Apple (NASDAQ: AAPL) released the 8GB iPhone in June at a high price point in the smart phone market of $599. Now, Apple has announced they'll drop the price of the iPhone by one-third to $399 in time to capture new customers during the holiday shopping season. Competitors, prospective customers and existing customers are all effected by this price cut.
According to Reuters, competitors like Palm's Treo and Motorola's Razr2 are likely to take the biggest market share hit with the new iPhone price coming very close to the current prices of those smart phones. With a lower price point, it's speculated that Apple should steal additional market share across the board, but Palm and Motorola are likely to see the biggest market share losses.
New customers will benefit from the price cut for obvious reasons. Let's face it, the iPhone is a cool product. At $399 many more customers will be able to afford it at the lower price. Of course, there is still the issue of AT&T being the only carrier service allowed with the iPhone, but at a lower price point, some people may take the risk of poor service just to get their hands on the latest, trendy technology.
Existing customers are probably affected the most in the short-term by the iPhone price cut. How would you feel if you paid $599 for a product two months ago, and now, it's available for $399? As you'd expect, current iPhone customers are livid about the price cut, but Apple is responding by providing rebates or a $100 Apple gift certificate to existing customers to offset their disappointment. I have to give Apple credit for doing something to appease their existing iPhone customers in order to maintain their brand image. They didn't have to give their existing customers anything, but according to Steve Jobs, CEO of Apple, in a letter to current iPhone customers:
"We want to do the right thing for our valued iPhone customers. We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple."
You can read the full letter from Steve Jobs here.
What do you think of the iPhone price change and Apple's response to current customers?
You can read more about the iPhone price cut from some of Know More Media's other business bloggers at:
Amazing prices on iPhone - check this out if you want the best deal out there (cheaper than Apples new pricing with their discount)
http://tinyurl.com/2r5ufv
Great accessories too. I got a cool holder for mine here..
Posted by: brielgeek | September 8, 2007 1:12 PM | Permalink to Comment