Apple announced yesterday that the price of the 8 GB iPhone was dropping from $599 to $399. Two groups were less than happy to hear the news.
First, those who bought the phone at the original price have been blogging about their rage. Consumerist.com posted a letter to Steve Jobs from one disillusioned Apple fan complaining about Apple’s “lack of integrity, and penny-pinching.” Also posted were five ways customers might try to get their money back. Hopefully for Apple, the $100 store credit just announced by Jobs will appease them. If not, the California Department for Consumer Affairs may soon receive a lot of complaints.
The second group of skeptics: Apple investors. Stock in the company fell 5% yesterday and a further 2% by midday today. Why are investors concerned? Marketwatch.com explains:
“A price cut of this magnitude just two months after [the iPhone's] launch clearly raises some questions about demand,” said Thomas Weisel analyst Kevin Hunt.
Apple is acting to counter investors’ impression that the price cut reflects lagging sales and soft demand. Steve Jobs made several media appearances stressing that the iPhone is “on track” and highlighting that the new price sets the iPhone up for the coming holiday season.
In addition to questions about demand, there are concerns about the phone’s performance. Trip Chowdhry of Global Equities Research notes on MarketWatch that “consumers tell us that Apple iPhone lacks some key phone capabilities.” Consumerist thinks the price cut and performance problems are linked: “this smells an awful lot like ‘get rid of these slow-ass phones so we can release the good ones.’”
However you look at it, Apple made a misstep in announcing this cut when and how it did.
