iPhone – What’s wrong with a discount?

Posted by: Rea Maor In: Apple and MacOS - Friday, September 7th, 2007

For all the preaching that proprietary tech fans do about free enterprise and capitalist commerce, they sure don’t seem to be too happy with the end effects.

It was kind of alarming to see the backlash of iPhone customers against Apple, who dropped their price for the new iPhone by one-third yesterday. But wait a minute, why are people mad about that? Because they bought before the price drop, so now they claim they were cheated.

Apple, in typically appeasing style, offered a $100 store-credit rebate to early customers. They didn’t have to do that.

I think I’ll apply that to my daily life. I’ll save every receipt from every purchase I make forever, and if any retailer I’ve ever done business with later prices the item for a discount, I’ll come back waving my receipt and demanding reimbursement.

But seriously, isn’t it a marketplace? After a while, you begin to notice that hardware tends to decrease in price as time goes on. I’ve seen this happen everywhere, from graphics cards to gaming consoles to storage media. As soon as a device is manufactured, it begins counting the days until it will be obsolete. Who was really surprised by this move?

Additionally, innovation has always been a burden on companies. If you make hardware, would you rather be first to market with a new product which may be a hit or it may bomb, or would you rather wait to see what your competitors do first, then copy their moves only if they didn’t mess up? When you make a new kind of product and launch it, you have not only eaten the cost of research and development, but will have to wait to see what problems are going to come up with that first beta launch into the market. If I were running Apple, I’d probably do about the same thing, with the higher beginning price in place to cover the cost of any mishaps such as replacing defective units.

Planning your pricing structure is good business strategy, and I’ve never heard of a company being punished for it before. In addition, the customers who bought early were getting something extra for their money: the benefit of being the first on the block with an iPhone. A quick Google search will show utilities for it popping up left and right; I’ve even pointed out some early ones here. Thus, the secondary market of innovative products for that platform, and the first iPhone customers were likely among some of the first to produce software for it.

Mind you, I’m glad Apple is showing good faith with its $100 store credit anyway. I’m equally glad to see that more people will be able to afford one. In a related iRumor, Apple is trying to cut content costs for TV shows on the iPod. Well, there we go again! But this time, it isn’t raising an eyebrow.

I’d just like to ask anybody who’s angry at Apple for dropping their price: if, instead, they had started out selling it at $499 when you bought one and then after two months raised the price to $699, would you feel motivated to go in and pay them an extra $100?

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2 Responses to “iPhone – What’s wrong with a discount?”

  1. iPhone drama bores me to death. Anyway… — Life is a Thrill Says:

    […] By now, you know that all the early adopters who spent $600 dollars on a freaking phone began whining and gnashing their keyboards once Steve Jobs announced the 8 gb iPhone was receiving a hefty $200 price cut a mere two months after its release. My take is essentially this: why are these people so surprised and angry? […]

  2. derek Says:

    People will definitely become angry the way apple slashed their price to it’s iphone but what else they can do? cut in price to hardware and electronic products are due to happen , so consumers should be aware of that and not be amused by the hype.

    But you have a point there, I don’t think they will feel the same way if it happens to be the reversed of what had happened. hehehe

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