In June of 2007, Apple introduced its 1st Generation iPhone. Just over two months later, Steve Jobs has put an EOL stamp on the low-end model (4GB) and the price of the high-end model (8GB) has been reduced by $200.
Great, right? Well -- maybe not. A lot of early adopters are understandably disappointed. (How many early adopters still owe more than $200 on their iPhone?) Phrases such as "slap in the face" are being tossed around, and (predictably) some are even talking (out their ass about) lawsuits.
Others are referring to this $200 dollar drop as an "early adopter tax" and assert that such adjustments are to be expected. In other words: "That's what you get for jumping the gun."
I've compiled a history of iPod prices spanning every iteration of the iPod from its inception through today's announcement of the iPod Touch and iPod Classic. (I used this website to compile the data.)
- October 2001 - Original (non-touch) Wheel 5GB $399
- March 2002 - Original (non-touch) Wheel 10GB $499
- July 2002 - Added Touch Wheel 20GB $499
- July 2002 - 5GB Original (non-touch) Wheel, 10GB Touch Wheel for $299 and $399
- April 2003 - 10GB, 15GB and 30GB for $299, $399 and $499
- September 2003 - 20GB and 40GB for $399 and $499
- July 2004 - Click Wheel 20GB, 40GB for $299 and $399
- October 2004 - U2 Edition Click Wheel 20GB for $349
- October 2004 - iPod Photo 40GB, 60GB for $499 and $599
- February 2005 - Click Wheel 20GB for $249
- June 2005 - Color (Photo + Click Wheel) 20GB, 60GB for $299 and $399
- June 2005 - Color U2 SE 20GB for $329
- October 2005 - iPod Video 30GB, 60GB for $299 and $399
- June 2006 - iPod Video US SE
- September 2006 - iPod Video 30GB, 80GB for $249 and $349
- September 2007 - iPod Classic (refreshed interface) - 80GB and 160GB for $249 and $349
- January 2004 - 4GB Mini for $249
- February 2005 - 4GB, 6GB for $199 and $249
- September 2005 - 2GB, 4GB Nano for $199 and $249
- February 2006 - 1GB for $149
- September 2006 - 2GB, 4GB, 8GB for $149, $199 and $249
- September 2007 (refreshed interface) - 4GB, 8GB for 149 and $199
- January 2005 - 512MB, 1GB for $99 and $149
- June 2005 - 1GB for $129
- February 2006 - 512MB, 1GB for $69 and $99
- September 2006 - 1GB for $79
- September 2007 - 1GB (New Colors) for $79
- June 2007 - 4GB, 8GB for $499 and $599
- September 2007 - 8GB for $399
- September 2007 - 8GB, 16GB for $299 and $399
John Gruber offers a rebuke to those who feel cheated:
And for those of you who've already bought one and are pissed about the price cut, if you didn't think the iPhone was worth $599, you shouldn't have bought it. That's how supply and demand works. Source.
Still, a scan of the provided list reveals that such a radical drop in price (33%) in such a short period of time is unprecedented in iPod history. (Noted: The iPhone is not an iPod.)
Various updates have been rolled out over the years, features have been added and prices have been adjusted accordingly. If anything, Apple has been remarkably consistent about pricing and feature changes over the life of the various iPod models, and that consistency hasn't ever involved radical price cuts after only two months, with no feature changes whatsoever.
With that in mind, it's not really fair or accurate to say that someone should have "expected" this price change or that it's a typical part of the Apple product cycle.
To be fair, one could argue that pre-release demand for the iPhone far exceeded demand for any iPod in history, and that iPhone price adjustments can't be compared with historic trends.
Still, how many people would have even considered paying $599 for an iPhone with the knowledge that it would sell for $399 two months later? Not many. I think that number would go up considerably at three months (with some grumbling) and that most consumers wouldn't bat an eye at a $200 price drop after (say) six months.
Similarly, if asked two months ago -- I suspect most consumers would have predicted a modest price drop ($50 - $100) after a period of six months, most likely with a storage increase. Based on historic trends, that would have been a reasonable expectation.
What can be done? Probably nothing. None of the grumbling matters, much. Apple hasn't broken the law and they're within their rights, here.
Even so: Just because Apple has the "right" to do something doesn't mean that it's the right thing to do, from a PR perspective.
Obviously, Apple has weighed the PR hit against the estimated increase in sales -- and money clearly won the day.
My take: Yes, it's a slap in the face to those who helped make the iPhone a success. No, there's not much we can do about it.
On Apple's end, the price drop will certainly result in increased sales.
On the other hand, such tactics may result in wary early adopters for future 1st generation releases. (One must also consider that many of the iPhone early adopters may have been first time Apple customers.)
I'm taking this all with a side of bitter humor, but I think the announcement could have been handled better, and it wouldn't have cost Apple much:
- Jobs should have made special mention of the early adopters who helped make the iPhone a success. Something in the way of: "We couldn't have done this without you, and Apple appreciates your support."
- As a bonus, Steve could have announced a "special" application (use your imagination, here -- maybe a game, or something) that would only ever be available to those with an iPhone registered prior to the price drop. Essentially, some added value to make up for the $200 kick to the groin.