Apple Slashes Price for 8 GB iPhone, Drops 4 GB Version *UPDATED*

Discussion in 'Headline News' started by Ed Hardy, Sep 6, 2007.

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  1. Ed Hardy

    Ed Hardy TabletPCReview Editor Staff Member

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    In addition to unveiling a new handheld yesterday, Apple has made some big changes to its iPhone line, including dropping the price for its flagship model.

    [​IMG]

    Just two months after the launch of its first smartphone, Apple is slashing the price for the 8 GB version of the iPhone by a third. As of now, this device is selling for $400, which is $200 off the original price.

    Apple gave no reason for the price drop, but it has set off a round of speculation that sales of this device aren't meeting the company's expectations. Still, CEO Steve Jobs said yesterday that the iPhone is still on track to hit the 1 million shipped mark before the end of Apple current fiscal quarter.

    In addition, the company is dropping the 4 GB version of the iPhone, Apple didn't give a reason for this move either, but most agree that it was due to low sales of this version. The vast majority of iPhone buyers went for the version with higher storage capacity.

    Apple is selling off the iPhone 4G for $300 while supplies last.

    A Refund?

    Steve Jobs doesn't appear to have much sympathy for those who just shelled out $600 for a device that now sells for much less. He told the USA Today, "If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that's what happens in technology."

    In the hours since this announcement, some iPhone users have reported success getting a $200 refund from Apple or AT&T stores even if they bought their smartphone more than 30 days ago.

    UPDATE: Steve Jobs has published an open letter on Apple's web site in which he address the complaints from those who, because of the very quick drop in the iPhone's price, feel that they paid too much for this product:

    <blockquote>

    Even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these.

    Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&amp;T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple's website next week.

    </blockquote>

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    Last edited by a moderator: May 20, 2015
  2. Adama D. Brown

    Adama D. Brown Brighthand Reviewer

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    A bit odd to think that sales could go from boom to bust so quickly. If that's the case, I suppose the vaunted Apple name and design couldn't make up for the long contract, mandatory data plan, and high price. Also, it make me wonder how many people may have been waiting for a phone-less iPhone like the iPod Touch.
     
  3. madmaxmedia

    madmaxmedia Mobile Deity

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    Yeah, it's hard to speculate on the real reasons for the price drop. A $200 price drop so soon does raise suspicions. OTOH, the phone was extremely anticipated, at the very least sold well at launch, and also largely lived up to the hype. We'll see if they hit that 1 million target number, and if the price drop was needed to hit it.

    2 other notes-
    1. $400 for an 8GB does make the phone much more attractive to a larger audience IMO. The RAZR costs $400 when it debuted, and while it looked great it was criticized for having outdated tech even when it launched.

    2. The price drop was also obviously influenced by the new iPods. The new lineup looks great to me, but could only work with a iPhone price drop. Otherwise the iPhone would look very overpriced next to the cheaper 16GB iPod Touch.

    What is ironic is that many people were arguing that Apple would never put Wifi and Safari on the iPod Touch because it would steal iPhone sales. But now that it turns out that the Touch is flash-based and 'only' goes up to 16GB, people are arguing there's no point to buying a Touch, people are going to buy the iPhone instead.
     
  4. Robanga

    Robanga Mobile Evangelist

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    I agree with Jobs. I would not have waited simply to save $200. That truly is the price of being an early adopter and well worth it IMHO.

    One thing with the touch though, is that you get video out that you do not have in the iPhone. So the difference between that is to be factored into the cost difference, if you want that feature.
     
  5. Ed Hardy

    Ed Hardy TabletPCReview Editor Staff Member

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    I don't think it's a case of the iPhone having poor sales. Instead, I suspect that Apple realized that -- at the original high price -- this smartphone wasn't having the wide appeal it was hoping for.

    iSupply looked at the demographics of those buying this product. Approximately 57 percent of iPhones bought in July were purchased by U.S. consumers 35 years of age or younger. Nearly two-thirds, or 62 percent, of iPhone buyers in July had a four-college degree or more education.

    Dropping the cost will almost certainly increase the appeal of this model to other groups.

    It's also possible that Apple wasn't happy with very good sales. It wants huge, over-the-top sales. Again, a price cut could help accomplish this goal. Think about it; if the iPhone had debuted at $400, it could have already reached the 1 million mark.

    I sincerely hope this wasn't an example of an "Early Adopter Tax", in which companies penalize people who can't wait to get their hands on a new product by deliberately over-charging them for it at launch.
     
  6. Adama D. Brown

    Adama D. Brown Brighthand Reviewer

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    Honestly, I wouldn't be surprised if that were exactly it. :(
     
  7. Unxmully

    Unxmully Mobile Consultant

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  8. Adama D. Brown

    Adama D. Brown Brighthand Reviewer

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    From the aforementioned URL:

    Apparently the pitchforks got some results. Honestly, though, I'm leery of weasel wording about "other consideration."
     
  9. Antoine Wright

    Antoine Wright Neighborhood Mobilist Super Moderator

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    That Apple Open Letter (way too many of these lately) smacks of PR cleanup and not what it was, market planning and perception. People are pissed that they were missled by Apple. Oh well, tech happens.

    The dropping of the cost put the iPhone inline with the iPod touch making it one of those "how do I decide modes." Apple is playing the split knowing that if they don't get you with the one, they will get you with the other. Pretty smart if you ask me, and taken right out of a BMW/Audi playbook.
     
  10. Ed Hardy

    Ed Hardy TabletPCReview Editor Staff Member

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    Thanks for the tip, Unxmully. I've updated the article with this information.
     
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