Friday, September 07, 2007

iPhone Price Cut - Apple Faux Pas??

Apple cut the price of the iPhone by 200 $ just after 10 weeks of its much hyped launch. I don't own a iPhone but it would have given me a bad feeling if I had bought it at its original price. Ever wondered how the latest model comes out or the price goes down immediately after you have bought a product. That's life but the price cut by Apple would have been too much to take even for hard-core Apple loyalists. After a huge backlash against the price cut and the feeling of being punished for being an early adopter, Apple decided to give a $100 credit to the people who bought the iPhone at the original price. Talk about a clever plan, you give the money and make them spend on Apple products again. Nice !!
Now back to the price cut announced by Steve Jobs, was it a shrewd move or a hasty one. Considering how Steve Jobs helped Apple bounce back from its heady days of being an innovative but low profitable company to the current profitable chic consumer electronic company, this price cut seems to be part of a long winded strategy to get more people to buy iPhone's as possible. The quickly approaching holiday season could be another factor behind it. I had read an article sometimes back on how cheap it is to manufacture an iPod or a iPhone. It approximately costs around 1/3 the price of the actual product and the costs goes even lower considering the economies of scale. So Apple still makes boatloads of money after the price cut it announces for its products every season.
Only time will tell, if this price cut had a short-term damage to its reputation due to the negative publicity or increases Apple's profitability and market share in the next few years. I bet on the later.


1 comment:

Anonymous said...

Definitely agree with your bet. Short term gains- esp right before Xmas season starts.
Apple has a different following among computer users as opposed to gadget buyers. If they were to do the same with the MAC, for example, I would say it would hurt customer loyalty in the long run.
But gadgets are purchased by the mindless consumers... they'll forget everything in another week. ;-)