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iPhone Pricing: No Conspiracy, Rather Nimble Reactions
Thursday, September 13th, 2007 at 4:00 PM - by .(JavaScript must be enabled to view this email address)
The sudden price drop of the iPhone feels unplanned and unexpected, according to Marc Zeedar at Macopinion.com on Friday. Something had to have happened to change things abruptly. How Apple responded says something about Apple’s ability to change course.
"Either Apple’s sales numbers were dramatically higher or lower than expected, component prices took an unexpected dip, or Apple obtained some new information (like a survey that showed 90% of all teenagers would buy an iPhone if cost $400 instead of $600)," Mr. Zeedar wrote. "My theory is that the reality is a complex mix of all these factors."
It’s not that Apple didn’t take into account the planned introduction of the iPod touch. In fact, Mr. Zeedar recalled the statement that Peter Oppenheimer made at the last earnings report about earnings would take a hit due to a "product transition I can’t get into."
However, the sequencing was important. The iPhone had to come before the iPod touch, but precisely when would depend on the success of the iPhone. If the iPhone met its target very early, perhaps surprising even Apple, then the iPod touch could come out much earlier. And then Apple was faced with the pricing disconnect between the two as well as lost opportunities at Christmas.
"Now Steve was awfully quick with the $100 Apple Store credit idea, wasn’t he? No doubt that was planned as a contingency. As all this was being figured out, there was concern about how early buyers would react. Steve’s answer was the Apple Store credit and I like how quickly he pulled it out when he heard the negative publicity. It was a brilliant strategy, turning a negative into a positive and garnering even more publicity in the process. Apple could have just dropped the price of the iPhone prior to introduction, but doing it this way generated Apple more revenue and more publicity..." the noted Macintosh writer observed.
Ultimately, while it appears the initial iPhone price was a conservative move, not a planned gouge, the pace of events nevertheless required Apple to change course and act. Fortunately, they reacted well and generated a lot of publicity from that changed course. It’s the genius of Apple.
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