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Crazy Stevie's iPhone Prices are Insaaane!
Posted by
Zonk
on Sat Sep 22, 2007 08:05 PM
from the come-on-down dept.
from the come-on-down dept.
theodp writes "Slate takes a look at the alarming lesson of the iPhone price cut and ponders the long-term effects of a Fire-Sale Nation mentality, especially when companies go all Crazy Eddie slashing prices on products like homes and cars that have active secondary markets. 'High-profile price-chopping tends to occur whenever companies freak out about the vicious combination of a slowing consumer economy and the prospect of getting stuck with big inventories of unsold goods. The tactic often works in the short term. The hype over insanely low prices functions as a form of free advertising, and the lower prices tend to attract buyers. Apple announced on Sept. 10 that it had sold its 1 millionth iPhone.'"
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Apple: Apple Legend Woz Blasts iPhone Price Drop 272 comments
Stony Stevenson writes "Apple cofounder Steve Wozniak Saturday blasted Steve Jobs' decision to drop the price of the iPhone by $200 just two months after the product was launched. Said Woz: 'Everyone expects technology to drop in price. The first adopters always pay a premium. I am one of them. I am used to that. But that one was too soon, too harsh ... A lot of people from Apple, even a lot of people that worked on the Apple Lisa and Macintosh computers in the beginning now work at Google. The thinking over at Google is very much like early Apple days. The fact that they give people time off to work on their own ideas is exactly matches some of the things that made Apple great. I wish Apple did that.'" We just discussed the price drop last night.
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As long as the only connectivity is AT and T... (Score:5, Informative)
It won't matter to me what his prices are. An incredibly short-sighted error, IMHO. I'm good for five of them (three kids and my SO.) But no connectivity, no buy.
Re:As long as the only connectivity is AT and T... (Score:5, Insightful)
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Re:As long as the only connectivity is AT and T... (Score:5, Interesting)
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Re:As long as the only connectivity is AT and T... (Score:4, Insightful)
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Let's say you sell it for use on any network. For the sake of argument, let's pretend that it would magically work on GSM or CDMA so you could use it on Sprint/Verizon too.
Firs thing is first, that's 4 times the compatibility testing (minimum). That is 4 carries that you have to make Visual Voicemail work on. That would be tough. Or you could let some customers have it and some not. Or you could just cut the feature which is probably what would happen.
With four carriers (we'll just assume the big ones for
Re:As long as the only connectivity is AT and T... (Score:5, Interesting)
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Re:As long as the only connectivity is AT and T... (Score:5, Informative)
Yeah, testing takes time, but it's cost in time and money is nowhere so high that we'd simply NOT test and go exclusive with one (or $SMALLNUM) operator.
Whether AT&T was the logical choice or not, I don't know, but it certainly wasn't for the reasons you cite!
I can't believe the mods went for it, though?!
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Re:As long as the only connectivity is AT and T... (Score:5, Insightful)
Just sell the thing in Apple stores; put the visual voicemail thing on the internet as a service and allow people to pick their own plans.
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It still wouldn't matter. If they went with T-Mobile, people would complain them. People complain about Sprint (I'm one) and Verizon is right up there. There are 4 big cell phone companies in the US, and I don't know of any of them having a decent reputation. My knowledge ranges from not great (T-Moblie, I haven't talked to many people about them) to annoying (Sprint: decent service, poor phones, poorer prices) to horrible (Verizon: poor phones, horrid software, and lock-downs that make Sprint look like a b
Re:As long as the only connectivity is AT and T... (Score:4, Insightful)
Most cell phone manufacturers do make different versions for different countries. LG is perhaps best known around here for their Verizon phones (CDMA), but they also make GSM devices. Motorola makes both GSM and CDMA versions of the RAZR and many other models, as do Sanyo, Samsung, RIM, and Palm.
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Re:As long as the only connectivity is AT and T... (Score:4, Informative)
Oh come on, you have to admit that is hyperbole. Yes, they may have somewhat limited themselves in the US market by being limited to a few carriers but I'm sure they did the research and the amount of lost sales because of that didn't out weigh the world market (the majority of the world uses GSM, the US is strangely skewed towards cdma).
I was once told by someone in the industry never to buy a CDMA version of a phone that was originally designed as a GSM phone. The reasoning being that often the other version was an afterthought and not as thoroughly tested.
Maybe at this point Apple is testing the market (worldwide) and will eventually approach the much smaller CDMA market if it seems financially viable. You can't really fault them for going for the bigger pot of fish first.
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Oh come on, you have to admit that is hyperbole. Yes, they may have somewhat limited themselves in the US market by being limited to a few carriers but I'm sure they did the research and the amount of lost sales because of that didn't out weigh the world market (the majority of the world uses GSM, the US is strangely skewed towards cdma).
Well, no, it's not hyperbole. Like I said, there are over 120 million CDMA customers in the US, and if Apple doesn't release a CDMA iPhone, they probably aren't going to get many of those customers.
But I agree that Apple probably took that into account. Perhaps they figured that developing the GSM version first would speed up their worldwide release, so they could sell enough units overseas to balance out the ones they aren't selling here.
I was once told by someone in the industry never to buy a CDMA version of a phone that was originally designed as a GSM phone. The reasoning being that often the other version was an afterthought and not as thoroughly tested.
I'm sure Apple would've put plenty of testing into the GSM version
Re: (Score:3, Informative)
Verizon (62 million) + Sprint (55 million) + Alltel (12 million) = 129 million for CDMA
AT&T (64 million) + T-Mobile (25 million) = 89 million for GSM
Perhaps I'm missing a few smaller carriers, but these are the major ones.
Re: (Score:3, Informative)
Also, Verizon recently chose GSM for their new '4g' stuff.
http://www.boygeniusreport.com/2007/09/21/verizon-adopts-gsm-standard-for-4g-network-cdma-limelight-fading/ [boygeniusreport.com]
http://www.engadget.com/2007/09/21/verizon-dumps-cdma-for-gsm-based-lte-in-4g-networks/ [engadget.com]
This is an odd move by any account, and nobody really knows
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CDMA is mostly a US thing apparently.
Indeed, mostly North American, though it gets some use in other countries [wikipedia.org] as well.
Also, Verizon recently chose GSM for their new '4g' stuff.
Well... I wouldn't say that, based on the info in those articles. They chose a technology that's supported by the GSM group, instead of the next revision of CDMA2000, but it's not the same GSM that's in use today by such carriers as AT&T; putting today's GSM chips in a phone won't prepare it to be used on this upcoming 4G network.
In fact, even UMTS (aka WCDMA, aka GSM's 3G) uses a CDMA-based air interface. The real loser
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Nope. The only thing UMTS and CDMA have in common are that at an air interface level, both use a Code Division Multiple Access multiplexing scheme, and that only applies to UMTS for versions R99 through Rev. 7: Rev 8 is OFDMA based.
UMTS and CDMA don't even use similar, let alone compatible, implementations of the air interface.
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I don't think that that true at all. Palm, after all, has come out various treo models in GSM and CDMA simultaneously, even tweaking features to suit the carrier. I don't know if it's just a matter of firmware, or plugging a different modules onto the system board, but carriers sell LOTS of phones.
I think the key has to do with marketing, particularly positioning against the t
Re: (Score:3, Insightful)
Perhaps so. However, I am not going to do that; I am not interested in a fairly expensive phone without a warranty or technical support, which appears to be the current policy. Nor am I interested in one that may break with an upgrade, or which is unable to upgrade while the rest of the field is. I am even less interested in handing out such
Don't forget (Score:4, Informative)
Re:Don't forget (Score:5, Funny)
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Gimme A Break!!! (Score:4, Insightful)
Please, let's see some real news, rather than trying to make problems up.
Re:Gimme A Break!!! (Score:5, Insightful)
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There are lots of examples. For just one, not many years back we saw certain computer memory manufacturers who were charged with "dumping"... even though none of those companies had a corner on the market. They WERE trying, though... which is the point.
If there are lots of examples, then you need to find another one. The memory dumping issue was NOT about monopoly, it was about unfair trade practices for imported goods. Micron, the only large-scale US memory manufacturer accused the koreans of dumping and the us state department supported Micron as a form of protectionism.
Come up with a real example of a domestic case of a 'dumping' conviction that did not involve leveraging or maintaining a monopoly market and I'll gladly accede.
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Re:Gimme A Break!!! (Score:4, Informative)
Don't try to trivialize the solid case for banning PS3s by associating it with the cranks who want to ban PS3s for being too cheap.
(Unfortunately, I have to remind people this is sarcastic...)
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falling prices are normal (Score:5, Interesting)
Second, the cost of everything has an fixed component and a quantity component. One reason an F22 fighter is so expensive is that relatively few are built. The same thing happened with the iPhone. At the beginning they weren't sure if they'd sell 1 or 1 million. They had to guess and price accordingly. Now that so many are sold, the fixed costs (like engineering) are paid-in.
Meanwhile, they are competing with many other kinds of smart phones. Most of which were cheaper already. Doesn't anyone remember all the talk about how the iPhone was outrageously priced above competing smart phones?
Yeah. So after their profit margin was clearly fat, they cut prices to be competitive and more than just fan-boy enthusiasm. We should be worried? This article is drawing ridiculous connections between the iPhone and the panic over the sub-prime mortgage market.
still overpriced (Score:5, Insightful)
iPhone doesn't start hitting "Crazy Eddie" pricing until it's below $100.
Re:still overpriced (Score:5, Insightful)
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Deflation Indeed (Score:3, Informative)
Really? No GPS, no tethering, no mem card, no IRda, no real bluetooth PAN, no MMS, no OTA pda syncing, no useful push email, no IM, no tactile feedback. I'm having trouble finding some features, can you point them out?
Flation - In or De? (Score:2, Interesting)
The Fed chose to cut rates to prevent deflation. The Slate article seems to suggest that deflation has only been postponed and companies will be hit in the long term. But the price cuts are held often - think Thanksg
Investment = Work (Score:3, Insightful)
The fed works to mediate the economy so that people with money wi
Re: (Score:3, Interesting)
When people buy gold, they basically stick it under their mattress. They don't use it themselves, and no one else gets any benefit from it either. For all intents and purposes, that gold has been removed from the economy. It doesn't build new factories, buy new machines, or pay anyone's wages. It doesn't even do anything for the person who bought it. It just sits there while the owner waits for the price to go up so
nature of phones (Score:5, Insightful)
Many pundits also complained that the iPhone could not compete with the smart phones. Of course, the iPhone is not competing with the smart phone, but merely assuming that some people might be willing to pay more for a phone upfront if it provided a value. Such a market was made clear by the Razr.
Now pundits are saying that Apple is desperate and crazy because it lowers prices. It is true that Apple never has a sale, but this is a phone. Phones start expensive and then get cheap. It always happens. I don't have an iPhone. Being an early adopter was not worth the price. I was waiting for this price drop, and a relaxation to contract rules typical to ATT. The price drop is not like the price drop of a Mac or an iPod. With those devices, one is not contracted with a total costs that is at least $2K.
10 million phones in a year? (Score:2, Insightful)
Now pundits are saying that Apple is desperate and crazy because it lowers prices
No... pundits are saying that Apple is desperate and crazy because they aren't even close to making their target of 10 million phones in the first year. [macdailynews.com] If Apple gave us an unlocked phone with an SDK, they could easily make or exceed that goal. It's simple really: Apple decided to focus on a great profit instead of a great product, and ended up with neither.
That's right! (Score:2, Funny)
Autos (Score:5, Insightful)
No matter how much Consumer Reports et al. say the reliability has improved, and no matter how much the US makers craft intriguing and unique new offerings, their cars' value will continue to tank.
Sure, all cars lose value the minute they're driven off the lot, and it's a substantial number. But go take a look at what happens to a Civic or Camry versus what happens to a Fusion/Taurus or Malibu. Go ahead, check it out. It's awful.
I bought a new Scion tC last year. I was all primed to buy a used carwith ~35K miles; it makes sense to let someone else take the financial hit. Then I looked at the prices on used Scions, used Civics, etc. $17K cars were selling for $14K after three years. It made absolutely no sense to go buy a three year old car with a nearly-expired warranty and a possibly shady maintenance record when $3K got me a brand new one. On top of that, I was paying cash; the price difference is narrowed even more if you're financing, because the used car will almost certainly have a higher APR.
Now contrast this with a Ford Focus or Chevy Cobalt or similar. Go look at the similar models, and marvel at how much more has bled off of the value; it's because the $17K Ford, depending on when you catch it, might be only $15K, and might have a 7% or a 0% APR. It's great in the short term, and if I was interested in a Focus I'd be all over it.
Ultimately, if I was buying this car to drive it into the ground and toss it at 300K miles, it would be smarter to buy the Ford (assuming the reliability was the same, which isn't really the case with the Focus). Most people, myself included, don't do that. They get rid of the car in the 80K to 120K range, when it's starting to show some age but before it might potentially require major repairs. And many people look at how the US automakers have played their "SUPER LOW 72 MONTHS 0%! $3,000 CASH BACK" games and they walk across the street to the guys who might charge a bit more, but won't slash their prices next week. All things being equal, a Camry with the same MSRP as a Malibu or Fusion will resell for more at every step in its life, and it's because Toyota has shown that they're going to hand out approximately the same deal to everyone.
I want to buy American, or at least be able to widen my prospects when looking at cars. I really do. If I were willing to drive cars into the dirt, I could probably do it, but I'm not comfortable with the risks near the end of the car's life. A $2,000 engine repair does make better financial sense than buying a new car, but not when your car won't start, and you have to get a rental for a week, and you're wondering if it will be okay for another year or will require a new transmission in four months. So, like most people, I sell mine before I think those problems will show. As long as the US automakers are willing to go "Crazy Eddie" and reap the short-term profits, though, they'll continue to lose out on long-term buyers like me. I sincerely hope other industries are willing to look at Ford, GM, and Chrysler's experience when they think that it's a good idea to slash their prices.
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Here are several scenarios where I, personally, have found it better to NOT Pay cash:
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No, cash is a horrible bargaining point when buying from an auto dealer. They make money on the financing, and assume people will be financing through them (or at least allowing them to arrange the loans - where the bank gives them cash kickbacks or points.)
You always want to finalize the price before you start talking financing (or lack-there-of) or trade-in. It is only when done in this order you will have a chance at working with unpadded numbers.
Makes sense, but the iPhone's a bad example (Score:3, Interesting)
What's masked it a little here in the US has been the subsidies that cellphone carriers pay to get lock-ins. And they increase the subsidies as the life of the gadget progresses (at least on paper), to reduce the perceived cost more. Remember, once upon a time the Motorola RAZR was the hottest phone on the market. And it cost around $400-$500, even with a contract. And that was just a phone! Now, of course, they're free with contracts, and have been for quite a while.
Anyhow, I'd say the dependency of the domestic auto market on rebates is a much better bellwether for the state of the "Crazy Eddie Economy" (and I grew up in New York, so I remember those ads), along with the use of incentives in the housing market. Heck, supermarket coupons are part of it, too. When discounts are the norm without any real reason to do so (real costs are always dropping in the electronics business), prices have no real floor, and consumers have no incentive to pay the "real" price, because they know that it's going down. A lot.
It's just profit maximisation (Score:3, Interesting)
So nothing surprising, just Apple doing whatever seemed likely to maximise profits. You don't like it? Tough luck. Those who live by the sword shall die by the sword.
Deflation (Score:5, Informative)
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Congratulations for so whole-heartedly buying into Apple's marketing, but he was going for the biggest possible profit, not a desire to make the perfect cell phone. There's easy to imagine improvements, that would have added cost but made the iPhone better - GSM or an unlocked OS are obvious ones. The super-expensive Nokias have a lot of options that the iPhone doesn't.
prices drop over time? (Score:5, Funny)
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Re:Apple "rebate". (Score:5, Insightful)
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It sounds better than the other two phones I've had -- Siemens SK65 and Nokia 3120. It's a pretty good phone, though it could do with voice dialing if you drive a lot and need to dial whilst driving. Me, I don't drive much, so it's fine.
-b.