Apple reduces price of iPhone by $200

This was not something that anybody would have expected. There was the usual sense of expectation regarding what would be new products introduced by Apple, but nobody would have expected the price of the iPhone to drop by a third, to $399. This is good for the people who were thinking of buying the iPhone but the price of $599 was too expensive for them, or maybe they just did not want to spend so much on the iPhone.
It sure looks like Apple felt that the sales figures for the iPhone were not meeting the desired levels, and the cost is a significant factor, and hence the reduction in the price. This price will make the iPhone more attractive for the holiday season and should spur sales. However, there is a very vocal group of uses who feel extremely dissatisfied with this decision, and it is quite expected. After all, to buy a new gadget is good, and then to find out after you buy it that the price has dropped by $200 would make you look like somewhat of a fool. The users were fairly vocal on the Apple website, and the company decided to give all of them $100 as compensation.

Apple on Thursday offered a $100 store credit and an apology to early adopters of its iPhone mobile handset after they reacted angrily to a large price cut within 10 weeks of its launch. The move, designed to boost sales during the holiday season in the US, was an unusual one for the company. It commands premium prices for its products and tends to add features to them to justify maintaining existing prices.
IPhone owners, some of whom queued for days to buy the handset before it went on sale on June 29, had by Thursday besieged Apple with complaints that they had been taken advantage of and overcharged. Apple’s price cut had also disappointed the market. The company’s shares fell 5 per cent on Wednesday on concerns about the effect on profitability and the decision to cut the price so soon. Apple shares closed a further 1.3 per cent lower on Thursday at $135.01.

This may actually be the first time that Apple has to had face the backlash of customers in such a way, and would not have been pleasant for them. However, it must have been necessary for Apple to make such a move in order to avoid getting a bad backlash from customers; at the same time, given the need to increase sales, the price cut would have been necessary.