Any early adopter has experienced the pain of a purchase followed by a price drop. It’s no fun. But enough with the hysteria that seems to be de rigeur these days whenever there’s a price drop (e.g. N.Y. woman sues Apple, Jobs over iPhone price cut).
The latest case: In response to Amazon’s MP3 efforts, Apple dropped the price of music downloads that are not protected by copy restrictions from $1.29 to 99 cents.
I’m an Apple fan, but it’s extremely annoying that every single Apple item I own (and I have several) significantly drops in price as soon as someone else comes along and shows us that prices don’t really have to be that high.
Sure, they gave a rebate to all those iPhone buyers who got the rug pulled out from under them, but what about my computer, my iPod and the songs I’ve been paying $1.29 for?
Apple could learn a thing or two about customer loyalty. Everything they make works great. But customers will eventually become wary of a company that pulls the financial wool over everyone eyes, price-gouging until someone points out that the emperor isn’t wearing any clothes. By that point, the money’s already in their pocket. Then they’re left scrambling in an effort to justify why they’ve been charging so much more. I hope the monopoly ends soon. Apple is most dishonest to their own customers.
Annoying? Sure. But this is the way technology and capitalism work. If you paid $1.29 for a song or $599 for an iPhone, you felt you were getting your money’s worth (otherwise you shouldn’t have bought it). The song or the phone didn’t change, so suck it up.
A new car loses a significant amount of its value when you drive it off the lot. If you don’t like that, buy a used car. Similarly, if getting the best technology value is crucial to you, buy used gear (or just hang on to what you’ve already got).
But if you want the latest and/or greatest, accept the fact that what you’re buying will cost less in the future. It’s the way the game works.
Your best bet: Step 1) Only buy things that are worth the cost to you at that time. Step 2) Get on with your life.
Luis
on 17 Oct 07Word!
Justin Reese
on 17 Oct 07I could not agree more, and it reminds me of the parable of the vineyard workers in Matthew 20:1-16.
Jeff Mackey
on 17 Oct 07Amen.
Dean
on 17 Oct 07I think Apple had to respond to the Amazon store. I’ve never bought from iTunes but purchased two singles and an album the first week Amazon opened. – better prices and no DRM.
Mart
on 17 Oct 07i agree as a general concept – but sitting in the uk it feels really hard to be (yet again) stuffed by the huge difference in pricing between these markets.
Looking at this new pricing – and using proper, real exchange rates, us Brits are now paying $2.02 for the same track.
see this article today in the register:- http://www.theregister.co.uk/2007/10/17/apple_itunes_plus/
Its bad enough having lame excuses leveled for physical products (such as Adobe’s supposed $3million translation costs for ‘other language’s’ for the latest Photoshop – like its that much different from the previous version) but for digital files theres even less reason. A song is a song is a song and digital downloads don’t cost more to transport in different country’s.
Of course i know this isn’t just apple, its also the licencing/record companies, but Apple have form here (£69 difference is Ipod Touch price too).
So less early adopter price hiking – more good old fashioned exploitation. Of course some people will say i have a choice – and dont have to buy it. But thats not much of a choice is it? Highlighting whenever we see it – such as in this post – helps get it off my chest but doesn’t affect my bank balance any. Certainly doesn’t feel like much of an incentive not to go the illegal route.
Theres a rather broad line between capitalism and exploitation – and this is firmly over that.
Chris Carter
on 17 Oct 07It’s called capturing the consumer surplus. If you don’t like it, don’t buy from the company.
Brian
on 17 Oct 07Oh my goodness… Amen, glory hallelujah ! ! ! You are so right. This has annoyed me to no end. The only poetic justice is that Apple will have this lawsuit thrown out on its ass in no time. Then people like this will just be stuck with their legal expenses… and nothing to show for it. Any purchase made is a voluntary decision, based on the terms of that transaction, at that time. It’s a bilateral agreement… I pay $X.XX, and I get “X.” Great Post!
Brian
Steve Brewer
on 17 Oct 07It’s just such stupid logic. If you follow it, these nim-rods are basically arguing that a company is evil for trying to make money.
Capitalism is exploitation, get over it. A company makes money by exploiting their assets and their customer’s wants and needs. There is no imaginary line – all companies want to make as much margin as possible.
Chris
on 17 Oct 07While I agree with your comments….I do believe the iPhone is an exception. A 40% price drop is extremely significant and they knew about it all along and were silent about it. They even went as far as publicly saying weeks before the announcement that there were no planned price drops!
I’m sure anyone would be upset if they bought a brand new Macbook Pro for 1999 but then a few weeks later are selling it for 1299 because they’re not selling enough of them to hit their 10m unit goal. Anyone would get upset by that, even if you HAD a reservation price of 1999 or higher. That’s just flat out ripping off. As we all witnessed, nobody likes getting ripped off.
Like I said that was a unique example probably going to be taught in many business schools. As for other price drops, yea you’re definitely right. The squeaking wheel gets the most attention.
Justin Reese
on 17 Oct 07@Mart: Your pricing argument assumes Apple has no UK-based costs of operation. I’m positive iTunes UK buyers aren’t downloading from US servers, which means Apple has to pay UK prices for bandwidth and hosting. Not to mention UK-based offices (and you can bet they aren’t paying rent and salaries in US dollars), UK legal teams, UK tax rates, etc.
Spread that all across the EU (and around the world) and consider the “health” of the US dollar, and you can bet that region-specific pricing is the only way Apple can afford to do business outside the US.
Mart
on 17 Oct 07To which i’d reply that theres good deals and bad deals by good company’s and bad company’s.
Take 37 signals. 1 price worldwide. I pay the same as you.
Thats fair.
and i respect them more and do my damnedest to promote them. Apple i don’t respect. If i choose to buy their product – thats my choice – but i wont be promoting it to my circle because i have bad faith.
A good deal is where both parties make money – thats good ethical business. Watch 37signals go places with much more good will than their competitor who doesn’t have the same such fairness – every time.
Grabbing what you can at the expense of your customers sense of fair play – its short sighted business sense and counter productive.
Of course theres a line – thats what the worlds about. Its where you draw it that counts and is the measure of how people regard you – that applies to your personal life and to business.
Mart
on 17 Oct 07btw – my last post was a reply to @Steve Brewer’s post
cheers
mart
Robb Irrgang
on 17 Oct 07I agree that people should be upset when Apple makes things cheaper. Me, I have my lawyer on speed dial. When Best Buy puts a CD I bought a few months ago in their $9.99 or less bin, I sue them.
</sarcasm>
Mark Holton
on 17 Oct 07Most early adopters know the decisions they make. The din by these ignorant people about something as common as a price drop is just funny. Competition is good, people.
Anonymous Coward
on 17 Oct 07“Apple could learn a thing or two about customer loyalty”
Apple and Google top customer loyalty survey.
Robb Irrgang
on 17 Oct 07I’m starting to get the sense that everybody seems to have an entitlement complex these days.
Carl
on 17 Oct 07hmmm, just imagine if those behaviors were committed by Microsoft
aliotsy
on 17 Oct 07This from someone who owns several Apple products, has seen price drops on his Apple computer, iPod, and iTunes songs, and still calls himself an “Apple fan?”
Clearly, Apple has plenty to teach about customer loyalty if their “fans” take that sort of callousness and still come back for more.
MattH
on 17 Oct 07@Steve – I disagree that all companies want to make as much margin as possible. Maybe as much money as possible, but that’s different than margins. See Costco.
Amen Matt. When you buy an iPhone for $599 you aren’t buying it because it’s such a great deal. It’s because you can’t control yourself and you want – it – right – now. If they change the price later sure that’s annoying, but it’s your fault not Apple’s.
Blake Householder
on 17 Oct 07Is telling people they don’t deserve to be angry with your company a good way to generate customer satisfaction and goodwill?
Mrad
on 17 Oct 07Damn, Apple stuff gets cheaper…sure sucks.
Jemaleddin
on 17 Oct 07Also, what people really like is when they buy something before the price goes up. It makes them feel smart.
When the reverse happens, they’re left feeling whatever the opposite of smart is. Oh yeah…
Martin Ringlein
on 17 Oct 07Well said!
Matt B.
on 17 Oct 07Price drop haters are the same people that sue McDonalds because their coffee was too hot or that they got fat because of eating too many Big Macs.
Andrew Kasper
on 17 Oct 07This has only been a well known fact since the first century, BC, when Publilus Syrus famously stated, “Everything is worth what its purchaser will pay for it.” We’ve only known for 2100 years; I can see why people haven’t caught on yet.
Jon
on 17 Oct 07When I read about these price-drop haters, I just shake my head.
I agree with those who say “you paid the going rate of your own free will.” I personally have a policy of not buying anything that does not meet my specifications at my price. I can’t even count how much money this policy has saved me over the years. I can wait, and this has made me rather proud of having skipped so many sucky early generations of products. Instead, I have bought later generations of products and services at lower prices and have been able to keep them in service for longer (saving even more money), because later generations are more refined and feature-complete.
It just about makes sense to go as far as calling the price-haters wimps. Because in so many other parts of the world, prices are elastic, and haggling is expected. It’s guaranteed that the price you negotiate is different than the guy who was 5 minutes before or after you buying the same thing. Could be higher, could be lower. The price-drop haters probably would not be able to survive such an environment, which is actually common in much of the world. Evolution would weed them out quickly.
So to the price-drop haters, I say, drop the emo act, get a backbone, name your price, stick to it, have the patience to refuse to buy until it hits that price, and you’ll be happier. Let the Early Adopters pay the high intial prices. That’s what Early Adopters are there for: to use their higher incomes to subsidize the lower prices that come later for The Rest of Us.
Dr. Pete
on 17 Oct 07It reminds me of the all of the lawsuits against companies whose stock price goes down. Sure, if you were cheated or a company lied, that’s one thing, but stock prices fluctuate. At least in that case, stock prices sometimes go up. In the case of technology products, prices always go down. They always have and they always will. Early adopters have been paying premiums since consumer electronics were invented. It baffles me why people are surprised now.
Benjy
on 17 Oct 07I just don’t get those who bitch about price drops - especially when it comes to technology. EVERY piece of technology - computers, cell phones, plasma TVs, CD Players, digital cameras, etc. —all drop substantially in price and get better as R&D is ammortized and economies of scale allow for cheaper components.
I remember when the RAZR came out and they were $500. What’s one run these days? Even a couple months after their release, they had dropped $200. Where was the outrage then?
Is there some supposed timeframe after which it’s OK to drop prices? For those bitching about the iPhone, at which point would they have not minded a price cut?
Also, price cuts are not charity for later adopters. They are rational business decisions made - as production costs drop or competative products hit the marketplace - to hopefully maximize profitability for the company.
Bill P
on 17 Oct 07Companies have every right to drop the price. All the power to them. In most cases I’m the beneficiary (like Jon above).
What people tend to forget is this: If it bothers you so much that the price was dropped (or how or why the price was dropped) then you have every right to never purchase products from that company again. By all means, vote with your pocketbook. It’s very liberating.
The only problem is that most people would rather complain than actually do something about it.
Phil McThomas
on 17 Oct 07Agree that complaining that the stuff you bought has dropped in value is silly and unproductive.
However, there’s a legitimate gripe that Apple (in this case) charge so much money in the first place, when they have a monopoly or de-facto monopoly.
Take my internet access, for instance. I’m paying something like $60 to Comcast each month. Sure, I could just not use the Internet, or use dial-up, or use the hokey DirecTV thing, but if I actually want decent Internet, I’m paying $60.
If they suddenly drop their prices to $20 because a competitor comes to town – and they’re staying in business – then I think I could be a bit annoyed that the original $60 included an unreasonably large amount of profit margin.
So if you’re annoyed that about a sudden 60% drop in the price of a DRM-free single now that there’s some competition, I think it’s okay to be ticked-off. Not because you’re collection has lost value but because you were getting bilked in the first place.
Dan
on 17 Oct 07Phil,
Of course 60% would probably irk some people, but price drops rarely go that far with any regularity.
I’m not saying some service providers are bilking people, but they’re in the minority.
James Moore
on 17 Oct 07The problem is that you want to kill the cycle in the middle. Sure, companies can drop prices. But then consumers can complain, inflicting some amount of public relations pain on the companies. Future companies will then take this into account when setting prices. Maybe they’ll set an initial price that’s lower than it might have been precisely because they think the next part of this cycle might hurt more than the revenue they get.
Anonymous Coward
on 17 Oct 07“If they suddenly drop their prices to $20 because a competitor comes to town – and they’re staying in business – then I think I could be a bit annoyed that the original $60 included an unreasonably large amount of profit margin…I think it’s okay to be ticked-off. Not because you’re collection has lost value but because you were getting bilked in the first place.
This is asinine. You don’t know if you were getting “bilked” in the first place. You have no clue about their margin at the earlier price or the new price. You don’t know if they had to cut staff, projects, etc. to compete with the competitor’s new price. You don’t know what their cost structure was when the product was introduced. (hint: many new products and services have large cost structures that are not covered profitably for some time).
Finally, as so many have pointed out, when you bought the item at the original price you MUST have decided it was worth the cost to you or you wouldn’t have bought it. Since prices of goods tend to drop over time, be patient and wait for the first price drop, or the 2nd, or the 3rd. Rather than bitch you should be happy that the price has dropped and you’ll pay less in the future. Some of you want the lowest possible future price NOW. That’s ridiculous. I’ll bet you’d sing a completely different tune if you were running the offending business yourself and were responsible for the viability of the product/line/company.
David Andersen
on 17 Oct 07I wrote that prior comment (“This is asinine.”) Hit return before I could put my name there.
David Andersen
on 17 Oct 07What does it even mean to claim that when a company sells something for $X to a buyer that the buyer has been bilked? Relative to what? What’s the fair price then? Wouldn’t it be the price that both parties agreed upon? Could it possibly be anything different? Is there some magical profit margin that is fair to everyone (hint: no, that would be nonsense.)?
The complainers simply want to have their cake and eat it too.
This attitude is pervasive in the US and it makes me sick. I’m glad to see so many commenters here call this for the idiocy that it is.
Geoff
on 17 Oct 07I don’t remotely believe that consumers are entitled to post-price-reduction credits (though I was appreciative that Steve gave me one for my iPhone!). However, I question the business strategy. When consumers start to anticipate significant price drops, consumers start waiting to buy.
Homebuilders are experiencing this right now. People who aren’t compelled to move right now are waiting for more price drops. The industry has shown consumers that they are willing to lower prices when inventory is high. Until prices flatten (and inventories lower), and stay that way for a couple months, the discretionary purchasers are going to hold back.
If Apple continues to show consumers that they will likely lower prices soon after a product launch, even the most rabid early adopters will hold back.
Alex Bunardzic
on 17 Oct 07So who do I sue in case my house drops below the purchase price I was made to pay?
Phil McThomas
on 17 Oct 07My (asinine) point is that companies will charge whatever the market will bear. Sure, that’s a free-market and all that, but a company with something resembling a monopoly will charge an unreasonable mark-up until a competitor comes along.
If the product or service is something you’ve got to have, you can end up paying the price under protest.
Take Ticketmaster’s “convenience charge”. Everyone knows it’s B/S, but you end up paying it because if you want to go to that game/show/concert, you don’t have a choice.
If Ticketmaster suddenly dropped their charge to fifty cents a ticket at the first sign of a competitor, it would show the $10 charge to be the extortion I think it is.
I really don’t class myself as a ‘hater’, and I’m not proposing rebates or lawsuits. I’m just saying that you sometimes pay a price ‘under protest’ and when you watch that price disintegrate under pressure, you’ll be even more annoyed.
Dan
on 17 Oct 07Back in the day. And I mean WAY back. There was a thing called a Macintosh. It was my very first computer, and it hard 128kb of RAM. It rocked. Then there was the 512, and so on, then the LISA. Ok, I had all of them, but software was almost non-existent. For these beasts. Apple supported these things for about as it took to boot one up.
I’m not a hater, but I think I have this company’s (apple) MO. And maybe I don’t, but I just think I do. I started buying pc’s and although I own a design firm, I will never switch to Mac’s. They might be awesome, but things are going pretty well, and I seem to be able to compete just fine. I will admit, – we don’t look as cool. But I am no longer a sucker for a slick pitch man. Don’t get me wrong. Mr. Jobs is awesome, and I love what he’s done. But I have had offices full of PC’s going back quite a few years now and none of the mud being slung around on the Mac vs PC commercials has EVER hit me. Boy, I know I’m inviting an argument here but I can afford to use whatever I want. If someone could show me where using a Mac would put dollars in my pocket, (read; better investment) instead of someone else’s, I would be there. But since I left Apple there are a lot of things I no longer have to think about. 95% of software in the world will run great on anything in my office. I hope they continue to do well and break new ground.
Andrew
on 17 Oct 07If you have to be the first on your block to have the hip shiny new gadget don’t cry when the predictable price drop comes along a short time later.
Like Bill Maher said, think of it as a “Nerd Tax.”
Ace
on 17 Oct 07Seems like the bitching is always accompanied by some babble about “fairness”, which is irrelevant in a capitalist system. You like, you buy. Fairness has nothing to do with it.
But you have to wonder why Apple is the only company who can’t quite manage the customer realtions issues associated with a bunch of misguided customers feeling as though they weren’t treated “fairly”.
It migh have something to do with their self-made image of being the “fair” company as opposed to the “bad” Microsoft. Kind of like Google seeming a lot more evil after they said they would strive not to be…
Justin Reese
on 17 Oct 07I’m with you on hating Ticketmaster, but this point is important: you still have the choice not to go. “Wanting to go” doesn’t mean you have to, it just means going has a higher value to you than to someone else.
For every 100 people who decide the price exceeds the value, there are easily 100 who decide it doesn’t. That’s called supply and demand. If they’re selling out at $100, why not try $150? If they’re selling out at $150, why not try $200? The only way reason to stop raising prices is flattened demand.
Fugazi (may they rest in peace) combatted this by playing in small (-2000), non-Ticketmaster venues so they could keep ticket prices under $10. Ticketmaster is a huge corporation and to expect them to act like punk rockers is wildly optimistic. Don’t blame Ticketmaster for capitalizing on demand; blame bands for selling out, MTV for marketing nothing but shit, and all your fellow music fans for buying into it.
John
on 17 Oct 07I always wondered what the early adopters of technology were thinking, especially well after the date of purchase. Apparently, the “look at how cool I am because I have this trendy new gadget” feeling wears off after a while, and later morphs into a “gosh, that other guy has the new, improved, bug-free (but not quite as trendy anymore) gadget and was actually able to eat last month” feeling.
Duh. Stop waiting in those long lines and paying ridiculous prices because you’re insecure and need to feel like you’re more hip than everybody else. You’ll feel better about yourself in the long run if you wait, save some precious cash and use what you’ve been using up until now… unless you’re bloody rich (and if you are, then stop complaining). These companies love you because you value image more than your own financial well-being. Can you blame them for taking advantage of you?!
Regarding the music downloads, paying $1.29 for a song isn’t so bad. At least you don’t need to buy an entire CD just because you like one song like back in the day. If you don’t like it, try listening to the radio – that’s still free (unless you’re on the overpriced satellite radio bandwagon already).
You people kill me… I could go on all day about this.
Kev
on 17 Oct 07I love all Apple products and I’ll take food off my kids’ plates to have their latest, greatest offering. But look at me, I’m very cool, and my kids will never be overweight.
dave
on 17 Oct 07Here is why I think Matt is wrong: People are used to price drops in technology. It’s a fact of life. You don’t hear early purchasers of LCD TVs complaining that they were bilked.
However: People just don’t like to feel like suckers. And people don’t like hanging around other people (or institutions, or whatever) that are often making them feel that way.
As you could tell from the massive outcry, the iPhone price drop did make a lot of people feel like suckers. Think about it—lots of early iphone customers bought them without ever having used one. What trust that takes!
Even though the price drop might have been the right thing for the iphone business, apple did need to do something to preserve the trust and loyalty of the early adopters.
Zack
on 17 Oct 07After watching Steve Job’s iPhone presentation back in January, I wanted one immediately. I would have committed inconceivable acts just to touch one.
When they FINALLY came out, it took everything in my power not to rush out and buy that beautiful bastard. But I kept calming myself down and telling myself to wait for gen2, let them get all the kinks out and lower the price a bit.
Then they go and lower the price, and I caught my legs running to the store, dragging my carcass behind. I had to slap myself unconscious, before I was able to regain my composure.
What’s the point? I’m someone who almost always waits for gen2, and even I had a very tough time resisting that temptress device. So I can relate with both sides on this one, to some extent. Clearly suing Apple is ridiculous. But short of that, both sides have good points.
I mean I don’t even have an iPhone and I was blown away with the price cut. I know I would have been pissed had I bought one (more at myself, than Apple) because I couldn’t afford one and it would have been some serious buyer’s remorse. It’s like my Grandpa used to tell me: if you can’t afford it, don’t go in, just window shop. So for the most part I agree with you guys, the problem is there is a lot of emotion that goes into these purchases, as I think I demonstrated above a bit.
People get so enticed to buy these awesome new gadgets and then to suddenly take a hit like that and get labeled a sucker by everyone they know…is pretty crappy. And yet, they did get to be labeled the cool kids for awhile, so I guess it sort of evens out.
Hell, I don’t know, I just wish they’d hurry up and release the next generation already! I don’t think I can hold out much longer.
Ryan
on 18 Oct 07Couldn’t agree more… If it’s too expensive, people complain… if the price drops, people complain… looks as though the “people” are the problem.
Alps
on 18 Oct 07Maybe I can sue Delta for dropping the price after I bought my ticket…? Or, better yet, how about suing Dell for changing its prices throughout the day?!
Prices change. Get over it.
Thanks for a great post!
Michael Stoner
on 18 Oct 07I’m so totally sick of all the complaining. I bought an iPhone the weekend after launch. It was the first phone I ever truly appreciated (as opposed to tolerated) and I needed an iPod. Bingo: two devices, decent price, flawless synch with my Mac (unlike my unlamented Treo). It was worth $599 to me. I’m glad they reduced the price—it made it easier for my wife to dump a worthless Treo and buy an iPhone. But my response to the whiners is: get a life! That’s how technology works! Thanks for making sense, Matt.
Rachel
on 18 Oct 07I straddle the fence on this one. I think part of the issue is that Apple, unlike Delta as Alps mentions above, doesn’t go changing their prices every few days based on availability or other circumstances. They are traditionally a company that rarely lowers prices on products, they just continue to offer new and better products for the same price and lower to get old models out the door.
Given that, my expectation when I bought one was that it was incredibly unlikely they would lower prices and if they did it would be more like in early 2008. Further, even though new technology drops in price, 10 weeks is unusual to slash almost 30% for almost any tech product. That’s not typical behavior especially for Apple so I don’t think that it’s weird that people would feel slightly ripped off. Basic logical deduction would point you to the conclusion that this drop wouldn’t happen in the near future. That was my thought process at least. It wasn’t that I HAD to have it THEN, but that I did need a new phone (at end of 2 year cycle), I wanted a video iPod and that the price was probably going to be the price for a while.
Having said all of this, I don’t think you can say it’s “not fair” for them to do that. That’s how technology works and a company can price things however they’d like. I don’t fault them, nor do I think it’s my right to get a refund for the difference. But I still do think it sucks. I didn’t rush out that day, I thought about it for a couple weeks, and made a good logical decision based on my current needs, desires, and situation, and informal knowledge of typical Apple pricing/adjustments. It’s still stupid to moan and groan about it and still be talking (or suing), but I do think it was painful for those of us who only purchased now, not because we couldn’t wait, but because we believed that waiting would likely not drop the price.
Umang
on 18 Oct 07But isn’t that the price you pay for being an early adopter? For the “coolness”?
With this logic you may as well just buy/use obsolete things because they are the only ones that won’t undergo another price reduction.
Heck, even money lying in my desk drawer undergoes “price reduction” (inflation etc.) !
Anonymous Coward
on 18 Oct 07Your best bet: Step 1) Only buy things that are worth the cost to you at that time. Step 2) Get on with your life.
Step 3) Apple goes under
Darrel
on 18 Oct 07Seems that there’s more complaining about the ‘price drop complainers’ than there was actually coming from the ‘price drop complainers’
Josh
on 18 Oct 07I agree with Rachel – this is more complicated than the price-drop-hater-haters make it out to be.
The people who bought iPhones early (I’m one of them) are almost all habitual early adopters – they already know how “technology works.” Every purchaser knew that he or she was paying a lot for a potentially iffy first-generation product that would at some point, maybe even some point soon, be better and cheaper. Saying “welcome to the real world” to early adopters is silly – by and large the poeple I know who bought iPhones are exactly the gadget geeks who know all about how price drops work. They’re experienced buyers, and they don’t need your lecturing.
The fact is that, even though everyone knew the iPhone would be getting cheaper, it got cheaper faster than anyone expected. It got cheaper abnormally fast. Even people who are very familiar with the pricing structures in the world of new gadgets (which are, incidentally, not the same as the pricing structures in the worlds of airline tickets or new automobiles) were surprised. It turned out that there were all sorts of tacit understandings between Apple and its early adopters. I don’t think these were one-way; I think Apple knew what those understandings were and decided not to worry about them.
Needless to say, I don’t agree with people who are suing Apple or using strong words like “unfairness” or “cheated.” But I do think there’s a lesson to be learned here about the tolerance of customers for price drops in technology. The lesson: early adopters take on a lot of risk simply in buying a gadget early; as a result, they only have so much risk tolerance left over for price risk. If you increase that price risk too much, they might stop buying products early.
For myself, I know that Apple’s $100 credit restored a lot of price-risk tolerance I lost after the iPhone price drop.
Jon
on 18 Oct 07There is an interesting contradiction at play when people talk about why they feel Apple screwed them. On the one hand, people perceive that they have been misled. Why? Because although technology prices drop quickly, nobody expected the iPhone price to drop that fast. Is that wrong? Well, wait a minute. Let’s look at why people like Apple. People like Apple (in part) because Apple constantly brings out these cool things nobody saw coming. We want to be surprised by Apple. Before every Apple trade show, the media spins ever more outrageous speculation about what Apple will surprise us with this time.
And that’s where the irony is. We demand that Apple surprise us with each new product. In a sense, Apple was doing what we always demand when they dropped the price. They did not conform to the established price curve; they did their own thing. The price drop timing was unconventional, nonstandard, dramatic. Usually the Apple universe thinks that sort of thing is So Freaking Cool. Unfortunately, when Apple applied the surprise model to pricing, uh oh…we realized we actually don’t like surprises…in that way.
So Apple has a bunch of customers who are selective about the surprises they get. So selective that they will actually complain about a product becoming more affordable!
I also want to amend my earlier comment. I do appreciate that overpricing is a problem when there is no alternative. For example, when your phone is dying and you’re at the end of your contract and this is the exact moment when you need a new phone, no later. It’s also hard with concerts. I only happen to be at the age where it’s no longer socially necessary to be at Band X’s next show. I think big-name concerts are too expensive now…I just don’t go anymore, the sound is better at home.
E.T.Cook
on 18 Oct 07This is a very myopic and shallow view of this debate, and this post is nothing but repeated rhetoric that has all been said before.
Your reasoning is faulty as a result of a fallacious assumption that you shouldn’t consider the product a commodity. It isn’t so much that people conceive their “paid too much”, it is a matter of the fact that Apple knowingly devalued the commodity within such a short time frame. The resale value has diminished to a greater degree than was expected, and the value of the product is far less…this is the source of much of the frustration that people have.
Your comparison to a car is also asinine. You know when you purchase a car there is going to be depreciation- you factor that into your decision to purchase the vehicle. In all honesty, and with all due respect, most of your posts are very informative, enlightening, and right on the money, but this post is old news, and horse shit.
Dhrumil
on 18 Oct 07Dude, this was the best post ever.
“Step 2) Get on with your life.”
Classic.
Tercume
on 20 Oct 07You buy a mobile phone (1.000 $). You use it 1 year. Then price comes to 400 $. So your phone is used. You want to sell it. They give you 120 $.
This discussion is closed.