Apple Dissed Early Adopters

Now that the dust has settled somewhat after the Apple event earlier this week, the news with the longest-lasting reverberations arguably has been the iPhone’s $200 price cut.

Not only did the move anger the iPhone’s early adopters, who’d shelled out $600 for theirs, it made Wall Street nervous, too. The AP reports:

Apple Inc.’s price cut of its iPhone and the new lineup of iPod players are expected to ring in healthy holiday sales, but Wall Street investors accustomed to Apple’s meaty profit margins appear a bit disappointed.

Apple stock fell $1.75, or 1.3 percent, to $135.01 Thursday. On Wednesday, after the price cut was announced, shares had fallen 5 percent.

Apple’s refund policy allowed those who purchased iPhones within 14 days before the announcement to get a $200 refund, but that left out their most loyal customers: those die-hard Apple-ites who stood in line to get their iPhones and then hyped it all over their blogs and to their friends. So yesterday, Jobs wrote an open letter promising a $100 store credit to the iPhone’s earliest and most eager customers:

[E]ven 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&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.

But in my opinion, the letter was a day late and that makes it $100 short. Granted, customers that can afford a $600 phone aren’t exactly hurting for cash (or rather, store credit), and price cuts happen all the time. Most early adopters know this, and being the first to own product X is worth it to them. But by cutting the prices so soon, and by being reactive about store credit instead of proactive, Apple allowed the attention to go from the shiny new gadgets they’d just introduced to the price tags on them, making it seem they don’t really care about their best customers. Not a great branding move. As if to drive this point home, Steve Jobs simply said, “That’s technology,” in a Q&A with USAToday (which happened before the letter went up).

Beyond the letter, the Wired Epicenter blog nicely summed up Apple’s mistakes with the price drop in the first place, chief among them “lack of tact”:

Most consumers are aware of how a product’s life cycle works–but let’s face it, few want to be openly reminded of it. It’s a harsh reality, but the fact of the matter is that businesses essentially view consumers as people whose passions, interests, and material needs can be forecasted, quantified, and exploited for maximum profit. It’s not unfair that Apple views its most loyal customers in the same fashion, but it’s incredibly tacky that the company made that fact so palpable with its price drop.

Nokia took advantage of Apple’s gaffe with a clever search marketing campaign, which Apple then countered with one of their own, though the messaging was purely a sales pitch and ignored their existing customers.

What Apple should have done is make an exception of their refund policy for all iPhone owners, giving them the $200 price difference. Or they should up the store credit to $200. Or Steve Jobs shouldn’t have been so blasé about the price cut.

Ultimately, what Apple really should have thought more carefully about is the original pricing of the iPhone, knowing that the iPod Touch was just around the corner anyway. Their sales will be through the roof this year, but still, it’ll be interesting to see if their next brand-new product gets a more tepid welcome from their burned fan base.

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