News

Jobs Offers Early iPhone Buyers $100 in Open Letter

Thursday, September 6th, 2007 at 3:35 PM - by

Apple's Steve Jobs has posted an open letter to iPhone customers. Mr. Jobs explained the rationale behind the price cut and went on to offer each early iPhone customer who is not receiving a "rebate or other consideration" a US$100 store credit.

In part, Mr Jobs wrote, "...even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these....

"Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple's website next week. Stay tuned," he wrote.

By other consideration, Mr. Jobs likely means that those iPhone customers who bought their iPhone in the last 14 days can invoke Apple's standard return policy.

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burrito said:

member since 07 Aug 2005 with 177 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 3:49 pm

they didn't have to do that. that's very decent of them. i just hope they still meet their profit goals.

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A guest said: (hide)

Thu Sep 06, 2007 3:52 pm

The whiners got something.

I want them to complain when they buy there next car, and it's value drops ten grand the moment they drive it off the lot.

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iVoid said:

member since 10 Jan 2007 with 61 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 3:52 pm

Fair enough. Thanks, Apple.

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rjackb said:

member since 08 Dec 2005 with 35 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 4:14 pm

Exactly what I suggested last night in a post on a forum here. Thanks Steve!

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A guest said: (hide)

Thu Sep 06, 2007 4:24 pm

To all those people who have been bashing Apple about the price cut, I say Bite me. I am happy for the credit, but I was still happy with my iPhones ( 4 & 8 Gigs.)

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Biff said:

member since 08 Apr 2004 with 1479 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 5:24 pm

Guest wrote:
The whiners got something.

I want them to complain when they buy there next car, and it's value drops ten grand the moment they drive it off the lot.
I agree the whining was mildly annoying, but as a launch day iPhone purchaser, I can understand their position. It does kind of suck after such a short period of time. But anyhow thats not the point of my post.

The point of my post is that your analogy sucks. When was the last time a car's MSRP was cut by 1/3?

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A guest said: (hide)

Thu Sep 06, 2007 5:28 pm

Biff wrote:
The point of my post is that your analogy sucks. When was the last time a car's MSRP was cut by 1/3?

I think they're referring to the fact that the resale value drops instantly, rather than the MSRP.

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Gators Fan said:

member since 03 Sep 2007 with 17 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 5:29 pm

Apple's most glaring mistake is that they didn't simply put the 8GB iPhone "On Sale" for the upcoming holiday period. Simulataneous with this announcement could have easily been "We will refund $200 to everyone who bought the phone during the past fourteen day period."

After the holidays, Apple could then safely announce that $399 was the new retail price.

It seems evident that Apple's business model doesn't include the philosophy that "A fast nickel is worth more than a slow dime," or that they don't subscribe to the axiom of "Everyone like a deal." Sam Walton built an empire far larger than Apple using just such tactics.

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vasic said:

member since 09 Aug 2005 with 249 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 6:49 pm

There never ever was a 'sale' or 'special' on Apple products. Occasionally, they have promotions (such as, buy a Mac, get a Nano free). Still, you always paid a full price for something. The difference may be semantics, but it is fundamental with respect to Apple.

The $100 store credit is a very smooth PR move that keeps all that money with Apple, and possibly makes them even more. Here's why:

1. It's a store credit, not a rebate cheque. You'll be buying stuff at Apple for that money. While that means that Apple will have to give you something for that store credit, they get to keep their profit margins on that something; the $100 dollars cost them a lot less than that;

2. It is very likely that many will use the $100 towards purchase of something more expensive, that they otherwise wouldn't have purchased. That way, Apple first took their $500 (or $600) for the iPhone, then some more for something else.

Very, very smoothly orchestrated and executed plan.

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A guest said: (hide)

Thu Sep 06, 2007 7:42 pm

Guest wrote:
Biff wrote:
The point of my post is that your analogy sucks. When was the last time a car's MSRP was cut by 1/3?

I think they're referring to the fact that the resale value drops instantly, rather than the MSRP.

The analogy would only work if the next customer could walk into the car dealership and get the same car for 1/3 less. The car dealer has no control over the price of a "pre-owned" car (unless it's on their lot).

Having said that, I believe Apple is being quite generous to iPhone buyers. They certainly had no obligation.

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burrito said:

member since 07 Aug 2005 with 177 posts, unranked, send him a message or view his profile

Thu Sep 06, 2007 7:55 pm

vasic wrote:
The $100 store credit is a very smooth PR move that keeps all that money with Apple, and possibly makes them even more. Here's why:

1. It's a store credit, not a rebate cheque. You'll be buying stuff at Apple for that money. While that means that Apple will have to give you something for that store credit, they get to keep their profit margins on that something; the $100 dollars cost them a lot less than that;

2. It is very likely that many will use the $100 towards purchase of something more expensive, that they otherwise wouldn't have purchased. That way, Apple first took their $500 (or $600) for the iPhone, then some more for something else.

Very, very smoothly orchestrated and executed plan.

boom. vasic hit it on the head.

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A guest said: (hide)

Thu Sep 06, 2007 10:09 pm

Here's the thing ... yes, everything goes down in price *eventually*. You expect that.

What you don't expect is such a dramatic cut (33%) within 2 months of release. That is not normal by any means. If it were, I almost guarantee you the term "early adopter" wouldn't exist - 2 months isn't much time to wait for something if you know it'll be a third cheaper then. We also purchased one of the new iMacs when they came out last month ... what do you want to bet that the price of those doesn't drop 33% any time soon? If this had happened at 6 months after release, it would be normal and expected.

The other thing is their short price protection period (If you purchased from Apple). Many electronics stores do 30 days.

I bought 2 iPhones *15 days* prior to the price cut. Try that one on for size I was irked yesterday (only because of my luck missing the price protection by one day, and the aforementioned shortness of everything), but I just looked at it like anything else - the last time I went to a casino I lost $400 at the craps table ... easy come, easy go. AND ... I knew their return policy when I bought the phones (I bought the second for my wife without her knowing, and thought there would be some strange alternate dimension where she'd say she didn't want it and for me to take it back ... ).

I'm obviously happy that we're getting a $200 store credit, but at the same time - their mistake has been made in terms of PR. Next time they have something new that we're interested in ... we'll wait 2 months and see if they drop the price ( and that's what they're trying to control right now with this move).

- Roach

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A guest said: (hide)

Fri Sep 07, 2007 1:06 am

what everyone has missed on this, is the main difference between today and 2 months ago is economics of scale. Apple is shipping multiple products now with the iPhone technology and components. The extras orders for those components to go into the new iPod Touch likely means apples cost per unit also goes down. And apple is likely to sell 5 times as many iPod touches as iPhones this holiday.

Another related reason is tiered pricing. If apple sold the iPod touch for $200 less than iPhone, they would sell far fewer iPhones. But having it within reach of someone who might have bought a iPod touch for $299 for $100 more, apple can up-sell them on the added value of the Phone vs the pod for that extra $100.

This is all very basic stuff, and Apple has done it across all product lines for a decade now. especially in the iPod arena.

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A guest said: (hide)

Sat Sep 08, 2007 5:41 pm

thought this was great and unexpected.

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