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June 10, 2009

Apple puts iPhones on sale, but at what price?


Forget the 3GS's speed and video capabilities. The real news out of Apple this week was that they were cutting the price of the 3G model to $99.  I get it. We're in the middle of a recession. The market's flooded with cheaper alternatives and a lower price point will lure in buyers who would have settled for one of them. Sprint's about to launch what many have declared to be the iPhone's first real competition. In this climate, the decision does make sense. But in the long run, does Apple stand to lose more than they gain?

The announcement stunned so many people because it doesn't seem like an Apple move. Other companies may hold fire sales to jettison old inventory, but not Apple. They may release a vastly compromised version of something and sell that on the cheap (yeah, I'm looking at you iPod shuffle), but to take the old gold standard and simply throw it in the bargain bin? Not Apple. So why is the company that trained us all to think different suddenly acting like everyone else?

I will admit, the stubborn refusal to drop their prices used to annoy me. I've owned 3 iPods, each twice the capacity as the one before it, and I paid $299 for all of them. When the 80G came out, I remember wondering, what happened to all the 60Gs? They don't go on sale, they don't go to Overstock, they just seem to vanish, replaced by something twice as nice at the same exact price.

But in the end, the decision was never about price. It was about value. And I'm not talking bytes for your buck. I'm talking brain value. Heart value. Apple appealed to best-hunters, not bargain hunters. People who believed these products were so special, so different, so much better than everything else out there, that they were worth the extra money. True or not, Apple successfully burnt this impression in the minds of millions. In fact, pre-price cut (and pre-Pre) they were shattering their own records with international iPhone sales, recession be damned.

Will a $99 price tag lure in new buyers at the expense of a loyal base who's been willing to pay any price all along? Will all those Apple-philes, who have been trained to never wait for the sale, hold off on the 4G in hopes the the 4GX will bring about a big discount?  Worse yet, will more mass-market friendly pricing  eventually cheapen Apple's cachet overall?


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mark Freid

This is right on. am looking forward to hearing the buzz and the backlash regarding this unexpected move. And will it ruin my credibility when i tell clients be bold. be strong. are they going to come back with, "Well, Apple appeals to the least common denominator." Where's our role model now?

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