Thursday, September 06, 2007

Who Owes Whom?

This appeared today on

Market Scan
Steve Jobs: iSorry
Carl Gutierrez, 09.06.07, 4:40 PM ET

They say love means having to never say you're sorry, but if so no one told Steve Jobs. On Thursday Apple's head sent a letter of apology to the iPhone's early adapters, hoping to make them feel a little less jilted after he dropped the price on 2007’s “It-product” from $599 to $399 on Wednesday, a mere two months after its release.

In the open letter Jobs wrote that after receiving hundreds of emails from customers upset about the $200 price drop he decided to offer every iPhone customer who purchased the gizmo at full price from either Apple (nasdaq: AAPL - news - people ) or AT&T (nyse: T - news - people )a $100 store credit toward any product at Apple’s retail or online stores.

By turns, Jobs was both boastful and contrite in the letter, as he addressed both iPhone customers, and, by extension, Apple investors. "iPhone is a breakthrough product, and we have a chance to 'go for it' this holiday season," he wrote. "iPhone is so far ahead of the competition, and now it will be affordable by even more customers."

But, ultimately, Jobs dropped the justifications, and simply apologized. "Our early customers trusted us, and we must live up to that trust," he wrote. How he plans to do this has yet to be worked out, exactly. “Details are still being worked out and will be posted on Apple’s website next week. Stay tuned.”

After rising to $137.24 a little after 3:00pm, the shares of the Cupertino, Calif.-based company fell to $135.20, a total 1.2%, or $1.69, drop from Wednesday’s closing price.

The week has been intense for the company. On Wednesday, Jobs gave a much-publicized presentation of Apple’s new line of iPods, along with cutting the price of the 8GB iPhone, as well as ceasing sale of the 4GB model (See “Apple Introduces New iPods”).

On Tuesday, shares of the company lifted 4.1% after Gene Munster, senior research analyst at Piper Jaffray, spent 50 hours counting iPhone and Mac sales in Apple retail stores across the country and found them to be in-line with his estimate (See “Traders Take A Bite Of Apple”).

Also, Apple recently weathered a dispute with NBC over iTunes contract to sell downloads, which ultimately led to Apple announcing last Friday that it will pull NBC shows from iTunes in September, three months early (See “The Apple-NBC Battle Won’t Amount To Much”).

Ah, nostalgia: I am reminded of those idyllic days of old, the days of the "user group" and the evangelical fervor (anyone remember when Apple actually had "evangelists" on the corporate masthead?) surrounding the Macintosh...and the near-fanatical belief that some Mac owners had that Apple "owed" them something that transcended the ordinary producer-consumer relationship.

The rationale went something like this: I shelled out my hard-earned dough to buy X (hardware, software, whatever) when X first came out, and if not for early-adopters like me, X would not have been successful. Since it's thanks to me and the other early-adopters that it was successful, I should not not be expected to shell out yet again for X.2 or X Enhanced. It was as if they expected a for-life free ride because they had bought, say, the original Mac when it first came on the market.

Well, so did I...but I never figured that Apple owed me anything but a working Mac.

Granted, it's always nice when, say, a software publisher offers an attractive upgrade option, something that seems to be becoming a rarity these days. And it's good marketing, good customer relations. But it's hardly mandatory.

Ditto with the iPhone. Its early-adopters had to be the first kids on the block to have one, and they were willing--nay, eager--to pay a premium for it. Now the premium has turned into a discount and they're crying foul. Huh? How do you figure? You paid the price that it carried when you bought it; if you wanted a discount, you should have waited. Your impatience is hardly Steve Jobs's fault, or responsibility.

Even if it's "a mere two months after its release." What's the significance of two months, anyhow, that Gutierrez feels it deserves boldface emphasis? Had Apple waited three months, would that have been more acceptable? Four months? Six? And why?

Here's my advice to disgruntled early adopters: Next time, don't be in such a big freakin' hurry.

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