls patiently waiting for Dell to ship their back-ordered notebooks. If they just wait a couple of months to order they can get the same machine for less money and they don’t have to wait two months for it to ship.
I love your website and what you do for the community, but sometimes it seems that you really try to fan the flames. I don’t know if you do it for page hits or that you just see things from a different perspective. I have noticed you’ve been particularly transfixed on pointing out perceived issues with the iPhone. For a site that caters to those who place extreme value in mobility your coverage of the iPhone is lacking. If not for Kevin’s experiences with the device I would get the impression that it’s just a gimmick or fad. When in fact those of use who own or use the device know that it’s a game changer.
Sorry.. I quoted Lloyd not JK.
I’m seeing the main argument from the whin… err the disgruntled early adopters is that Apple hyped their product so much “forcing” consumers to purchase it. This is WEAK on so many levels it’s not even funny.
First of all most if not all companies hype their product, this is an obvious fact of life and business. The marketing budget of a product is usually one of the highest costs. What about the hype for the video cards? What about the hype for Windows Vista? Hell, what about the hype for the ipods themselves? It is such a non argument.
As for the price drop, all I can say to you guys is DOH! There were articles out BEFORE the iphone was launched stating that the estimated cost to make was in the mid to low $200’s. It was clear that Apple was making $400 PROFIT off of every iphone, why didn’t you complain then? Was Apple ripping you? Yes. It is what makes Apple a genius and successful company. Marketing is all about deception and making you think you need something you don’t.
To even further illustrate the story of misplaced rage I think we need to fast forward a bit here. In an Apple induced fervent blindness the sheep ran over each other in a chance to purchase a shiny, yet strangely functionless device. With no 3G, no true smartphone capabilities, and a walled garden of applications the iphone was crippled out of the gate. What the price drop should be telling you guys is that Apple plans on releasing the TRUE iphone sometime in the very near future. Yeah, you should have listened to those who said they would wait for the iphone 2.0. I am confused as to why there was not more outrage at the paltry specs of the iphone. With the release of the ipod touch, don’t you see that’s all you got, just with a dialer slapped in?!?
So seriously, what is the argument here? That Apple marketed a product, you fell for the marketing, then their business plan dictated they drop the price by 1/3? Nothing has been done wrong here, or different than many other products. WHY IS APPLE HELD TO A DIFFERENT STANDARD THAN OTHER COMPANIES? Sorry for the caps, but it just isn’t sinking in to anyones Apple addled brain. It’s like Apple fanboism turned against it’s own company.
Bottom line, there just is NO legitimate reason to complain or be dissatisfied, even before Jobs gave his $100 credit, which I don’t think you guys even deserved. The time to be outraged was when the iphone was released. Outrage at the huge profit margin that was clearly published. Outrage at the substandard features which will be replaced with a better model soon.
Apple fanbois wake up…
Excerpts from an article published in January 07 !!!!! There are TONS more of these articles strewn about the internet/blog scene. Of particular interest is: “With a 50 percent gross margin, Apple is setting itself up for aggressive price declines going forward,” While hindsight is 20/20, it seems that foresight was also 20/20, at least for those who chose to listen. The price drop is nothing surprising, it was forecast even before the iphone was released. You guys just didn’t pay attention.
http://www.eweek.com/article2/0,1759,2085669,00.asp
According to a preliminary bill-of-materials estimate by iSuppli, the $599 Apple iPhone could net Apple over a 50 percent gross margin, the analyst firm said on Jan. 18.
ADVERTISEMENT With the cost to manufacture an 8GB iPhone estimated to be about $280 in total expense, the remainder of the $599 total retail price is estimated to be pure profit1—which will flow back to Apple, as the company is forbidding carriers to subsidize or discount the phones.
Unlike other “teardown” services performed by iSuppli, the firm did not have an actual iPhone in hand to disassemble. The company said it was working off of its own component estimates, based on similar teardowns of competing phones, laptops and other devices.
Working models of the iPhone must also be submitted to the FCC for approval. However, a small number of working prototypes have already been distributed for hands-on previews, proving that the iPhone is nearing its final design.
High-profit products are no stranger at Apple, which has claimed margins of 45 percent on the iPod nano, said iSuppli analysts, who predicted that Apple will have to cut prices to keep up with the market. “With a 50 percent gross margin, Apple is setting itself up for aggressive price declines going forward,” said Jagdish Rebello, director and principal analyst with iSuppli, in a statement.
I’m kind of jealous. I wish all the manufacture’s that I got in line for would do a rebate now. Even if it was instore then I could have more tech gadgets to play with and such….
We’ve all had buyers remorse from time to time and we’ve all had bragging rights from time to time, you take the good with the bad in the gadget worlds. I think the I-phone early owners got a sweet deal.
As always Jobs is out of the box thinking and inovations. I’m not an Apple fan and would personally love to see the I-phone bite the big one. but hey kudo’s where they are deserved, hell maybe I can drop an email to samsung and get a gadget rebate for my early purchase of my q1 that is seriously reduced by now… lol
Kevin Tofel’s comments on iPhone pricing made the Boston Globe’s weekly “Quotes of note” feature:
http://www.boston.com/news/globe/editorial_opinion/oped/articles/2007/09/08/quotes_of_note/
“I just felt so used as a consumer. They hyped up the iPhone for six months and built up our expectations, and then they grabbed our extra $200 and ran.”
KEVIN TOFEL, on Apple saying it will drop the price of the iPhone by $200.
Rhis certainly hit a chord.
This is why I stopped being an “early adopter” of anything a long time ago. “Early Adopter” is an industry phrase meaning “chump”. It’s a phone. People who stood in line any length of time and willingly shelled out $600+ did so for a phone. There was no sense of perspective then and there’s still no sense of perspective now. These people shouldn’t be upset with Apple, they should be upset at themselves for being such lemmings over….a phone.
Over here in the UK I know a lot of people are looking at this whole storm in a teacup and thinking WTF?!?!? I know people who bought the N93 (my phone) on release day for £300 and I got it 5 days later for FREE as a Vodaphone High Value Customer (HVC). I’ve been offered the N95 for free too. Everyone knows that the price of the phone on opening day represents the demand rather than its true value. Throughout the hype in the US… constructive folk over here were wondering if and when T-mobile would be offering it for free (and with a Sony PSP thrown in). I think Steve Jobs blinked, he should have shrugged and let them eat cake. It is a really poor precedent to set for all technology companies everywhere.
$100/month to be ahead of the game. That sounds about right, if you ask me. I’ve overpaid to be one of the first on the block with a new gadget.
What’s hilarious is that Steve Jobs isn’t giving anyone any money back, it’s all in gift certificates.
Just about every iPhone user that I’ve met can’t stop going on about how wonderful it is. When I’ve brought up the price drop, they’ve claimed that they’ll just use the money to discount a new Mac system entirely.
He’s giving up the slimmest of profit margins, and leveraging people to jump further into the Apple product line. Even if you just buy some songs, a movie, and a couple of TV episodes from the iTMS, you’re now locked into the system, and for the low low price of his overhead and some lost margins, you’re now deep in Apple’s world.
Me, I’ll wait for the iPod Touch nano.
I bought an Apple Lisa… Where’s my refund?
http://www.bbspot.com/News/2007/09/jobs-offers-apple-lisa-early-adopters-store-credit.html