Listen to this article
When the iPhone was launched two months ago, the cult of Apple was in full swing. Hard-core aficionados cheered each other as, having camped out overnight, they shelled out $599 (plus talk-plan) for a top-of-the-line model. This week, after chief executive Steve Jobs announced a 33 per cent price cut, the disciples rebelled, demanding recompense.
On Thursday, Mr Jobs relented – sort of. In an open letter to early adopters of the iPhone, he apologised and offered them a $100 store credit. It was the least he could do. Apple’s renaissance has been based on stylish technology allied with an image of being the industry’s nimble underdog. So when the blogs turn nasty, quick action is required.
But if the apology proves enough to quell the revolt, it will intensify debate over how well the iPhone is doing. The price cut can be read in two ways. The positive argument – reiterated in Mr Jobs’ letter – is that Apple is encouraged by the iPhone’s reception and has accelerated the usual price-cutting schedule to net even more customers in the run-up to the holiday season.
Yet the scale and timing of the price cut mean it is more easily interpreted negatively. Historically, Apple has tended to adjust prices when launching new models. In this case, it actually dropped one – the lower-stage iPhone. And even in this consumerist day and age, we are still far from the end-of-year holidays.
Ominously, Mr Jobs provided no numbers on iPhone sales, but the price cut smacks of making sure he reaches his target of 1m units being shifted by the end of this month. It might just do that, albeit at the cost of lower margins. Even so, the next time Apple launches a snazzy new product, the lines will be that bit shorter, and the high-fives less exuberant.