Jobs Hacks High-End iPhone to $399

Pete Mortensen ()

In the most unanticipated news of the Apple “Beat Goes On” event, CEO Steve Jobs announced that the high-end 8 GB iPhone will now retail for $399 with a two-year AT&T wireless plan, a price cut of $200 less than three months after the device first shipped.

Jobs said that the company would ship its 1 millionth phone this month and wanted to make the device more accessible, hence the cut. I have to also see the move as strategic related to the new iPod Touch, which delivers every feature of the iPhone except for e-mail, text messaging and phone calls, and will retail for $299 for an 8GB model. Making the iPhone cost $100 more for the same size and costing the same as a 16GB model is a lot more palatable than a $300 premium.

Still, I wonder what this says about the success of the iPhone. We’re talking about a 33 percent price cut. Is Apple disappointed by iPhone sales or merely competing with itself

Via Gadget Lab

DON'T MISS
Here’s What You Can Expect to Pay for Your iPhone 4S When it Launches on Oct. 14 [Rumor]

25 comments »

About the author

Petemortensen

Pete Mortensen is a design strategist for consulting firm Jump Associates and the co-author of Wired to Care: How Companies Prosper When They Create Widespread Empathy, a book and blog that are significantly more interesting than you might initially think. Pete's particular Apple avocations are both around design--interface and industrial. Follow him on Twitter!

(sorry, you need Javascript to see this e-mail address)| Read more posts by .

Posted in iPhone |

  • Thomas

    Competing with itself: the extra $200 (x1 million) is helping pay for those Starbucks wifi stations.

    I want my $200 rebate, as I hate starbucks and won’t be seen in one :/

    Cheers

  • Electroboy

    Thanks, Steve. Way to shaft early iPhone adopters. That’s not nice.

  • Barry

    Now that Apple is coming out with a touch screen iPod I would imagine that the common parts are going to be cheaper for them with the greater economy of scale. That could have influenced the decision to drop the price as well.

  • http://cognize.org/~blog/ extra88

    The iPhone also has the camera but I think the point still holds.

    So will the calendar, contacts, etc. be read/write on the iPod Touch? Is there anything preventing the iPod Touch from being a viable PDA?

  • http://crosswiredmind.com crosswiredmind

    $200 rebate indeed. Brand loyalty only goes so far. A price cut that deep and that soon after roll out deserves a response from Apple. Heck – just give me $200 in iTunes credit and I’ll be happy.

  • covertlyobvious

    Wait a minute, sure two months and a 200.00 price slash is a mighty eff-ewe to the fans but did you catch the fate of the 4GB iPhone? An end of life product inside of two months??? Anyone who bought either iPhone is probably taking a shower about now, trying to wash off the feeling of being used.

  • Alan Christensen

    Shafting the early adopters? Hey, the folks in line to be first to get whatever the new toy is only shaft themselves. They never learn.

  • Andronicus

    This act on the part of Apple is a complete betrayal of the hardest of hard core Apple fanboys. One reason I bought mine when I did was Apple’s history of price reductions and the faith in the company that this product would follow a similar pattern. Apple really needs to do something to restore the incredible badwill brewing out there with this announcement. Never have I felt such a stab in the heart from a corporation before because my expectations of Apple are so high. The best retail experience anywhere. Great customer service. Great tech support. Faith in the company built up over 23 years, since I wrote my first school papers on the original Mac.

    It only takes one stab to kill that faith, and this was it. If Apple doesn’t offer a rebate, a $200 ITMS credit, voucher or something, then they are no better than Sony, Best Buy or any other of the shisters out there.

    Yeah, I know, caveat emptor, more so now than ever before. But it was nice to have had faith that one company would do the right thing. It was nice to believe that someone in corporate America cared to do the right thing for its customers, who have rewarded Apple with unheard of 36 percent margins.

    No more. Not now. Unless Apple fixes this mess. Sure, my next pc will be a mac, but it will be just another run of the mill consumer transaction, nothing special.

  • KyKid

    I’m with Electroboy. To drop the price this significantly less than 3 months after launching the product is a slap in the face. If nothing else, that $200 would have paid the cost of breaking my contract with Sprint to get the iPhone. This doesn’t make any sense to me.

  • sdude

    No email on the ipod touch? Surely web-based email will work?

  • Allan

    I’m pretty steamed about the price cut. I think Apple should refund me $200.

  • Essefgy

    “You know, the surveys are in: the customer satisfaction numbers on the iPhone are off the charts. They’re higher from iPhone owners than any Apple product. Ever. They LOVE them. So we’re going to return the favor by kicking them in the balls — boom — and lowering the price for everyone else.” – Steve Jobs, 9/5/07

  • Sam

    Price cut makes sense. Folks who stood in line paid $200 to have someone ask them twice per day for the last forty days ‘Ooooh…. is that the iPhone?!?!?!’. Hopefully it was worth it. And if an iPhone owner tries to say that they didn’t anticipate a $200 price cut (or a 50% feature increase) within 90 days of release, they are lying.

  • Sam

    And if he’d RAISED the price $200, how many would be saying “Where do I send my check” versus “A deal is a deal”. At some point we have to grow up and realize the price of being first in line.

  • Dan

    People should know by now that Apple is always going to lower the price, or raise the specs and keep it at the same price. Look back at the evolution of the iPod overall. The people who paid the premium got to go around taunting their friends that they got their item as soon as it came on the market.

    Also, depending on when you got your iPhone, Apple may be happy to refund you the difference according to their return policy.

    http://store.apple.com/Catalog/US/Images/salespolicies.html#topic-19

  • DJ Rizzo

    Wow, imagine a technology product’s price being cut. Who would have thunk it? Now excuse me while I go buy that $500 VCR I’ve been saving for since 1982…

  • championmaxwell

    What apple did with the pricing makes a lot of good sense. Turning the iphone into a one model product will ease confusion among casual customers, the ones that apple eventually hopes to reach with its mobile sales. That said, it simply is not practical to force people to either pay more(by making the cheapest iphone 500-600), or having less memory available(keeping only the 4GB version).
    Its easy to see that this might not have been the optimal decision, but it is the only logical one.

  • djfred

    I think it’s becasue they’ve got new products in the pipeline. Obviously, there’s a 16GB on the way. Maybe a 16GB 3G unit for $600, the 16GB EDGE for $500 and the 8GB for $400? I just picked up the 4GB for $300 so I’m feeling good about it.

  • d0b3rmann

    Apple employees, posting here to try to underscore the negative magnitude of what Steve Jobs has done to the utmost Mac faithful, those that stood in line for hours and days, kids that saved money all summer for an iPhone, etc, etc, is just not going to work.

    I did not willingly decide to spend $200 for two months of “showing off my phone”, I bought an iPhone, as I have been buying Apple products for 15 years, because it was revolutionary, amazing and I was the proudest owner in the world, until today, when Jobs basically let us know he decided to screw us like never before by any company I can recall basically ever. The “price for being first in line” has never been 50% more for two months of “privilege”.

    The comments I read here say exactly what has been going through my head today. I too have been stabbed in the heart, I too have to take a shower now, I too want to see some kind of small, medium or large compensation saying that Apple is in any way going to make up for this, otherwise I know that deep inside things have changed for good.

    I never gave a second thought to renewing my .Mac subscription, actually coming up by the end of this month. That’s the first $99 I’m taking away from Apple.

  • Doctor Fedora

    I don’t see anything particularly heinous about dropping the price. When demand is going to vastly outstrip supply, what’s the point of not charging as much as you can while still expecting to sell out? It’s an early adopter tax of sorts. Everyone knows that technology goes down in price, but not everyone has the patience to wait for it.

    Incidentally, accusing those who DARE to suggest that a $200 price cut ISN’T the most grievous injustice in the history of western civilization of being Apple employees isn’t so much silly as just plain delusional. People are, in fact, capable of disagreeing with others, and some folks really DO believe that there’s nothing wrong with a company deciding not to make as much of a profit from their products as they did a day before.

  • Sam

    Folks need to grow up. I realize $200 is a big issue to some people, but did they REALLY think that 8gb iphones would be $599 for more than 90 days? I figured a better model (16g? 3G? Slimmer?) for $349 at Christmas. This is actually a mild change.

    Early adopters of the iPhone can only fall into two categories. Some rationally evaluated the product and decided it had $599 worth of features/benefit to them. NOTHING HAS CHANGED FOR THESE PEOPLE. The phone does everything it did the day they bought it. Current price is irrelevant. The second group made an irrational purchase, either to “be first”, or they “just couldn’t wait”, or they “had to have it”, etc. Irrational decisions are not often rewarded by the market. Irrational decision makers usually want to deny the irrational decison, and blame someone else. Enter Jobs.

    And even if they did think that all prior technology price/feature curves had been suspended for this one product… is Jobs some how at fault for their own poor grasp on reality?

  • d0b3rmann

    My wife works for a PR agency, the work of people in her team includes doing just this for some tech client companies I obviously can’t mention. To think that companies (not just technology, think Coca-Cola, McD, StarB) don’t pay for services where people post positive comments on blogs (or to dispel negative concerns) is just plain silly or illusional.

  • Cal

    Sam wins (see above). Either you bought the product because you like the PRODUCT — in which case nothing has changed for you — or you bought the product because you’re an irrational impulse shopper, which is your own issue.

    That does not make you a bad person. However, claiming that a tech company “stabbed [you] in the heart” DOES make you a bad person. A bad, bad person.

    I was also intrigued by the iPhone; but unlike many of you, I apparently have superhuman powers of insight, because I knew there was gonna be a significant price cut on the thing before Christmas. I didn’t buy one at launch, but now I think it’s a pretty irresistable deal.

  • Sam

    iTunes University has “Introduction to Logic” lectures available. What a great service. The study of logic helps us avoid reasoning errors such as “My wife is paid to post false positive comments, so all positive comments are false and paid”.

    But I may just be… illusional!

  • Sam

    Well, looks like Jobs decided there is no margin in being “Dead Right”, so he’s passing out $100 credits. I wonder if anyone will be happy…