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I, Cringely - The Survival of the Nerdiest with Robert X. Cringely
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The Pulpit
Pulpit Comments
September 06, 2007 -- The Puppet Master
Status: [CLOSED]

The letter was so beautifully crafted, it was clear that it was not dashed out in the late afternoon.

M. Crawford | Sep 07, 2007 | 12:04AM

Yes indeed. That is one of Bob's best in a long time.

J. Doege | Sep 07, 2007 | 12:28AM

I am not a Steve Jobs fan. He seems like an overgrown baby; a mean and insensitive SOB that I would not like to work for. However, you can't help but praise him for his passion and vision. And I truly feel that most geeks that do work for him need the kind of motivation that he provides - a heavy dose of fear with undertones of "show me how good you really are! Impress me you pathetic, no-girlfriend, coding worm!"

Did he milk the "early adopters"? Of course! Duh! Who doesn't? XBOX 360, PS3 etc. Anything new and cool and in-demand will command a premium price if you want to be the first on the block to have one. And do you know what? Most early adopters know this and don't care. Especially when it comes to the kool-aid that is Apple.

If I were sitting at the boardroom discussing the product launch and life cycle of the iPhone I would have agreed with every single thing they've done to-date:

Milk the early adopters? Check. Undersell the sales estimate to the analysts? Check. Lower the price 3 months later? Check. Offer a $100 Apple credit to appease the whiners? Check. Blow the sales estimates away because of the new lower price? Check.

Make no mistake; the iPhone is the most significant device since the personal computer itself.

I firmly believe we will look back 10 years from now and realize that this product began the true transition from a computer on the desk, to one in your shirt pocket. Yes it has shortcomings, but this is version 1 folks! It is so far ahead of any other device in terms of design, power, and functionality that the game has truly changed now and forever.

So bravo Steve Jobs! Keep wowing the consumers! Keep humiliating and motivating your employees at the same time. And most importantly, keep never settling for "good enough".

Stu Gazzo | Sep 07, 2007 | 12:32AM

My apologies. My comment was not quite so crafted. To restate:

The Apple CEO's letter was so beautifully crafted, it was clear that it was not dashed out in a rush this afternoon.

M. Crawford | Sep 07, 2007 | 12:38AM

Stu Gazzo comments: "this product began the true transition from a computer on the desk, to one in your shirt pocket." Yes, and notice who's software is NOT leading the transition. Let's revisit that "doesn't he realize he can't win" comment of Gates in a few years.

Randall Newton | Sep 07, 2007 | 1:17AM

You know, Steve has a far greater opportunity available to him - that of his legacy. Imagine if Steve was a tremendously nice guy to people? He'd be a legendary role model, both a superb manager and someone to admire.

And honestly, I think Steve could go down in history with a far more admirable legacy than that of Gates, if Jobs was a nice guy and loved talking to people. He could retire as a bestselling author, a role model to thousands of people, admired by millions, and worshipped all the more.

Graham Fair | Sep 07, 2007 | 1:17AM

Umm, when did people start thinking that Bill Gates was such a wonderfully nice guy? Even if you think Steve is devious (another word for clever?) nothing that he has done can be considered one-one thousandth as predatory as Gates and Co.

It is great that Gates is redistributing his ill-gotten gains to the less fortunate, but they shouldn't have been his to begin with.

Let's be honest, that is no different (morally) than the subterfuge that Cringely is accusing Jobs of doing here vis a vis the iPhone--except that instead of $100 million, we're talking about over $50 BILLION.

S.A. | Sep 07, 2007 | 1:57AM

microsoft aimed for a microsoft product in every home, apple is aiming for an ipod in every pocket (or purse for that matter

within a decade, we will have, perhaps, a TERABYTE in our pockets if GOO-PLE-TUBE succeeds

ajespinosa | Sep 07, 2007 | 2:00AM

I think there's an additional element of this:

Everyone, especially Americans, love apologies. It's ok to make a mistake, but the "big" people among us are never afraid to apologize.

It's rather Machiavellian to know you're going to sin but then have your apology ready to roll in advance. Turns that whole "better to beg forgiveness than ask for permission" thing on its head. Imagine having a typed apology ready to go when confronted with your transgression.

What I don't understand is why the market pounded AAPL shares so badly on Thursday. I know this leaves some money on the table from Apple for its customers, but it removes all doubt that Apple is going to crush the competition now. The goal is to get out ahead before the other guys can come up with any features to make consumers even consider alternatives. Kind of how it went down with the iPod: You could get another gizmo from Creative or another vendor for half the price and twice the features, but everyone wanted an iPod.

Brilliant.

Now, if they could just ditch AT&T. When can I hook this thing up to my t-mobile account?

John S. Leyba | Sep 07, 2007 | 2:12AM

"Umm, when did people start thinking that Bill Gates was such a wonderfully nice guy? Even if you think Steve is devious (another word for clever?) nothing that he has done can be considered one-one thousandth as predatory as Gates and Co."

I suspect that has a lot more to Jobs never having the market dominance required to pull a microsoft than it has with Jobs being unwilling to do so.

Eamonn | Sep 07, 2007 | 2:14AM

Bob, while you would have been remiss to not comment this week on the Apple mischief, I was hoping for some commentary on the gPhone and all the ferver around it.

D

dblanchard | Sep 07, 2007 | 2:16AM

>>
I suspect that has a lot more to Jobs never having the market dominance required to pull a microsoft than it has with Jobs being unwilling to do so.
>>

Yes, but last time I checked we prosecute people for crimes committed in practice--not in theory. So by that standard, your perception of Jobs's "willingness" to be as predatory as Gates is irrelevant.

S.A. | Sep 07, 2007 | 2:19AM

Ah, but this is not about Steve or Bill or any particular person. It's about products and services.

Apart from the Xbox 360, Microsoft doesn't have any interesting or promising products or services at the moment. Look at Vista - what a complete disaster - technically and market-wise. It's the biggest flop since Windows ME. MSN is not going anywhere, and Office is a boring, mediocre office product. The hardware division's mice and keyboards are OK, but there are many great competitors such as Logitech.

Meanwhile, Apple keeps pumping out hot new products and services that make you feel: I WANT THAT!

It will probably go on like this for a long time.

MB | Sep 07, 2007 | 2:38AM

Stop the presses!
I find myself in total agreement with Bob.
My first exposure to the Ipod was at Internext, sitting in the moniker domain auction with the editor of News.com, who also happened to be the keynote speaker at our convention. (I spoke on the future technology panel)
Anyhow, he was a "mac" guy. And an uber geek Mac guy, so of course he had the Iphone. As I played with it, I realized Steve got the display right. The thing that always has sucked on the Windows PDAs, all the way back to the Casio 105.
Frankly it annoyed me. My windows Pocket PCs can do all these functions, but the Iphone's screen just worked better.
Now, why can't Gates and the Windows people figure this crap out?

Eric J. White | Sep 07, 2007 | 3:14AM

So loyal Apple cuomsters basically have battered-wife syndrome? haha. It does make a sick sort of sense though.

"Yes, but last time I checked we prosecute people for crimes committed in practice--not in theory. So by that standard, your perception of Jobs's "willingness" to be as predatory as Gates is irrelevant."

Don't be ignorant, willfully or otherwise. Apple has been just as predatory over the years as Microsoft, but on the much smaller scale that they play in. (And for that alone I have more respect for them.) They have sued, threatened, bought out, and locked out competition many times over the years, not to mention they're just as iron-fisted with the press. It was probably worst in the 90's, when they were taking closed-platform to an extreme, it's not as harsh with BSD and Webkit.

As they gain marketshare, more people are waking up to the fact that Apple is a more stylish and even more ruthless Microsoft/Oracle/Symantec/IBM/etc. Even as someone who uses and likes Apple products, as well as Microsoft products, I'm still going to be wary.

Foxyshadis | Sep 07, 2007 | 3:26AM

Did anyyone notice or complain when Microsoft announced a Zune price drop from $249 to $199 on September 4th? The very next day Steve Jobs announced the new iPods. Microsoft then announces a limited edition pink case Zune a day or two later. Are any Zune owners clamoring (whining) for $25 from Bill Gates? Unlikely. Bill may be eating a lot of HumbLe Pie at the moment.

Roy | Sep 07, 2007 | 3:28AM

Bob, I know I read your story about Vanity Fair before...

Ed FitzGerald | Sep 07, 2007 | 3:30AM

It's a pity Apple is going to go straight down the tubes when Steve Jobs is gone. Is any kind of dynamic heir apparent being groomed? No, which is very frightening, if you are an Apple stockholder.

Kevin Kunreuther | Sep 07, 2007 | 3:43AM

The biggest reason that I didn't buy an iPhone when they first came out... the price (and the contract).
The second, the assumption that nothing Apple releases as "Mark-I" is bug-free and painless.

I'm still holding out... but it's getting harder to resist. But, if I were an early adopter; I'd still be pissed. And Steve still isn't my hero. (Nor BG either, but that is a different rant).

Kudos, Bob...

-edmund

Edmund | Sep 07, 2007 | 4:32AM

“He has to know that he can never win."

What a fascinating quote. At the time, Gates seemed completely correct but look at Apple now...

They are a clear leader in digital music and no-one else is even close to snapping on their heels yet - not even Microsoft, whose effort is widely seen as embarrassing. Ouch.

The iPhone - not that I've seen one - is obviously a revolutionary product. However the lack of an open development API (Surely Jobs remembers the lesson of the Windows open platform and the Mac's relatively closed one in the 80s?) and alleged contractual demands that demand that Apple are making on potential partners - which seems like arrogance and potential hubris - are two big question marks on it's future.

The Mac is never going to beat the Windows marketshare - but Jobs doesn't seem bothered. They're gaining share in the profitable high-end of that market and Apple now appears to have the mind-share of much of the tech elite and increasingly is making in-roads to the typical members of the business elite. Go on any public transport - planes or long-distant train journeys (I'm writing from Europe) and year on year, you see more and more Macs being used by sober suited people.

Bob, I remember you writing an article on this topic back a few years ago, where - I believe - you said that Steve Jobs was quite happy with Apple's position because he was playing by his own terms - not by an agenda set by the press, analysts etc. - and by that count, winning.

Well, like him or loathe him, Jobs popularized the template for desktop computer that we have today whether it be Windows or a Mac and in the last few years has changed the Media industry whilst marking what are widely perceived to be the best (and very profitable) personal computers.

So two landmark achievements in the computing industry - and arguably, the second achievement marks the beginning of computers breaking out of the desktop and becoming devices that we don't really think of being computers. And the second time around, Apple under Jobs just seems to be getting stronger and stronger.

So, not too shabby...

P.S. I disagree with you re. the iPhone price cut. I think that Jobs thought that the typical Valley elite who would originally purchase the iPhone just wouldn't care about the drop - which is probably true - so the cut just didn't matter. What's $200 to them? But I'll bet quite a few people who bought an iPhone were not your average wealthy high-achiever or Apple fanatic and were understandably upset.

I mean, Steve Jobs just doesn't ever say sorry unless he has to, does he? Yet he apologized and ate humble pie in front of the World - and that had to hurt!

Simon | Sep 07, 2007 | 5:14AM

Good read. I don't accept your assertion about undeserved profit.

1) iPhone is a luxury products. They are supposed to come with a higher price tag. It is part of the deal. You get a bit of "experience"/styling/coolness /exclusivity in exchange for paying more.

2) We know that techn-products gets cheaper (of course not that fast). So being the first to get it, you know you are going to pay extra.

I'm sure if you look at luxury product pricing, you would find this common.

Jobs is just right on the mark. Apple is in the fashion business, not the computer business.

Personally I don't care one bit about the price. I do mind though that I still can't buy an iPhone because I live in Europe, and that I will have to buy it on a contract. Luckily the company expected to sell them is a pretty decent one.

Henrik | Sep 07, 2007 | 5:49AM

Finally! Back to hard-boiled, gossipy, trashy conspiracy-theories. But with a chewy people centre.

Critical faculties blissfully suspended, I soooo want this to be true.

More please!

ProComBoDia | Sep 07, 2007 | 5:50AM

Good point Kevin. Steve is such a big personality who probably inspires many people in the company, it will be pretty much impossible to replace him. I can't see him grooming anyone for his eventual replacement as it would damage his ego!

Thurstan Johnston | Sep 07, 2007 | 6:16AM

'The iPhone is obviously a revolutionary product'
Ahem, I don't think so. The multi-touch screen is a new step, but the rest of it is not revolutionary.
Apple were not the first MP3 player manufacturer, were not the first mobile manufacturer, were not the first to combine the two. Even Bill G said that he thought the iPod's days were numbered as the mobile can do what an iPod can.
But the product's style and marketing are both outstanding. And the way Apple are catching up the likes of Nokia & Sony Erricsson is remarkble too.

Jon K | Sep 07, 2007 | 6:21AM

Jon K – 'The iPhone IS obviously a revolutionary product'

It's not so much WHAT it does, it's all about HOW it does it. No, I'm not specifically referring to multi-touch. I am referring to the overall user experience. It's simply fabulous. The iPhone doesn't do everything that everyone wants, but it does a lot of it and does it well.

Nothing frustrates me more than technology that is harder to use than it should be, and this is where Steve and Apple just "get it".

I don't recall Apple claiming that they created the first MP3 player. I do recall them claiming that it was the best though and history has proven them right. Nor did Apple claim to create the first mobile phone. They were not the first company to combine an MP3 player and a phone or the first out of the gates with a half decent smart phone.

Apple did the MP3 player right. It wasn't perfect, but it was and still is, in a class by itself. Apple has done the smart phone right as well. It's not perfect, but again, it's in a class by itself. I doubt that Apple will have the dominance with phones that it enjoys with MP3 players, because, as you mentioned there are other very capable phones out there. These other phones are only going to get better, because they HAVE to. Apple has raised the bar. Who wins? Everyone.

"Even Bill G said that he thought the iPod's days were numbered as the mobile can do what an iPod can."

That may prove to be true to a certain degree... but WHO CARES! The iPod has made Apple a ton of cash, generated new customers and help sell other Apple products. It's all good my friend!

It's not so much WHAT Apple does, but HOW they do it that separates them from the pack.

This is just my opinion. I've been wrong before, just ask my ex-wife! LOL.

Bilbo | Sep 07, 2007 | 7:07AM

"Apple is in the fashion business, not the computer business."

False dichotomy. The difference between Apple products and Dell/Microsoft is a lot more than just fashion.

Paul Dubuc | Sep 07, 2007 | 8:07AM

Love Steve Jobs or hate him, just don't ignore him.
...
At least 500,000 iPhones went out at the old price, which means Apple made $100 million in extra profit.

I don't love him or hate him, but I'll be cursed if I ever stand in line to buy his products. Good on him for a making a buck from the "gotta have it" crowd, they deserve what they get. One plus - taking advantage of the lowly consumer with "fashion" and staying profitable requires continuous, high-quality innovation. That's one area where everybody wins: witness iPhone. Every competitor is now going to make some attempt to mimic its popularity. The challenge for Apple is to keep ahead of the fashion curve just enough to stay "fashionable," but not so far out front that people look at its stuff and say, huh? Such was the demise of The Cube.

GuyFromOhio | Sep 07, 2007 | 8:34AM

>> "Apple is in the fashion business, not the computer business."

> False dichotomy. The difference between Apple products and Dell/Microsoft is a lot more than just fashion.

Apple is in the User Experience business. Dell is in the commodity hardware business, Microsoft is in the Monopoly Protection business.

Gee, which one is going to make product that users actually enjoy using?

Mew

Mija Cat | Sep 07, 2007 | 8:37AM

I used to believe Steve until Newton, NeXT, and some of the other failures. At NeXT he had an early lead that was wasted through sheer ego. He cannot have believed that the most compelling feature of the Macintosh Classic was the small, B&W screen; it was the OS and GUI interface. OSX is a Unix hack from open source. While beautiful visually, it is still closed, proprietary, and as far from the mark as every other Unix distribution in that computers should be working for us but we are still mostly working for them simply trying to get them to work for us. If it wasn't for blind luck at Pixar he would still be a simple multi-millionaire. He still has great Vision but he's never had great Listening.

TC Taylor | Sep 07, 2007 | 8:39AM

er.... you appear to be having a dig at a company and its CEO , purely because A) The company has actually lowered the price of one of its products and B) because its CEO is actually making money for his company!!!! Get real , this is called capitalism.

I for one am not complaining about the fact that my Ford car is now available for $4000 less than I paid for it 6 months ago , thems the breaks !!!!

Jason | Sep 07, 2007 | 8:47AM

I personally think that the real reason Apple dropped the price is that they want to launch the iPhone in Europe and compared to European phines the iPhone is rubbish.

I like Apple products and I love the OS but the iPhone is, was and always will be a joke. Top of the line phones in Europe have everything this phone has and dont look half as gimmicky.

Apple have to beat the top of the line phones here and give something special. iTunes on a phone isnt special, it's a crap way to buy music. 8GB compares to an iPod nano, hardly top of the line. If apple want to do something special it has to have a camera, video calls wi-fi internet and more than 10 GB of storage. Only when they can do that do I think Europe will even care about this toy.

I love my mac but this phone was a disaster from the start.

Brian Andrews | Sep 07, 2007 | 9:09AM

Even with the rebate, the early adopters are going to be much slower to adopt future Apple products. I think "listening to your once loyal consumers when they light the castle on fire" is not a brand building exercise of any kind...

Luke Peterschmidt | Sep 07, 2007 | 9:21AM

Interesting article but it still comes down to another spin on SOUR GRAPES. I cannot believe the amount of whining that is occurring in the press and blogosphere. It is pretty obvious who flunked market economics (if they even understand free markets and economics, it is a REALLY big step for most people).

Cheers,
bb

bartb | Sep 07, 2007 | 9:24AM

Sigh. With all due respect, what part of "caveat emptor" is not getting through? You thought it was worth $600 when you stood in line two months ago, all of a sudden it's not worth that much anymore? You didn't get on the web and research the device, so you did not see all the geeks across the blogosphere saying "wait, the price will come down and the features will improve, that's the Apple M.O."

This is no different from customers who buy a new Apple laptop or desktop two months before Macworld, only to find out from the keynote that prices are slashed and features are improved. Except that nobody forms a pitchfork and torch mob or demands financial concessions when that happens, because that's the risk you take. You buy a new car two months before the new model year and find out on TV that the price has come down, the incentive package is insane and the new model year has new gizmos. You don't go back to the dealer and demand that he refinance your X model car at the Y model price, do you? Remember all those folks who bought the Honda Insight?

Constance Reader | Sep 07, 2007 | 9:35AM

In terms of actually watching the keynote, this latest Steve "event" was a turning point for me; the Reality Distortion Field evaporated. Up until now I've put up with his constant muttering ("amazing", "revolutionary". "it's really beautiful" and so on) as his condescending way of framing viewers' thoughts and precluding critical thinking. It's irritating but tolerable, in the realm of accepted salesman behavior.



Everyone has their own breaking point, and many reached theirs long ago, but this was the speach that did it for me. The arrogance of charging for using software to create a ring tone (what's next, 5 cents per email? $1 per Pages doc?), and then the shameless $200 iPhone price drop followed by the $100 store credit (which, as Bob points out, given their margins and customer buying patterns really costs nothing), all delivered with a that smirk and "how cool is that" patter, well, it just turned me. It seemed he was treating his audience as a bunch of enraptured fools.


I like Apple for their innovative products, but I don't enjoy being taken for a ride.

Ken Chin-Purcell | Sep 07, 2007 | 9:42AM

But, but. Does Bill realize he lost? Look at the Stock, Microsoft is a flat-liner.
The times of excessive ME TOO come to an end and Microsoft is just fall out. Everybody can copy now and does.

ronald | Sep 07, 2007 | 9:46AM

"the top-selling smartphone in the world"

Whaaaa? There were 18.7 million Symbian smartphones alone shipped by licensees in Q2 2007. Global smartphone shipments in 2006 totalled 72.9 million units. Being the best-selling smartphone in the world is a little less impressive if you can do it with less than 3% of the market.

Chris | Sep 07, 2007 | 9:49AM

Come on folks, this is the *free marketplace*. Buy what you need when you need it at the best available price. If your wants demand more, be prepared to pay higher than commodity prices.

I don't have an iPhone. Nice, but it's way more than I need (now). I don't text message or have much need for wireless internet connectivity *at the current price vendors are charging*. When the equation changes, I'll reconsider.

Lest everyone think me a Luddite, I ordered my first Mac in January 1984. That Jobs guy does have vision. He sees technologies becoming available to fulfill parts of the vision and he goes for it, incorporating them in his products. And he really seems to care about the users' experience using those products. Because of that, the technological world is a better place.

Rich Straka | Sep 07, 2007 | 9:58AM

I am a newcomer to the whole apple/jobs reality distortion so apparently the koolaid hasn't taken full affect...however, Constance is right, caveat emptor. Personally, I love the show that Steve puts on...It's amazing! So much charisma and natural showmanship...

Derek | Sep 07, 2007 | 9:59AM

It must have been worth the $200.00 to be the first guy in your gang with an iPhone.

And now you get a $100 voucher too. How good is that?

Any sign of the ZunePhone?

Henry Porter | Sep 07, 2007 | 10:00AM

You know Apple's in a good position where they have to worry about lowering prices too quickly.

This is spot on though. Apple's pricing is nothing if not meticulously intentional. Nobody complaining about the drop is actually going to stop buying Apple products, and a huge host of new customers will pick it up at the new point, just in time for the holiday season.

gbabbitt | Sep 07, 2007 | 10:10AM

Wonderful piece. But believe it or not, Jobs missed a huge opportunity.

S.O.S. Steve Jobs! eBooks Will Save You!

Given your understanding of him, I am now hated by God Himself.

Mike Cane | Sep 07, 2007 | 10:12AM

Expect many execs stepping down "to spend more time with family" at Nokia, Motorola, LG, Verizon, Sprint, NBC/Universal....
They are all toast. The iPhone was already a hot product; now it's more affordable. And you can get the goodness without the phone part (the iPod "Touch"), which you don't really NEED anyway, if you have the wifi.

Tom B | Sep 07, 2007 | 10:13AM


And if Bill reads this he must be thinking that his statement about Jobs not winning was just a scrass and stupid as Michael Dell saying Steve Jobs should hand the money back to shareholders..

Apple products makes everything Microsoft does look twenty years old.

Thank you Steve Jobs. Goodbye Bill Gates.

Jon T | Sep 07, 2007 | 10:13AM


Bob, in your book Accidental Empires, you give name to this behaviour: The Battle Cry of Youth.

It's that, "Oh yes I can! You'll See!!" heard from every kid who is told that they can't do something.

So Mr. Gates says Jobs can't win.

...Oh yes he can, we'll see.

perhaps.

HiMY SYeD | Sep 07, 2007 | 10:27AM

Regardless of whether or not the iPhone price drop was a strategic miscalculation of customer reaction, or whether it was a deliberate attempt on Steve Jobs ' part to punish his customers (seems highly unlikely), I do believe that it will have little impact on future Apple sales. Here's why:
- The internet echo chamber means that the number of vocal critics of the price drop are probably far, far, far less than those that are perfectly happy with what they paid for their iPhones.

- The folks who buy Apple products will continue to do so as usual, because
a) they love the Apple experience, not Steve
b) Steve's reality distortion field is incredibly powerful at getting people to buy Apple products.
c) We Americans have a short attention span. We'll forget this whole brouhaha within weeks.

So don't cry for Apple. Next quarter, they'll still be laughing all the way to the bank (assuming the coming recession doesn't affect them much).

The Last Ninja | Sep 07, 2007 | 10:28AM

This is all a big pile of whining. People saw the product, saw the price, had reason to believe the profit margins were dramatically high, but were not only willing to buy the phone under those terms, but were willing to make great sacrifices (camping out in front of stores, etc.).

In other words, people are willing to pay big to be early adopters. No one was hoodwinked.

That Steve decided to placate customers' indignation by offering $100 gift certificates to anyone who payed the original price doesn't speak well to you general theory / character assasination.

paul | Sep 07, 2007 | 10:33AM

Am I the only one who thought the iPhone was not originally overpriced nor is angry about the price cut? I'm delighted. We're supposed to be delighted when products become more affordable (re-sale value drop aside). It is a smart phone and iPod in one, so why not charge the price of both. None of those people who paid $599 were forced to do so. The have the right to complain of course, but we should all ignore them. Me, I'm happy I waited until yesterday to buy one, but I'm sure a new, probably faster model will come out next year with more memory and I'll be envious again. But then I'll just buy a new one, just like a buy a new computer every year. I won't complain about it. I'll be happy I can get a new, better one.

Christopher Pelham | Sep 07, 2007 | 10:36AM

"Shameless price drop" - that's a new one. Steve Jobs has the gall to ask consumers for less in return for his goods! The unfeeling bastard.

This really is new territory. Historically, people have damned merchants for price increases. Now the price cut is an affront. How long before people start whining about prices that stay the same?

Bogus commercial ethics really does depend upon ignorance of economics.

LexM | Sep 07, 2007 | 10:43AM

More likely the price drop was not aimed at the people who had just purchased the iPhone, but aimed instead at those who wanted one, but were waiting for this expected event.
The only whiners were those who got trapped in the hype.
I doubt anyone really thought the price of a piece of electronic gadget would not go down. Every phone sold by every company has dropped in price just as dramatically as the iPhone, such as the Razar, which is at least $300 less than the day it was first offered.

I laughed at my friend who got one at $599. I told him that I would wait until next month to get mine cheaper. We both knew I was right. He wanted one first, he has one, he loves it, and will gladly spend more money in the Apple Store.

Yes Steve gets on your nerves sometimes, but evil Puppet Master? Not a true characterization. Remember to be a puppet master to make the puppet move you have to jerk the strings, not pull our leg.

Scott | Sep 07, 2007 | 10:44AM

Wow; that's some SOUR grapes. (And some pot-stirring, click-generation of your own.)

marc Farnum Rendino | Sep 07, 2007 | 10:50AM

So did you have a rant about the Motorola Razor$ It's gone from $499 to $49 w/service agreement, and still $249.99 purchased alone.

DE | Sep 07, 2007 | 10:51AM

Bob, it seems like you've got a bit of a personal ax to grind when it comes to Mr. Jobs, given your relationship at Apple, and subsequent professional encounters.

As for the iPhone "fiasco" where Apple "punished" its users ... First off, it's amazing how we're forgetting the risk that Apple was taking. In a field where they had no prior experience, the iPhone could have suffered the fate of the Mac Cube, either with lower-than-anticipated receptivity or a major technical issue (remember the Cube's notorious "cracks"?). Buffering the risk with larger margins is a common practice. But now the iPhone is a legitimate hit, Jobs is comfortable making a full market-share assault with a price that pits the iPhone against most other premium smart phones. Plus, he planned for a number of different possible customer reactions, and Apple responded accordingly.

That's just good strategic planning. It has nothing at all to do with Gates, Sculley, or any other deep-seeded Jobsian machinations. He dropped the price. Everybody wins. Yay capitalism...

Knute5 | Sep 07, 2007 | 10:52AM

So tell me, when will Bill Gates give back some of that over priced Vista OS he is selling in 7 different flavours? And what of the extra cost to buy a version that will run in Virtualization. And you somehow conveniently miss out how such a great deal OS X is to run on 5 machines at home (the family pack), compared to that of Vista on 5 machines. How do these things stroke Job's ego? We'd like to know old wise one.

veggiedude | Sep 07, 2007 | 10:54AM

Excellent column. Someone with an inside track to the inner workings of Jobs tries to lay out the thinking/personality traits involved in this 'pricing fiasco'. (And IMHO does a pretty darn good job of it too.)

Still, people who have NO dog in this fight (ie, those who have not purchased an iPhone and/or do not work for the Apple accounting department) continue to beat up on the iPhone owners who felt jilted by the price cut. Who's whining now?

I mean, seriously, does it hurt you in any way we early adopters, arguably among Apple's best and most vocal customers, felt a little betrayed? Does it hurt you at all, that Apple decided to give us a break on future purchases for our trouble? Didn't you enjoy the 24 hours that you got to feel smug about NOT having a beautiful iPhone to use/work/play with?

Come on. Enough is enough. Give it up. Your jealousy is showing, and its really ugly.

scralpha | Sep 07, 2007 | 10:57AM

Milking the early adopters is classic marketing strategy. I remember doing some spreadsheet modeling way back in the 1980s for Jack Ryan who invented the Barbie Doll. He had just invented a coffee cup that would keep a cup of coffee hot for an hour. He planned to sell the first wave at $35 (which seemed like a lot in 1985 dollars). And then he projected the price down to $5 at KMART by the "end" of the product cycle.

I just wonder if a) Steve wasn't a little too greedy in going for an "extra" $200, and b) if he shouldn't have waited a couple days to lower the price to let the iPods have their own news cycle apart from the price drop.

I will say that the price drop motivates me. I'm on a family plan with my wife, and I wasn't about to spend 2 x $599 plus a verizon cancel fee (read $1375 total) to get into an iPhone. But if I go to the Apple Store and purchase two refurbs I can keep the investment down to about $875. And help Steve make his numbers.

Bruce Kaplan | Sep 07, 2007 | 10:58AM

I have no doubt the iPhone price cut was planned in order to capitalize on Christmas buying - long ago, in fact. Look at what's come together this winter for Apple: New iMacs, hot iPhone, very attractive new iPod lineup, refreshed Mac Mini, better Laptop growth than any other computer maker in the market, and a shiny new operating system release (an OS which is apparently used by every single device in the arsenal). This convergence was no accident: this Christmas was specifically targeted to grow the Apple platform - to put devices in the hands of users. Next year, even if there is little or no new hardware, Apple will be able to use OSX to expand the capabilities of every device they sell at practically the same time for the same investment. My guess is that iPhone price cut was always planned in order to promote this Christmas push, but the iPhone launch may well have been a month or two later than originally scheduled - a schedule tentatively outlined several years ago.

MonkeyT | Sep 07, 2007 | 11:08AM

I want to echo the posts of Scott and Christopher--those who bought first, who wanted to be on the bleeding edge--didn't get burned, they got what they wanted which was to be one of the first iPhone owners.

And let's remind folks that one of the biggest criticisms of tech and other journalists wasn't about the phone, it was about the price: $599--even though Nokia, Samsung and others sell phones for more, and have much less functionality. So if there's a touch of whining going on, it seems to be the hypocrisy of those who are now complaining that Steve cut the price.

From purely a biz perspective, why is this bad move? I bought the original iPod, a 5gb for $399! Was I bugged that a 15gb version came out 6mos. later for$349? Or that you can get a $160gb version for $349? I was a early adopter of the Mac and probably hold the distinction of buying a Mac SE AFTER the price WENT UP $200!

Regardless of all the whining going on now, the $399 price cut will do nothing but put iPhone sales on fire (as if they aren't already).

Oh, and did anyone point out that w/the 4gb version discountinued, and the iPod Touch at 16gb, that there will probably be a 16gb iPhone very soon at... $599!

Terry | Sep 07, 2007 | 11:09AM

What I'd really like to know is, did Cringely buy an early-iPhone and is he going to take Steve up on his offer?

Shawn Blower | Sep 07, 2007 | 11:21AM

"...and the iPhone, which was already the top-selling smartphone in the world,..."

If you said, "which was already the top-selling smartphone in the US, in the last 3 months" you would have avoided walking around with D on your hat.

Nokia sold how many 10's of millions of smartphones this year?... ordinary mobile phones was an order of magnitiude more.

RIM still had more smartphones sold than Apple... what a bizzare statement you make.

Mark B | Sep 07, 2007 | 11:27AM

Bob, I am surprised you didn't interpret the price drop on the iPhone as clearing the decks for the introduction of the gen 2 HSDPA iPhone you predicted in your 7/5 and 7/12 columns.



As for the ethics or business sense of the price cut, I think it would have been nice if Apple had stated up front an intent to drop the price substantially after a couple months, but I can see why they wouldn't want to commit to a schedule or a dollar value when they didn't even know for sure how sales were going to go. And I don't know if sales would have been affected much if they had given warning. But in these situations where demand exceeds supply, I'd rather see the manufacturer charge more up front to modulate demand than to see the money go to speculators selling on eBay.

randomjohndoe | Sep 07, 2007 | 11:46AM

Ok, so I bought the iPhone 10 days ago. If not for the price-change rebate, I would be mightily upset right about now. I wouldn't have been upset if the drop came 3 months from now, as that is an insult that I am used to from the computer industry.

But anyway, now that my iPhone costs (costed?) $400, I find myself much more tolerant of its shortcomings. Slow EDGE network? So what, it's just a normal $400 phone. Short battery life? I'll by another one next christmas when they fix it-- my last $300 phone only lasted one year anyway. (Goddamn razr piece of crap, may it rest in hell.)

As to whether the iPhone is revolutionary, well, it is. The Mac was revolutionary not because it was the first GUI (Xerox Star was) but because it was "The first personal computer worth of cricism." (Alan Kay) The iPod was the first MP3 player worthy of criticism. The iPhone is the first multifunction phone worthy of criticism.

Sure, you could criticize the expensive phones from Nokia that had crappy UIs, or the TREO and Windows phones that were slow and hard to use, or the Blackberry that's still better at email than being a phone, but those were easy. Nobody expected much from them, and that's what they delivered. People expect the world from Apple, and in the iPhone, they're starting to deliver it.

Vineel | Sep 07, 2007 | 11:46AM


Hi Bob -- I really enjoyed the Jobs column -- you are always at your most erudite and hillarious when analyzing Stevo.

Bob I also Have a suggestion - How about another article about Hurd at HP and how they are kicking Dell's ass.....

Maybe even about how HP now has the public's "Mindshare" on the best pc's -- and their strategy of buying VOODOO PC AND THE NEW BLACKBIRD 002???

THANKS BOB!!
BRIAN KOESTER

EDMONTON ALBERTA CANADA

Brian Koester | Sep 07, 2007 | 11:49AM

The ipod would perhaps become absolete if it stayed a MP3 player. But...the future of ipod is a PDA, or a mobile computer. With OS 10, no mobile phone is similar to ipod. It would take a really a mobile company to change into a software company to have any chance to compete in the future. Even the world second best software company has no clue how to do mobile. I would not bet againt the ipod becoming the personal mobile computer similar to devices in Minority Report.

RJ | Sep 07, 2007 | 11:52AM

I can't agree that Apple "punished" iPhone owners. Precisely nothing happened to them when the price was reduced; they didn't become poorer; their iPhones didn't stop working. It is totally unlikely that a small (to Apple) one time milking of their best customers was the motivation. It's much more likely that the higher launch price (which was set in January, 8 months ago) was (a) to limit demand somewhat in a high risk large scale entry into a completely new market, and (b) to make competitors commit to their product plans and suppliers for the coming 3 months on the basis of a higher iPhone selling price and lower iPhone volumes. Suddenly, Nokia's N95 is not the competing phone, something much simpler is. And Apple has got huge amounts of free publicity for the price drop among the 99% of Americans who don't have an iPhone yet.

You may be right about SJ's personality, but by now he knows himself well, and it is only one, minor factor.

sleepy | Sep 07, 2007 | 11:53AM

I feel sorry for the early adopters ... but not too much. Nobody forced them to buy the iPhones at that price. And most peple do not spend money on products they feel are unworthy of their cash. The buyers made the choice to purchase the phones at the original price.

What should Apple have done? NOT cut the price by $200-- just to make these guys happy?

Dan D'Errico | Sep 07, 2007 | 11:57AM

Wow. It's almost as if the author bought and iPhone on eBay and found out they aren't eligible for the $100 credit. IT'S BUSINESS IN THE TECHNOLOGY FIELD!!!! What about that plasma I bought 2 months ago that is now $300 less?

Mark | Sep 07, 2007 | 11:58AM

Look at all the posts.
If not thing more, the Apple crowd is certainly persuasive, prolific and proud (a bit like Jobs himself no?).

Dave Cline | Sep 07, 2007 | 11:59AM

I'm having a great deal of trouble understanding how that $50million was "undeserved" or how in fact lowering the price does ANYTHING to ANYONE. If you buy something at a certain price, and the price comes down, YOU STILL HAVE THE ITEM, and have to pay NOTHING more. When the xbox and the ps2 came out, they all had early adopter premium pricing as well. When you pour a billion dollars into developing a new product, you have to recoup is a much as you can as fast as you can.
The fact is, the price of ANYTHING is whatever the market will bear. Everyone on earth knows if you have to be first to buy a tech product it WILL be much cheaper soon after.

Steve Sense | Sep 07, 2007 | 12:00PM

I stood in line for 10 hours to get my iPhone after salivating for 6 months. It is every bit worth the $600. To think that Apple punished me and other early adopters by lowering the price is ridiculous. The strategy was a shrewd move to limit demand until production could ramp and to screw with the plans and expectations of competitors. The price drop and new products prior to the holiday shopping season is brilliant. The $100 rebate is an unexpected windfall that will go towards more Apple purchases. Shareholders and consumers should all be pleased... and Steve has good reason for a healthy ego.

J Postma | Sep 07, 2007 | 12:03PM

Honestly it was a great move on Job's part. Why?


The problem for the iPhone all along had been its price, but there was also a good number of people willing to pay the price to get it just because they could get it. So, Apple charged them that price for it. Don't get me wrong - the price is great if you're buying it for a PDA or even to be some kind of Mac-mini equivalent; it's just too high for a cell phone, even a smart phone.



Now, as the iPhone saturates that part of the market, customers are starting to be more wary of the price and unless Apple changed the price to be more reasonable for a cell phone, then it would have flunked just like the Apple Newton. (And we all remember how bad that was. It cost Apple the entire PDA market, not something Jobs wants to repeat with the cell phone market - or any other market he choses to enter Apple into.)


So, 3 months after introduction? Yep, that's probably about right for saturating the number of people that were willing to pay; and btw, it also enables them to do a little testing. But what testing would have been needed? (Another brilliant side to this.)



Well, it's kind of hard to test in those kinds of numbers internally. It's also kind of hard to test the activation and other features to that level. So, by managing a limited deployment by charging more as you only get people that are really willing to buy technology that will likely break - e.g. the early adopters, it enables them to test and scale the deployment so that they can properly handle the masses when they do lower the price. So, it seems that they've finished their testing after 3 months. They will still be bugs, but those remaining bugs will be pretty minor, and not likely noticed by most.



And I would certainly have to agree that the price cut and rebate were all pre-planned. It's always good to have some kind of backup to please the people your pissing off so that if it does happen, and there is some kind of backlash, you have something to immediately toss out and please them. Then you can mitigate the rest if you need to; so there is likely a second plan in case this one failed.



So yes, another brilliant move by Jobs & co.

TemporalBeing | Sep 07, 2007 | 12:17PM

Jobs mentioned, rightly, that there would have been chaos at the lower price. AND us early adopter types would have been paying the $200 (or more) more via eBay and the like. As with other such releases (PS2 etc). Why is paying an eBayer better? Would the eBayer ever write me a personal blog and give me a $100 credit? Or have earned the premium by developing a way cool device? We were not forced to buy iPhones at $599, nor are we at $399. Me, I am thrilled at the $100 credit. For whatever its purpose. Any other company done the same? None that I know of.

Michael E | Sep 07, 2007 | 12:17PM

The people who chose to purchase an iPhone knew full well what they were buying. They weren't all 'used,' either. Apple isn't the only shrewd marketeer. My girlfriend's boss paid her to stand in line for him, then purchased two phones and resold one of them on ebay for a 50% mark-up which more than covered what he paid her. We can't blame anyone for using the capitalist system. It exists for the best and strongest to use to grow stronger and better; just like evolution...

poet | Sep 07, 2007 | 12:17PM

In one respect the marketing message was a disaster -- because nobody is talking about the new iPods at all, it's all about the price cut. That $200 didn't just obscure the iTouch message, it completely obliterated it.

That alone makes me think this badly handled, and not some Jobsian scheme to manipulate the masses.

Charles Reilly | Sep 07, 2007 | 12:28PM

This is sort of off topic, but you mentioned a fire-proof safe. I wouldn't count on that for saving a tape. Fire-proof safes are rated only to keep the temperature lower than the ignition point for paper - well above the melting point for plastic. If you want to safeguard electronic media, you need to get a heat-proof safe. These are generally larger and MUCH more expensive.

Nick | Sep 07, 2007 | 12:32PM

Okay, so what is the REAL lesson in this finely crafted Cringley column? Writers are like elephants. But unlike elephants they have pens. Skipping out of an interview will cost you, because they always get the last word.

Gregg Hinthorn | Sep 07, 2007 | 12:33PM

Okay, so what is the REAL lesson in this finely crafted Cringley column? Writers are like elephants. But unlike elephants they have pens. Skipping out of an interview will cost you, because they always get the last word.

Gregg Hinthorn | Sep 07, 2007 | 12:34PM

People talk about the Steve Jobs Reality Distortion Field but they do not mention the Cringely reality distortion field. I wonder why?

A writer takes his past anger at someone not following up with an interview and somehow that person is forever a questionable person. Hmmmmm.

I agree that Steve Jobs is a very smart man and I am sure that the price drop and store credit were planned at some level. (re options, choices, street reactions, etc. )

But too many writers like to assume that Steve Jobs and Apple work in a vaccum. They assume that the market place does not exist and that stocks go up on good news, etc. Hmmm, it looks like they are wrong a lot of the time.

Apple has been working on these systems for YEARS. You make plans, choices, take chances and sometimes the events come together well and sometimes they do not. But if you make a good product with good features it sells much better than cobbling up some zune thing with DRM stuck in every corner cause people don't matter, only money and big business matters. Right?

Well, to Bill Gates and his "doesn't Steve Jobs understand that he can never win" comment, I say that maybe the tides are turning. And a tide is a slow but powerful thing.

Now people are saying, "Now, why can't Gates and the Windows people figure this crap out?" more and more. Maybe its Bill Gates that needs to know that "Maybe its him, that can lose" afterall.

And to Mr. Cringely, I say, "The world moves on. You must look at Apple in todays world view, not from years ago. Like Jobs said, You have to skate to where the puck will be!!"

PS, I really think its OK to like Apple products if they really are good. :-)

Later,
en

elder norm | Sep 07, 2007 | 12:37PM

In response to "He has to know that he can never win:" He's already won.

Jobs is not in a competition with Gates over marketshare. He doesn't care how many people use Macs vs. use Windows. Or for that matter Zune vs. iPod (though I'm sure it's gratifying seeing the marketshare that high, but even were it not, nothing would change.)
Gates has changed the world of computing once. And not the one people think. Gates implemented the idea that instead of contracting to provide a company with a program that then became theirs, contract with a company to provide a program that remains yours and is licensed for use. That was a huge change in the 70's.

Jobs arguably brought personal computers to the masses in 1977. Then made it no longer just a geek phenomenon in 1984. Then finally made it a household appliance in 1997. Then made unix user-friendly in 2001. Then went to work on music. Built the iPod. Not the first, but the first of its kind, and it changed that industry.

Gates is out to make money. And he's won.

Jobs is out to change the world. And he's won.

memrys | Sep 07, 2007 | 12:46PM

Who is feeling sorry for those who ran out to buy an iPhone for $600? I don't, and I doubt many 'early adopters' do either.

It is about being the first. They knew what they were doing and are not surprised, or at least they have no right to be surprised, that the price was dropped.

Blake | Sep 07, 2007 | 12:47PM

Things that made me laugh:

1. People cheering because they get to pay $1 to make a ringtone out of a song they already own.
2. Almost every feature basically boils down to "and now you can buy stuff from iTunes somewhere else"
3. The thought of Steve Jobs cringing backstage as his Starbucks announcement was totally gutted by the 3 to 4 years its going to take to roll that feature out accross Starbucks outlets. Can't apple just make some kindof black box that you turn on in store to enable this? Years of development and they can only roll it out to 100 outlets a month worldwide?

Eamonn | Sep 07, 2007 | 12:51PM

I'm curious, you quote Gates as saying of Jobs that, “He has to know that he can never win." Is Gates saying that Jobs still wants to overtake Microsoft?

David | Sep 07, 2007 | 12:52PM

Robert, this is an interesting perspective and I think you're probably right on with your very last statement: "....'He has to know he can't win'..... I don't think he knows that at all." Direct hit. Now, regarding the motivations and intentions of Steve Jobs, I don't see that we will understand that - even by asking Steve. The person that can truly & accurately explain their motivation is rare indeed. That's not to say you can't get a lot of perspective from what a public figure like Steve or Bill decides to share.

For whatever it's worth, I don't think the iPhone pricing was an exercise in ego, I think it was more of a missed bid that needed an over correction. I do think you're right that pretty quickly Steve / Apple knew what they might have to do and planned accordingly.

Brad Isaacs | Sep 07, 2007 | 12:55PM

The statement "And Steve, having deliberately alienated his best customers, now gets a chance to woo them back. He has finally placed millions of people in the role of every key Apple employee — being alternately seduced and tormented."

The nearly twenty years I spent at Apple lets me say that you have hit the nail directly on the head.

Practically every Apple employee that I have known will agree with your statement.

Many will take it a step further and say that the only reason they stay at Apple is because they love the technology and enjoy working with some of the world's most loyal customers.

Just wait another month or so, and you will see another scripted Jobs revenue enhancement.

It is not a coincidence that new hardware is most often released at a different time than the operating system.

It isn't about marketing either, it is about money.

Introducing the new iMac a few months before the new OS lets Steve get another $129 tax out of them when they figure out that their latest and great computer doesn't have the latest operating system.

Just remember it is about the money, and Steve doing it just because he can.

ocracokewaves | Sep 07, 2007 | 1:00PM

I don't think the $100 rebate was necessary at all. It's a nice gesture, but early adopters of ANY technology know very well that constant developments, especially in electronics, mean that even before you buy the latest product there's already a successor planned for production. I bought the Playstation 2 that first week it came out in the UK and paid a hefty price tag for it - if I had waited just 2 months I would have paid significantly less, but as a gaming fan I wanted it straight away and was prepared to pay extra to do so. I paid a ton of money for my Nikon camera, and not 3 months later they have a better one on sale. That's the way it goes - we should appreciate constant improvements and technological breakthroughs instead of greedily demanding them all cheap and fast.

I will buy the iPhone the minute it hits the UK - yeah in 6 months there'll very likely be an updated version, just like any other mobile phone, computer, DVD player, microwave, washing machine, camera - and in any case, whatever the US and Europe come out with, the Japanese are already 5 years ahead of us!

minxlj | Sep 07, 2007 | 1:05PM

I think Cringely is right on here, and mirrors my theory the day of the price break (my burning rage must have triggered some inert brain cells).

$599 was *never* the intended price. Apple likely intended to cut the price to $399 just before launch, to set off a buying A-bomb. But hype was already at a fever pitch and people were already lining up to buy at $599. So why not keep the price at $599 and build a perception of high value with the customers?

Then two months later you cut the price to what you had originally planned. A new buying frenzy erupts. After all, the iPhone is obviously *worth* $599 (per the mob scene on launch day), so at $399 it's an irresistible bargain!

Let the early adopters (like me) fume and scream for a day. Tell the media "Sorry, that's technology." You know, play it cool. Then issue a benevolent missive to the masses the following day and give them a $100 gift certificate to buy *more* Apple stuff. Apple's "good will" is a huge PR coup, loyal customers are even *more* loyal now, and iPhone sales start to accelerate.

A brilliant plan, no question.

Quix | Sep 07, 2007 | 1:10PM

You think the customers who flashed their iPhone around for 2 months and then suddenly started crying over the price cut are Apple's "best customers"? Is that a joke? The whining of these self-indulgent dipshits alone is proof that most of them had never bought an Apple product in their lives until the iPhone. If they had, they'd understand that Apple's product pipeline is fast and that early adoption has a price and a risk associated with it.

More generally Cringely, your theories are always full of giant holes. I mean, the "REAL" price? "Extra" profit? You should stop talking shit long enough to take a course in economics. Companies set prices to maximize profit and Apple is no different. Setting a high entry price for a new product and cutting it significantly after a few months is business as usual for all companies, and perhaps especially consumer electronics companies where products have short life cycles. The only thing remarkable about this price cut is that it was for the iPhone.

Joseph | Sep 07, 2007 | 1:19PM

You think the customers who flashed their iPhone around for 2 months and then suddenly started crying over the price cut are Apple's "best customers"? Is that a joke? The whining of these self-indulgent dipshits alone is proof that most of them had never bought an Apple product in their lives until the iPhone. If they had, they'd understand that Apple's product pipeline is fast and that early adoption has a price and a risk associated with it.

More generally Cringely, your theories are always full of giant holes. I mean, the "REAL" price? "Extra" profit? You should stop talking shit long enough to take a course in economics. Companies set prices to maximize profit and Apple is no different. Setting a high entry price for a new product and cutting it significantly after a few months is business as usual for all companies, and perhaps especially consumer electronics companies where products have short life cycles. The only thing remarkable about this price cut is that it was for the iPhone.

Joseph | Sep 07, 2007 | 1:19PM

Apple wanting to make money. Whatever next.

Technology going down in price. Who'da thought? How quaint is that. Guess we'll have to wait for the article on Sony, Microsoft and Nintendo with their consoles that constantly reduce in price.

Maybe Nokia will drop the price of the N95....

Justin Clements | Sep 07, 2007 | 1:22PM

Oops. I got excited and broke the personal attack rules. Sorry. In anticipation that my comment will be deleted, here's a second try.

First, Apple's best customers know that it doesn't matter if a product is new, better and cheaper products are still often just around the corner. The people who are making the most noise about this are certainly not Apple's best customers.

Second, your price analysis makes no sense. All companies set prices to maximize profit. There is no "REAL" price and no "extra" profit. Apple is no different. Setting a high entry price and cutting it after a few months is nothing remarkable. The only thing remarkable about this price cut is that the product was the iPhone.

Joseph | Sep 07, 2007 | 1:27PM

I've had my iPhone since day one and have been extremely happy with my $600 purchase. The recent $200 price cut stung a bit, but it really didn't bother me as that's part of the risk of early adoption of any new technology. The $100 rebate wasn't necessary, but it was a very smart move by Apple.

minxlj nails it...

$599 was *never* the intended price. Apple likely intended to cut the price to $399 just before launch, to set off a buying A-bomb. But hype was already at a fever pitch and people were already lining up to buy at $599. So why not keep the price at $599 and build a perception of high value with the customers?

Then two months later you cut the price to what you had originally planned. A new buying frenzy erupts. After all, the iPhone is obviously *worth* $599 (per the mob scene on launch day), so at $399 it's an irresistible bargain!

Let the early adopters (like me) fume and scream for a day. Tell the media "Sorry, that's technology." You know, play it cool. Then issue a benevolent missive to the masses the following day and give them a $100 gift certificate to buy *more* Apple stuff. Apple's "good will" is a huge PR coup, loyal customers are even *more* loyal now, and iPhone sales start to accelerate.

A brilliant plan, no question.

AGREED.

Bill | Sep 07, 2007 | 1:32PM

You don't think he cut prices in anticipation of the rumored gPhone coming in at $100?

Jonathan Washburn | Sep 07, 2007 | 1:35PM

I think Apple is just about to release a 16GB iPhone and therefore cut the price on their now flagship 8GB iPhone. They are just waiting for the Europe iPhone announcement the 25 of Sep to release this new 16GB iPhone, they might even throw in some 3G.
It doesn't make sense to me to have a 16GB iTouch iPod and not have a 16GB iPhone in the same format. It'll come soon.

Henrik | Sep 07, 2007 | 1:37PM

Me again. Cringely, your psychoanalysis of Jobs is whacky. The only part that will bother him? As if he's going to read your article. LOL. And if you want to understand something about the reason for the price cut, read this:
http://bits.blogs.nytimes.com/2007/09/07/steve-jobs-speaks-the-truth-about-the-iphone-price-drop/index.html?ex=1346817600&en=dabd8bc62f0a6da0&ei=5088&partner=rssnyt&emc=rss

Joseph | Sep 07, 2007 | 1:40PM

Interesting commentary to which I have only one observation. The open letter announcing the $100 rebate contains some awkward phrases ("iPhone is so far ahead of the competition [that what?], and now it will be affordable by [for]even more customers.") and (arguable) typographical errors that it feels thrown together in a rather hurried fashion - as if they were trying to get ahead of the issue and difuse it before it spins out of control. I suppose that could just be part of the consipiracy, but I guess I'm just not willing to be that paranoid. Of course, just because you're not paranoid doesn't mean they're not out to get you.

IMHO | Sep 07, 2007 | 1:41PM

Apple got free publicity worth tens of millions and the iPhone, which was already the top-selling smartphone in the world, will now sell two million units by the end of the year, up from an estimated one million.

Actually, Apple's stated goal is 1 million iPhones by the end of September and 10 million by the end of 2008.

Jeff | Sep 07, 2007 | 1:48PM

Hi Bob, thanks for this excellent article. I enjoyed it immensely and have posted to it from my blog. I just love the insight into this whole matter. Ahh I wish I could listen to Bill's interview :-)

Ross Dunn
CEO, StepForth Web Marketing Inc.

Ross Dunn | Sep 07, 2007 | 1:49PM

It is amazing the vitriol that is reserved for the pioneer who changes society for the better. People should be grateful that Steve Jobs single-handedly made the personal computer a reality for the world (Apple I & II), made the personal computer easy to use through adoption of graphical interface (Mac, and Windows that followed), and is now changing the state of the communication device (Ipod, IPhone). While we are all debating his quirks -- and he has several -- the history books will have long forgotten the overwhelming majority of us who did little like he to push the envelope.

ThePioneer | Sep 07, 2007 | 2:06PM

I find the phrase "Apple keeps an undeserved $50 million..." (emphasis mine) an odd one. If they had just kept the price where it was and the perceived value of the product were unchanged, would you still have described this money as undeserved?

While I think Apple is entitled to all the money 500,000 people willingly handed over for their iPhones, I think that the timing of this price drop was imprudent. I've been burned by price drops and new product announcements in the past and cursed my luck (or lack of research), but doing this so soon after a release will likely cause potential buyers to hesitate in the future, waiting for a price drop that may never come.

Jonathan Butler | Sep 07, 2007 | 2:09PM

I will comment on the only statement in this article that I can comment on and let the speculation upon speculation babble on.

The statement: ... Apple punished its most loyal users by dropping the price of an 8-gig iPhone from $599 to $399 less than three months after the product’s introduction, is classic Steve Jobs.

is simply hogwash and not true in any way. My wife and I bought two 8GB iPhones on day one because they were part of a strategic plan to reduce our telecom costs over the next year. By dropping some redundant lines and services which the iPhones replace we have saved about $400 already. More importantly, why should the opportunity of others to buy this phone cheaper "punish" me in any way? We've been recommending iPhones to everyone, I'm actually happy new buyers can get a nice deal. I'm already set. I'm happy to take these $100 rebates because that will drop my cost on OS X Leopard to practically zero for our older Macs, but I don't need it to feel I got my money's worth. And why is the press so frantic at dissing Apple? Does anyone expect an auto maker to refund the $3 grand extra a customer paid for a car just a day before the "year end blow out, cash back sale?" NO, of course not. Is the press on the case of the phone companies for offering sign-up rates to new customers that are much cheaper than existing customers pay? NO, and that is clearly a case of punishing existing customers.

To the whiners, and the pot stirring, headline jockeys, I say, Get a life!

Ashley Grayson | Sep 07, 2007 | 2:12PM

What a fascinating (from a safe distance) man, though I wish he didn't have such a tight grip on a vital part of my ... errr ... infrastructure. I refuse to buy the iPhone because it doesn't meet my minimal needs, and I don't trust Jobs to ever pay attention to what I think I need (vs. what he thinks I need).

The optimistic/delusional spin on the price drop is that they're going to roll out iPhone 2 after Jan 2008 at the original price point -- and this way iPhone 1 buyers will be a bit less outraged ...

John Faughnan | Sep 07, 2007 | 2:14PM

In regards to Bill's quote, it's clear that he and Jobs have very different definitions of "win." It's being the richest man in the world/being the dominant operating system v. driving/transforming our culture/being the best operating system. Neither is more valid than the other and each will have its own adherents.

T. Faust | Sep 07, 2007 | 2:18PM

You obviously need to take a basic business course, maybe then you'll understand the logic of the price drop.

Even without one though it's very obvious (Steve said it himself) that he wants to sell as many phones as possible this holiday season.

Everyone knows that the price on any electronic device will drop over time. No one is being punished. When you buy a product it's because you think that it is worth the price at that moment. It's clear that the iphone was.

Is it that you're still sore at Steve Jobs for blowing you off? Is it simply that you're an incredibly lame journalist (maybe that's why he didn't want you to interview him)? In any case this is one of the most ludicrous articles i've ever read, though you do reveal a lot about yourself. Not pretty...

ur wrong | Sep 07, 2007 | 2:38PM

I'm surprised more don't reference Steve's buddhist faith as an explanation for his behaviors. To me it explains his ability to walk to his own drummer and also what he considers a 'win'.

I consider his marketing strategy a Zen Koan. In this sense the price drop isn't a disappointment, but part of a story in which I have a role. I can't wait to see how it'll turn out!

I certainly didn't expect (but am pleased) that my wife's response to the rebate was, "So mine will cost less now?"

And isn't that a win-win-win for me, Steve, and my wife?

Richard Neill | Sep 07, 2007 | 2:45PM

Sometimes vendettas can be powerful motivation that drives people to demonstrate their real or perceived prowess over other challengers. Jobs may be the most brilliant marketer or he may have been a bit surprised at the launch results, and decided he would flex a bit of creative influence. If the impetus for the purchase was to improve efficiency, and save on current technologies, the savings is irrelevant, the goal has been met. The salient point is not whether Jobs mesmerized naive consumers but whether they saw value in what they purchased.

glenn | Sep 07, 2007 | 2:52PM

Are you kidding? Those folks are going to use that $100 store credit next month to buy copies of Apple's newest OS, Leopard. In so doing Steve will increase his installed user base of Leopard faster than he would have without the credit. Think of it this way, be the first to buy and iPhone and get the next OS for $29. Now that's a deal!

I see Microsoft announced a price drop on the Zune. Is Bill giving Zune buyers a rebate? I don't think so. This is all good for Apple in so many ways.

Michael Scarborough | Sep 07, 2007 | 2:53PM

Are you kidding? Those folks are going to use that $100 store credit next month to buy copies of Apple's newest OS, Leopard. In so doing Steve will increase his installed user base of Leopard faster than he would have without the credit. Think of it this way, be the first to buy and iPhone and get the next OS for $29. Now that's a deal!

I see Microsoft announced a price drop on the Zune. Is Bill giving Zune buyers a rebate? I don't think so. This is all good for Apple in so many ways.

Michael Scarborough | Sep 07, 2007 | 2:53PM

The price cut is about kneecaping competitors ... they figured they were competing with a $599 phone, now Nokia, Palm, MS and RIM are looking at the iPhone being a $100 upsell from an 8 GB iPod Touch. A totally different game.

huxley | Sep 07, 2007 | 2:57PM

"most of his business moves are still in reaction to having been fired by Apple back in 1985."

And this entire article is still a reaction to you getting snubbed by Jobs in 1999....so whats the problem?

Bart | Sep 07, 2007 | 3:14PM

PEOPLE ARE COMPLAINING BECAUSE THE PRICE WAS REDUCED???

Duh, get ahold of your wits.

Does that mean that they would be happy if Apple increased the price by $200 instead? Let's all complain because price of gas has been declining. This is just plain crazy!

Do people really need to be told that the risk of early adoption is paying a premium? It's like telling someone that smoking may be hazardous to health- if they don't already know that then they're beyond all help.

Nothing has changed. People have always been paying a premium for new tech like DVD's, digital cameras, HiDef TVs, BluRay, HD DVD, etc.

The early adopters should be happy for the price reduction. It's a hedge against obsolescence. The wider the audience the less likely it will become a paperweight before its time. It means their purchase won't go the way of the betamax and those LP sized video disks of long ago. It means the manufacturer is committed to the long term viability of the product.

Those who are complaining over the price decrease should just get over it, get a life and accept responsibility for being an early adopter.

There are way too many whiners in this culture!

D. B. | Sep 07, 2007 | 3:16PM

I imagine google could give Apple a run for the title of best managed technology

Somebody | Sep 07, 2007 | 3:20PM

I suppose one question that emerges from this is what would Steve Jobs do if everyone simply sat around and waited for a few months until the price dropped and all the early adopters simply refused to adopt? Would we then have a situation of an irresistable force meeting an immovable object or would Steve Jobs have to give way to market demands and drop the price in order to attract the early adopters and then drop it some more to attract the rest of us?

An interesting conundrum...

David B - UK | Sep 07, 2007 | 3:21PM

Do any of you read newspapers or pay attention to the world outside of gadgets and toys? The U.S. economy is heading into recession, and retail sales of high-end "stuff" will likely tank next quarter. Apple's price cut is preemptive, because they see the sh_tstorm that's coming in a few months.

jeremy | Sep 07, 2007 | 3:40PM

@Somebody:

Having visited Google recently, I can assure you that they pose no threat to Apple whatsoever for the "best managed" title. That's not to say that they won't continue to be successful, but it will be in spite of - not because of - the management.

Mike | Sep 07, 2007 | 3:40PM

It's really pathetic how people try making lemonade from lemons when it comes to just about anything Apple or Steve Jobs does.

Early adopters do what they do strictly because they want to be first. That is why we call them early adopters (not early adopters at a specific price point).

Let's focus on the product shall we. A WiFi iPod is genius. I can't wait to get one.

Steve and Apple are doing everything right by their current and future customers.

Keep it up.

mistersurefire | Sep 07, 2007 | 3:42PM

Sorry that should have been "lemons from lemonade".

My bad.

mistersurefire | Sep 07, 2007 | 3:45PM

Look, you bozos, you're just proving Carver's First Law of Retail: CUSTOMERS ARE STUPID!

EVERYTHING ELECTRONIC GOES DOWN IN PRICE EVENTUALLY! It's just how things work in the real world!

Yeah, there may be some who think they should have waited, but they'd have lost the two months of utility they got out of the iPhone.

These are probably the same people who think they're getting free money from the government when they get a tax refund.

akcarver | Sep 07, 2007 | 3:55PM

Apple is the world's whipping post. It's either all Jobs' problem or Apple's problem or the brainwashed Mac faithful's problem. I guess it helps distract people's attention from the REAL problems in life. Even if you wanted to restrict yourself to technology, there are bigger problems in the field, like the fact that 100% of spam is promulgated by Windows systems and it's chocking our productivity.

Anyway, if I were Steve Jobs, I wouldn't give Cringely an interview either. Based on the self-important, wishful and speculative garbage Cringely produces, it would only help to line Cringely's pockets with money and it wouldn't enlighten anyone.

HG | Sep 07, 2007 | 3:56PM

The only surprise here is that Apple/Jobs is even offering the ($100) coupons. He probably saved the company millions in legal fees from a class-action suit that would have ended up with the same scam, I mean solution: vouchers good at the company store.

Sky-hi prices and almost immediate price cuts are de rigeur for the cell phone business. Not a month goes by without Nextel sending me an ad with new "special" pricing on phones that were premium the month before. Apple has done nothing other than what every other phone maker/dealer has been doing for the last 15 years.

Amazingly, my five year-old Motorola keeps chugging along without having to sign a new service contract.

Michael | Sep 07, 2007 | 3:57PM

so?
You paid full price for that '07 car in January and now the exact same model is several thousand less? Why aren't you demanding a rebate from Ford or Mercedes?

When a department store cuts the price of that designer suit by 70% just two months after you bought one, do you go ballistic and cry foul?

You do know that in January there'll likely be a new model iphone that will be faster, shiner and even more capable at the same or lower price. Are you gonna lose it again?

ginjg | Sep 07, 2007 | 4:06PM

The "true" price of an iPhone is whatever price which the buyer and seller mutually and voluntarily agree on. Nobody was marched into the Apple retail stores at the point of a machine gun and made to hand over their money. They willingly camped outside overnight in their thousands and then cried with happiness when they got the stupid thing out of its packaging.

So Apple got an "undeserved $50 million"? Haven't they been pouring investment into this phone over several years? Didn't they in fact delay Leopard as a result, delaying upgrade sales by half a year at huge cost? Unpicking the cosmic morality of where this money came from and went to is rather more difficult than it at first appears. If we actually look at the actions carried out by the individual people involved, nobody got "slapped around a bit" at all. On a cosmic scale of justice, perhaps there shouldn't be iPhones at all, but more kidney dialysis machines. This could take a while to get to the bottom of, so wake me up when you've straightened everyone else's entire lives out for them.

The early iPhone customers are presumably some of the richer people in America - why not write a polemic on behalf of starving Africans next time? Meanwhile, iPhones just became marginally more accessible to America's poor. What an immense moral tragedy, eh, Bob?

Daniel Earwicker | Sep 07, 2007 | 4:32PM

I really love ginjg's comment comparing buying a $600 electronics device to an avg. $25K new vehicle - Honda or Lexus used car at that. The logic goes like this...if I was a car buyer and bought a brand new car and 2 months later I am expected to be "happy" my car lost 33% of its value???....I don't think so. Maybe 2 years later especially if I bought a quality brand like Honda! ?

This argument still holds true if that buyer has a perception that buying Apple is like buying a Honda = higher quality that won't be sold 33% less in 2 months, then maybe that buyer's perception was wrong in the first place and they should not have bought an Apple! Choose a different analogy like say a discontinued piece of electronics and your argument might have more weight.

JB | Sep 07, 2007 | 4:55PM

TROLLING EXERCISE for a little-read author.

You know NOTHING about business, and your purported knowledge of the "real" Steve Jobs is hyperbole at best and mythology at worst. Since when is selling a product for a price consumers are willing to pay regarded as "undeserved ... millions"? Undeserved millions pretty much applies to a PBS pledge drive, though

Since when is a price drop when sales have slowed a dastardly attack on the pocketbooks of early adopters who knew the price would be less and the features greater at any time after their purchase?

Roger W | Sep 07, 2007 | 4:58PM

I liked on the video of Steve Jobs from your site, and I felt I was watching a TV Evangelist or a Tent Evangelist that my grandmother use to drag me to when I was little? If I remember I didn't care much for it then, and I don't care too much for it now, but you do have to give him credit he does know how to work a crowd.....

Bob
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Bob Pyke | Sep 07, 2007 | 5:19PM

I liked on the video of Steve Jobs from your site, and I felt I was watching a TV Evangelist or a Tent Evangelist that my grandmother use to drag me to when I was little? If I remember I didn't care much for it then, and I don't care too much for it now, but you do have to give him credit he does know how to work a crowd.....

Bob Pyke | Sep 07, 2007 | 5:20PM

I liked on the video of Steve Jobs from your site, and I felt I was watching a TV Evangelist or a Tent Evangelist that my grandmother use to drag me to when I was little? If I remember I didn't care much for it then, and I don't care too much for it now, but you do have to give him credit he does know how to work a crowd

Bob Pyke | Sep 07, 2007 | 5:21PM

Check out what early iPhone adopter (and web comic author) R Stevens posted today:

to the early adopting iphone whiners

I bought an iPhone this summer at full retail and you know what? I ain't mad at the price drop. Traveling and working is HARD, but my little phone made doing both a lot less stressful.

If you're among those of us getting $100 credits, please consider sending Steve/Apple a nice email- they acted pretty classy and I'm sure 99% of his inbox is "I HAET YUO APPEL IS TEH GAY DIE DIE". We internet people need every positive email we can get.

*****

From: dieselsweeties@mac.com

Subject: the iphone credit

Date: September 6, 2007 4:13 PM :: 9/6

To: sjobs@apple.com

Just saw your open letter on the Apple site- very classy!

I ordered my iPhone back in July and got 20+ days and 8,000+ miles of road trip and work convention usage out of it and it was worth every PENNY of the extra $200. (not that I'm going to turn down the $100 credit to get some accessories.)

Thanks! And rock on.

Gilmoure | Sep 07, 2007 | 5:26PM

Whiners. They had an iPhone all summer for $200. You can't get a decent hotel room for that.

If you didn't think it was worth $600 then why did you buy it?

I am glad that Apple is going for marketshare--for ONCE.

If they had a cut rate Mac it would KILL all the lousy HP/Acer/Toshiba/Sony/Dell crap out there. But it would also cut into their own better hardware. So they don't. Lucky for the likes of HP, Dell etc... who do nothing but put together components no software no hardware no nothing (they design the cardboard box and logo mostly...

Brian | Sep 07, 2007 | 5:30PM

I liked on the video of Steve Jobs from your site, and I felt I was watching a TV Evangelist or a Tent Evangelist that my grandmother use to drag me to when I was little? If I remember I didn't care much for it then, and I don't care too much for it now, but you do have to give him credit he does know how to work a crowd

Bob Pyke | Sep 07, 2007 | 5:31PM

I have been an Apple user since 1985, and will continue to use their products, but...

It seems as if the strongest defenders of this Jobs/Apple pricing move appear to come from those who camped outside an Apple store waiting for a chance to buy an iPhone (and maybe resell it on eBay?) .

It is also very interesting to me that the new (?) iPod is the old iPhone without the phone; and that the (old?) iPhone is really a handheld computer running OS X that happens to also be a phone. Perhaps, too, it was just coincidence that Cingular was acquired by AT&T just in time to be the SP for iPhone customers (HA!).

Don't forget that Apple almost went into the toilet until Steve reinvented the company with all the "i" products that have us looking at technology as furniture/lifestyle appendages ...don't forget, too, that I/i is a pronoun -- "i" is Steve is Apple is "i". We all get to carry a piece of Steve around with us wherever we go.

As for Biil and Steve, after a certain point it might no longer be about money; Steve's won because he gets to define "cool."

fishgutz mkk | Sep 07, 2007 | 5:54PM


It never ceases to amaze me how desperate people are to bash Apple- even cringly. Apple doesn't "deserve" profit?

Is cringly so ignorant of economics and high tech that he doesn't understand that when you sell more of something the cost per unit to manufacture goes down?

Jesus, it would have been better if apple had waited to drop prices? So they could get more "unearned" profits?

There is no way any rational person can fault apple for what they have done-- they didn't owe their customers a rebate but they gave one anyway. They didn't have to cut the price of the phone-- its selling like crazy, but they did anyway. And they didn't ahve to cut hte price of the phone that much-- but they did anyway.

And yet still people- mostly self appointed pundits like cringley are whining to high heaven .

Shame on you.

Joe | Sep 07, 2007 | 5:55PM


Its hard to have much sympathy for you when you dvorak jobs like that-- no wonder he cancelled the interview.

I mean ,if I were him, I wouldn't volunteer to be interviewed for a hit piece-- and it seems that the only article you coudl have about the relationship between jobs and gates (in mainstream media, anyway) is a hit piece on jobs. Hell, jobs does good things and you write hit pieces.

So, in the end this article is all you being petulant because jobs cancelled an interview-- you failed to put one over on him, and in a fit of petulance you ascribe to him the very reaction you have having--- still 8 years later.

Shameful.

joe | Sep 07, 2007 | 6:01PM

"I liked on the video of Steve Jobs from your site, and I felt I was watching a TV Evangelist or a Tent Evangelist that my grandmother use to drag me to when I was little? If I remember I didn't care much for it then, and I don't care too much for it now, but you do have to give him credit he does know how to work a crowd"

Hey Pyke. Stop itting the Submit button.

little devil | Sep 07, 2007 | 6:24PM

Joe, Cringely wasn't criticizing Apple or Jobs per se, he was just pointing out that the price-cutting move by Jobs calculated down to the finest detail. He also pointed out that Jobs' motivations are not completely 'economics' or business; they're also personal. Finally, he suggests that Jobs is a master at working the corporation-consumer relationship to his own benefit. Jobs is in control and if you don't like that, then that's fine to Jobs too because you're still going to buy anyway.

Michael | Sep 07, 2007 | 6:37PM

The thing that I think is missing here is Job's humanity. Mac has been into music a long time, hence the iPod. Maybe, he just thinks that the mission is for people to enjoy themselves and money not being the main criteria. iPhone sounds cool, I was going to buy one even not being able to use the phone part, now...with the price reduction, the reality is a lot closer. Skip the phone, move system ten.

T. Quinlan | Sep 07, 2007 | 8:09PM

The popular iPod nano form factor, that is now replace by iPod nano "fatty", is too good to completely disappear. I suspect it returns next year as a low cost ($149-$199) mobile phone with limited functionality as compared to iPod nano "fatty".

appleobserver | Sep 07, 2007 | 8:22PM

price cut of iphone is most likely due to sales not meeting expectation. If they were selling so well, why cut $200? why not cut $100? Also, AT&T can't be happy with the release of ipod touch as it will deter many would be iphone customers from purchasing iphone. In the end, my sense is that, apple and Mr Jobs has reached the end of the gravy train that is ipod. Despite Mr Cringely's suggestion, this whole price-cut fiasco does not appear well thought out.

David | Sep 07, 2007 | 8:52PM

Seems to be a smart move to me. He gives a $100 retail gift that is only costing him pennies on the dollar wholesale. Look what you can get for $100 ,a nano maybe, plus the right to buy more music from Apple.

Joe | Sep 07, 2007 | 9:01PM

Wow...this was a phenomenal article. I am continually amazed at how Cringley marries the technology discussion with a dead-on look at the marketing and business savvy behind it.

I have a marketing background as well as technology one, and I can tell you Cringley's analysis is correct. One only has to look at the way all the toy companies are reacting to their toxic toys recall. So they get some goodwill brownie points for "doing the right thing" thought they are barely making a dent in actually fixing the problem they solved.

They offer to replace your toy, but know that the redemption numbers will be low because most people just throw the toys away rather than deal with having to fill out forms, mail it back and get a rebate to take back to the store. All that to replace a $9 toy? Riiiiiight.
As I business owner myself, I will admit it takes some cojones to bilk your best clients, but Mac-ophiles are a rabid bunch like no other!

Layla | Sep 07, 2007 | 9:26PM

The iPhone was the best selling smartphone on the planet this past month. The only "expectations" Apple has failed to meet were the inflated/made up ones posted by The Street "analysts".

Joe | Sep 07, 2007 | 10:23PM

As an Apple stockholder, and iPhone owner, I just am happy to own the stock. And the phone is pretty good too, although AT&T needs some work....
This has got to be one of the best Cringely columns that provides insight on both Steve and Bill.
I look forward to the inevitable VOweb client on the iPod Touch...maybe jahjah; a Palm to iPhone data transfer application would be nice, too.;)

When I think of Bill - I picture a guy in a gold lattice box; and when I think of Jobs, it is a ginsu knife slicing a tomato.....

grappaman | Sep 07, 2007 | 10:39PM

Mmmm, some interesting points, but I think you may have given Jobs too much credit. Time will tell.

A factual mistake in your column. You wrote:

>>>Apple got free publicity worth tens of millions and the iPhone, which was already the top-selling smartphone in the world, will now sell two million units by the end of the year, up from an estimated one million

Apple projected that it would sell 1 million iphones by the end of September, not by the end of the year. A very aggressive target indeed.

Ben | Sep 07, 2007 | 10:47PM

Loved the article. It's well thought out and simple to follow even for a rookie like myself.

Keep up the good work.

Endurer | Sep 07, 2007 | 10:51PM

Good article. I think you missed the boat when you discussed IBM. I felt you were saying what you wanted to be true, not what is. But here, I think you are right. I remember my first reation to the Apple Store- I was repelled by the snooty elegance. But you know what- the service is good, the genii actually know something, and if they aren't busy they will help you out without an appointment. Furthermore, the sales staff don't hassle you and they have stock on hand. Its kind of like the machines. They work.

stephen | Sep 07, 2007 | 10:57PM

Good article. I think you missed the boat when you discussed IBM. I felt you were saying what you wanted to be true, not what is. But here, I think you got it pretty right. I remember my first reation to the Apple Store- I was repelled by the snooty elegance. But you know what- the service is good, the genii actually know something, and if they aren't busy they will help you out without an appointment. Furthermore, the sales staff don't hassle you and they have stock on hand. Its kind of like the machines. They work.

stephen | Sep 07, 2007 | 10:57PM

Good article. I think you missed the boat when you discussed IBM. I felt you were saying what you wanted to be true, not what is. But here, I think you got it pretty right. I remember my first reaction to the Apple Store- I was repelled by the snooty elegance. But you know what- the service is good, the genii actually know something, and if they aren't busy they will help you out without an appointment. Furthermore, the sales staff don't hassle you and they have stock on hand. Its kind of like the machines. They work.

stephen | Sep 07, 2007 | 10:58PM

What was fasicnating was seeing how Jobs and Gates interacted with the attendees at the D5 Conference earlier this year. During lunch, a self-serve buffet held outdoors, Gates wandered through the crowd chatting with anyone that came up to him or he came in contact with. He was alone with no entourage. Jobs, between appearances, was nowhere to be seen.

And then watching each of them on stage later in the afternoon, Gates was friendly, smiling and confident. Jobs seemed stiff and uptight, almost like a bully. Between the two I'm sure Gates is the much happier person. Gates has proven himself, but Jobs needs to keep doing it. Perhaps that's why we get much better products from Apple.

jake | Sep 07, 2007 | 11:00PM

I can't resist one more comment: about how amused I am at the stock market and the press. Is the allure of good ergonomics and good industrial design so hard to get? Sure, lots of other devices do the same things- but how many of them are you going to do on them. In this country the business model is slow down evolution and sell the dummies another versio of the same old pain in the butt they got last season. I agree- the iPhone is a move in the direction of a pocket full blown computer. Carry it around, find interfaces (monitors, etc) to connect (bluetooth+). Think tricorder, not Razor.

stephen | Sep 07, 2007 | 11:14PM

"In one respect the marketing message was a disaster -- because nobody is talking about the new iPods at all, it's all about the price cut. That $200 didn't just obscure the iTouch message, it completely obliterated it."

Exactly opposite. In the fifth year of iPod when news stations are likely not to trumpet another iPod refresh, all the local news stations last night led with teasers about how to get your money back if you'd bought an iPhone following the iPhone price cut. Thousands of articles have now been written about the iPhone price cut and the rebate. That's priceless.

Just getting their attention is key whether to go to an Apple Store or browse online. The iPhone is still the most expensive iPod and if it's too expensive, the customer will just move on down to the cheaper model. Perfect.

mark | Sep 07, 2007 | 11:20PM

"Things that made me laugh:
1. People cheering because they get to pay $1 to make a ringtone out of a song they already own."

People cheered because everywhere (legally) else one looks, it costs more to get a ringtone.

As for Ken Chin-Purcell's "The arrogance of charging for using software to create a ring tone", he should realize that it is the arrogant content owners that are the ones who insist on charging again for ringtone (as separate from the song download). Apple seems to have pushed hard to get the price down to just 99 cents.

mark | Sep 07, 2007 | 11:39PM

Because the people who are crazy enough to think
they can change the world,
Are the ones who do.

Jacob Wilson | Sep 07, 2007 | 11:54PM

an earlier commenter said:

"I used to believe Steve until Newton, NeXT, and some of the other failures."

Steve had nothing to do with the Newton. That was born entirely under John Sculley and later, Michael Spindler's regimes -- two technocrats who didn't really have the vision to push the product where it needed to be, but it was groundbreaking enough to invent the entire PDA category. Its handwriting recognition lives on in Mac OS X's Ink, arguably considerably improved. (in fact, I'm a little surprised it didn't end up on the iPhone.)

The earlier poster also said:

"At NeXT he had an early lead that was wasted through sheer ego."

How so? He built a new company, new computers and a new OS from scratch and even managed to find a niche market (apparently the NSA bought tons of NeXT machines), and managed to get Apple to buy his company for over $400M and make him CEO again. And NeXTStep is basically what became OS X. It might not have knocked Microsoft off its (increasingly rusty) throne, but it shows that yes, in some lives, there certainly are second acts!

"While beautiful visually, it is still closed, proprietary, and as far from the mark as every other Unix distribution in that computers should be working for us but we are still mostly working for them simply trying to get them to work for us."

I have yet to see ANY Unix or Linux GUI that doesn't look like it was designed by a bunch of Babylon 5 fans with Geocities homepages (ooh, ironic diss)... Nautilus came close -- but only because it was designed by a bunch of ex-Apple people -- and the nerd market decided against it.

However, it seems that more people these days are trying OS X and liking it -- and trying Vista and wondering when their software will be compatible.

Granted, for a completely new-to-computers user, OS X and Windows are EQUALLY hard/easy to learn, but in practice, OS X gets out of your way and just lets you DO things. And I say so as a 20+ year user of multiple operating systems.

"If it wasn't for blind luck at Pixar he would still be a simple multi-millionaire. He still has great Vision but he's never had great Listening."

Blind luck? More like, he saw the potential at Pixar and decided to let the artists and storytellers run the place. Under George Lucas' tenure the place was not run very well. If there's one thing Jobs respects, it's artists and musicians, and he does listen to them and help create tools that 'get out of the way' and let people create. In releasing iWork, he's listening to people who want the functionality of Office, but are put off by its complexity and yes, the ugliness of the output. You get the idea.

I say this not as a blind Apple fanboy -- I'm more than a little cheesed off at my current 1st MacBook Pro which experienced the battery-swelling issue as well as a defective keyboard -- and yeah, Jobs certainly doesn't show his warm and fuzzy side in public -- but they didn't get to where they are now by blind luck and uncalculation.

aj | Sep 08, 2007 | 12:17AM

Hey Bob...just curious a curious fan wondering what Bill Gates and Steve Jobs would say if they could say what they felt about Bob Cringley :) We pretty much KNOW what they think of each other. What they think of you. Now THAT would be interesting!

Doug | Sep 08, 2007 | 12:18AM

David writes:
"price cut of iphone is most likely due to sales not meeting expectation. If they were selling so well, why cut $200? why not cut $100? Also, AT&T can't be happy with the release of ipod touch as it will deter many would be iphone customers from purchasing iphone. In the end, my sense is that, apple and Mr Jobs has reached the end of the gravy train that is ipod. Despite Mr Cringely's suggestion, this whole price-cut fiasco does not appear well thought out."

The gravy train is far from over; it's just beginning. Like Jobs said, Apple is going after market share in both phones and mp3 players. If they left the 8GB iPhone at 599, they could've charged 499 for 8GB iPod touch (and still dealt with at&t's concerns) and 249 for new 8GB iPod nano. But how many would they have sold during the Christmas season? Would they have let a new model from another company creep into contention? Apple would generate megaprofit but at the cost of establishing a dominant media/Internet/computing/mobile ecosystem. With lower iPod/iPhone prices, they can still meet their margins, get megaprofit from sales volume, and better establish the bigger ecosystem; a system that has expanded to include wifi music sales, and Starbucks.

Apple went after market share in 2005 with the iPod nano and iPod, pricing them at such competitive prices, that they forced everyone else to accept drastic price cuts (huge Amazon discounts) to move product. They did it again last year as Zune was about to be introduced by pricing the 30GB iPod at 249 instead of 299.

The larger sales volume is critical as it allows Apple to spread the cost of OS X development across more units, which will give Apple the flexibility to start going after market share in computers with more aggressive pricing. And it allows Apple to exert more pressure on content producers like NBC to lower prices at the iTunes store, and thus gain even more market share.

The gravy train is just starting. This price cut scenario was incredibly well thought out so as to hit multiple strategic targets; well thought out even down to possibility of an $100 rebate contingency.

strategicmove | Sep 08, 2007 | 12:38AM

must find and read more Cringely!

angelia | Sep 08, 2007 | 12:43AM

The size of the price cut was very interesting. It could be that Steve knows about some competitive moves coming in the near future and fired a preemptive strike. Also, Steve is about the only one in the world capable of making a move like this. At any other company the accountants would have fits over this. They'd want to milk it longer. Think of the iPod nano introduction. Steve canceled the best selling iPod, the mini, to introduce the nano. By selling the iPhone for several months at $599 they have established it as a high priced, luxury product which is now available for $200 less. Quite different from just selling it at $399 from the start.

Apple has cleaned up their legacy issues, they have a ton of money in the bank, OS X is mature. Apple is like a tightly wound spring. I think we'll see tons of new products from them in the next year.

John | Sep 08, 2007 | 1:42AM

Steve is a megalomaniac everyone knows it and puts up with it. He gives us what we want cool, slick and useful devices and computers.
A lot of industries could learn from the way Steve operates.
The iPhone will never dominate until it can be used with any carrier, I like many folks would do without a cell phone before doing business with AT&T Wireless again.
Reshaping the Wireless industry would be a gift to all of us, I mean charging for text messages is the biggest rip off I have ever heard of. But they are doing it. I takes zero bandwidth like chatting on the iNet.
Although the 33% price cut on the iPhone was ballsey a Benny now and another before Christmas would have been smarter less costly. Its the how to cook a frog methodology.
Also I don't think Apple will have finally arrived again until I can browse through racks of junk software at my local Costco and maybe pick up a Current or special Costco configuration MacBook there too.
Paul

Paul Petersen | Sep 08, 2007 | 3:20AM

Jobs redifines what winning is. This hardly is a unique quality, but in the realm of public/consumer lifestyle products, it means a great deal.

For me Apple has won. I now really do not need Microsoft ... except for Word and Excel at times. But as long as iApps improve and Gates doesn't run pdf's off the face of the Earth, I can computer in elegance and laugh at all the pc clones. I win!

And I don't need to see old MacBooks at Costco.

MacGregor | Sep 08, 2007 | 3:45AM

Although I don't agree completely with everything you've said (particularly that the $50 million was undeserved), this is probably the most well-stated analysis I've heard concerning this situation. Perhaps it's just that it most closely aligns with my opinion on the issue.
Since we insist upon bestowing so much credit upon Steve Jobs for everything that is Apple, we have to believe that much of this scenario was orchestrated, not just haphazard posturing. Early adoptors always get to foot part of the R&D bill, I'm just surprised that so many of them do not appear to realize this. And can you imagine what the early demand would have been like at $399? Anarchy, riots in the streets. $599 accomplished what it was designed to: Make back some of the two years legwork upfront, and limit demand to a managable level. And now that the competitors have settled on price as one of their primary talking points, Jobs has managed to pull that rug right from under them.

Steven | Sep 08, 2007 | 3:49AM

I think all iPhone early adopters need to re-read the Parable of the Prodigal Son and stop whining.

I do not buy v1 products in the first 3 months and I don't want to pay $100 more for for them when I do just to keep people who wait in line to buy on Day One happy.

MacGregor | Sep 08, 2007 | 4:11AM

As a long-time Windows user I moved over to using Macs a couple of years ago and was blown away by the user interface and how easy the system is to work with. It's a 'feeling' you get that surpasses Windows - even the latest Vista version. When I have to use a Windows machine now I think 'yuk' and this is what Steve Jobs has done - yes its his team that deliver the vision, but he appears to be totally focused on quality and the customer experience. It's a double-edged sword though - anyone who can be so much of a visionary is bound to have character traits that are considered negative by most of the population. It's ying and yang :)

Since moving over to Apple machines I bought a couple of books on Apple and on Steve Jobs and he's a complicated individual, but one that people should aspire to be more like, at least in his positive traits

PHP Encoder | Sep 08, 2007 | 4:13AM

Mr Jobs is just a unique CEO who took over the lead from Microsoft in terms of UI (MacOS) and technology (Nextstep) and now from Sony by having replaced the Walkman with the iPod phenomenon.

When it comes to telephony and content delivery, you will see a new Apple that must play hardball in both places.

The geek vision of old-time Macintoshers is obsolete now.

Alan Sky | Sep 08, 2007 | 8:12AM

Pretty psychotic, people. But paranoia is always more fun than the boring truth. And the truth was simply that Steve got caught flat-footed. He dropped the price of the iPhone for obvious reasons, and went up on stage thinking everybody would be excited. But he hadn't counted on how upset (a definite minority of) iPhone users would be. And so he found himself having to write that letter. That letter was not the work of a puppetmaster but of a frustrated guy trying to apologize but not apologize. And to some of the people who have said "that letter definitely couldn't have been written in one day": please, don't be so stupid. Exactly how long do you think it takes???

Ron | Sep 08, 2007 | 8:23AM

I have not yet bought an iPhone because of missing features. Price was not the problem. I expect the features I want to be available in the next version of iPhone assumed to be released by Februrary ’08. I was unwilling to spend $600 on a phone in July, only to spend another $600 next February. The price cut does not change my mind. I wonder how many other potential iPhone customers are not price sensitive, but feature sensitive. So that no one might lose sleep wondering which features I am waiting for, they are GPS, 3G, A2DP, and audio recording. In addition, I hold the probably vain hope that Jobs will come to his senses and provide replaceable batteries. Also, the ability to have the Ultralingua dictionaries on an iPhone would enable me to get rid of my pesky palm. The last two missing features are not deal killers.

Charles Calthrop | Sep 08, 2007 | 8:49AM

I have not yet bought an iPhone because of missing features. Price was not the problem. I expect the features I want to be available in the next version of iPhone assumed to be released by Februrary ’08. I was unwilling to spend $600 on a phone in July, only to spend another $600 next February. The price cut does not change my mind. I wonder how many other potential iPhone customers are not price sensitive, but feature sensitive. So that no one might lose sleep wondering which features I am waiting for, they are GPS, 3G, A2DP, and audio recording. In addition, I hold the probably vain hope that Jobs will come to his senses and provide replaceable batteries. Also, the ability to have the Ultralingua dictionaries on an iPhone would enable me to get rid of my pesky Palm. The last two missing features are not deal killers.

Charles Calthrop | Sep 08, 2007 | 8:51AM

Yup all planned. Apple got an additional 50 mil. What about the 6-7 billion dollars Apple stock closed down? Was that the plan?

me | Sep 08, 2007 | 12:19PM

I think most people missed the most amazing part of the IPod/IPhone business, which is the complex web of business deals Apple put together. Getting AT&T to go along with their demands, the music companies, the television and movie studios, the search engine companies (Google and Yahoo.) and now Starbucks. These are companies that in most ways compelete against each other and are run by very aggressive business executives. I am more impressed by that then the technology Apple has built.

Jeff | Sep 08, 2007 | 1:11PM

1999 quote from Bill Gates about Jobs: “He has to know that he can never win.”

If Steve Jobs has a quote about Gates in 2007 it will be: "He has to know that he has already lost."

Viswakarma | Sep 08, 2007 | 2:12PM

"Those who do use it will nearly all buy something that costs more than $100. "

Those that don't have iWork '08 or iLife '08 on their Macs but bought iPhone at $599, can get these at $79 for a single user version and $99 for a family pack. Both iWork '08 and iLife '08 are a must to have for Mac users.

In addition, those who are groaning for a 2-button mouse can get Apple's Wired Mighty Mouse for $49 and the new Keyboard for $49. Also, they can get a Wireless Mighty Mouse for $69 or the new Wireless Keyboard for $79. Wacom Graphire4 Tablet Set for $99.95 which allows hand-writing recognition using InkWell, a part of OS X.

The list goes on.

For other such items all one has to do is to visit Apple's on-line store, instead of whining!


Viswakarma | Sep 08, 2007 | 2:41PM

"Those who do use it will nearly all buy something that costs more than $100. "

Those that don't have iWork '08 or iLife '08 on their Macs but bought iPhone at $599, can get these at $79 for a single user version and $99 for a family pack. Both iWork '08 and iLife '08 are a must to have for Mac users.

In addition, those who are groaning for a 2-button mouse can get Apple's Wired Mighty Mouse for $49 and the new Keyboard for $49. Also, they can get a Wireless Mighty Mouse for $69 or the new Wireless Keyboard for $79. Wacom Graphire4 Tablet Set for $99.95 which allows hand-writing recognition using InkWell, a part of OS X.

The list goes on.

For other such items all one has to do is to visit Apple's on-line store, instead of whining!


Viswakarma | Sep 08, 2007 | 2:41PM

We had just purchased 2 iPhones, an iMac and a MacPro from he online store on September 1st. While waiting for everything to be delivered I received an e-mail stating that the pricing on the iPhone had changed and since our phones had not shipped yet we would be re-invoiced at the new pricing. The e-mail stated if that was not acceptable we could cancel our order.

"Not acceptable." Fat chance. We had a dozen friends rubbing their iPhones under our noses for a couple of months. Now I can rub my receipt under theirs and laugh all the way to the bank with the $400 we saved.

Jobs is a marketing genius and visionary. People like that are usually a bit odd - but that's because they do not see the world in the same way as most people. Everyone knew a price drop would come in time for Christmas - he just pulled the trigger early to get the extra exposure. I can not fault him for that.

So those of you who paid a little extra for the bragging rights of being the first on the block to have your iPhone, enjoy the phone and the rebate and dress up your phone in a nice new hot pink leather case, compliments of Mr. Jobs.

I have never not paid full pop for the latest greatest technology only to have something better pop up the next month or two.

My 2 cents . . .
Lori

Lori | Sep 08, 2007 | 2:59PM

This article is of course a tiny headed man's, small view of a single aspect of this story. Job's vision and responsibilities far exceed this. Jobs has a European market and contracts to set up for the iPhone right now and going for it is all of what it's about. Products that start big get bigger just like products that are slow like the Zune are dead ends. Jobs knows this while Gates doesn't. This decision is multifaceted and has to do with costs of the first million of any product and penetration into new markets and using your overwhelming advantage to dominate while you can. Sure all of Apple's competitors would like Steve to lie down and sleep while they attempt to hopelessly catch up. Just like the iPod continuous advances and giving people useable technology that inspires wins customer while Gates is still stuck in the seventies with lists of features implemented horrendously and forced with extreme prejudice on users. This of course doesn't pass the sniff test to anybody but used car salesmen like Balmer. Winning is happening and Jobs knows it even if Gates doesn't.

Gwendal Parks | Sep 08, 2007 | 3:23PM

"He has to know that he can never win."

The definition of winning is open for discussion.

I think Apple hit a home run this week, coming out with the new iPods and the iPhone price change/refund combo. The Apple stores are humming. Mac sales are up and plenty of PC users, fed up with Windows in general and Vista in particular, are adopting OS X.

Apple gets it and people know it.

Jeff | Sep 08, 2007 | 5:51PM

Bob, you say it's costing Steve only $50 to get new customers (and returning customers) into the Apple stores via this iPhone store credit. According to one of the comments to a post I read in the Fake Steve Jobs blog (an authoritative source, to be certain), the real cost is only $8 back out of the $200 Steve made in the first place, leaving him a net profit of $192 and the love of the Apple Fanboys as well. It starts out with the fact that Apple enjoys a 50% profit margin in at least some areas, which reduces the actual cost of the $100 store credit down to $50, and goes on to point out that not all store credits will be redeemed, that Apple products don't cost exactly $100, meaning that additional profit on the added money spent, and in the end the figure of actual cost looks a lot like $8 out of the extra $200 profit -- not to mention additional great will to Steve. Worth looking up that comment to one of FSJ's posts from the last couple of days.

David | Sep 08, 2007 | 6:12PM

I find the most revealing comment on this article was that of Bill Gates in 1999 about Steve Jobs returning to Apple “He has to know that he can never win”. With the arrogance of Microsoft's world domination mindset. Gates didn't imagine Jobs could present any threat to him or his company. Then came the iPod, iTunes, all of a sudden Microsoft look boring, buisness like, and not fun at all.
Steve Jobs is the pied piper, he leads his hi-tech boffins into believing they could change the world. What is fasinating is how he does it. It's like a magical touch, maybe one day he'll lose it.
I also saw the recent Gates/ Jobs interveiw, and I've got to say Jobs put down of Gates saying that he should be remembered for his philanthropy and not just the"richest man in the graveyard" was like a laser guided missile which left the richest man in history mortally wounded. This reveals the essential difference between these men. One a programmer, copier of any good innovative software,calling it his own.The other not really a technical person at all, but definately a leader, enigmatic, with a real ability to inspire. I'll let you guess who's who.

Fred | Sep 08, 2007 | 6:22PM

Iam sure there is some truth to this article but this kind of analysis always come across as somewhat meaningless. I am sure there is an awful lot more to what makes SJ do what he does than the fact that he was fired many many years ago. And while I have no doubt SJ is a driven and sometimes ruthless leader, I see no reason why he should not be 'nice' person. Not that I really care. I do think it is refrshing to see a CEO who is not a boring corporate machine. He's got personality. I think he just does what he does because loves doing it. What more do we really need to know? Here's another, and to me, far more interesing side to Steve Jobs.
http://www.youtube.com/results?search_query=steve+jobs+addresses+graduates

Hal | Sep 08, 2007 | 11:22PM

It's not going the way Bill or Steve thinks it's going to happen. It's not a question of who is going to win or lose. It's really the questiion of who is going to lose BIG, first.

Billy Boy had been bending over backwards to financially support anyone who is likely to help kill FOSS and/or Linux. It's going to be interesting to see how long it's going to take the "Tipping Point" to take Billyn Boy down - will it be sooner rather laster (we'll see).

Now when it comes to Stevey, what's going cause his killer Tipping Point. It depends ... if he's going out of the computer hardware software business; then he'll not lose and might win if Billy Boy fails (last man standing).

Why get out of computers etc.? Adobe likely just made the Quicktime player redundant; because H.264 no longer needs Quicktime for playback. No Quicktime - really no need for computer to run Quicktime (apparently sucked in Windows anyway) Any OS can do so-called "creative" stuff - like 98% of web pages - which are the awful, unusable, mindless, and pointless.

But if Steve takes the iPhone "all the way" - a shrunken Newton with a super display - that instantly accesses any kind of cheap entertainment. He won't lose!

He'll win if Billy Boy loses (which Billy seems to be hard at work doing.)

cannuck | Sep 08, 2007 | 11:24PM

I bought my iPhone from Apple's online store the day it became available, and I got what i paid for. If someone had offered it to me for a $200 discount to be delivered in two months, I would have declined.


SJ said that hundreds of people complained. Well, do the math: that would be about one out of a thousand buyers. The price was right when it shipped, and the economies of scale have kicked in to make it possible for Apple to make a major grab for market share this holiday season.

The $100 credit nice, I'll probably spend it on TV shows, but I wouldn't have been bent out of shape without it.

-jcr

John C. Randolph | Sep 09, 2007 | 5:17AM

"Steve is a megalomaniac everyone knows it and puts up with it. "

No, Steve is a perfectionist. If he were a megalomaniac, he would have become a politician.

-jcr

John C. Randolph | Sep 09, 2007 | 5:23AM

Interesting read, although unlike some of the many people who have commented, I understood the article as a insight into how Steve Jobs works not as a attack on him for bailing on an interview years ago, although I dislike apple I did read the keynote live updates on engadget and watch the keynote itself on the apple website which I found quite entertaining and even got a chuckle out of some of the funnier moments and its understandable why Steve is CEO, if anyone else was running apple its easy to believe that it might well be bankrupt by now, but although the $200 price drop makes the iphone rather tempting even for me, it still lacks some major functions that I use on my phone that I'd rather not have a phone without, of course these features could easily be brought in with a software update, and I live in Europe so I can't buy it yet anyway but that's beside the point. But, the new ipod touch and nano models are VERY tempting and are lacking the coverage the $200 price drop is getting which is a shame.


Oh and for the guys/girls who think $0.99 is reasonable for a ringtone, all I have to do is get the song I want, and if it needs trimmed cut it using audacity then send to my phone via bluetooth, and this is the same for pretty much every phone with bluetooth released in Europe for the last 4 or 5 years.

And for the guy who said what happens when Steve stands down because having no apparent heir is a scary notion for shareholders, be thankful you don't have someone like Steve Ballmer as a replacement CEO.

mike | Sep 09, 2007 | 5:25AM

For anyone who has made it this far - Well done.
It seems to me that based on the posts here, Mr Cringely, is backing the wrong horse, he posts these nefarious articles purely as a way to generate hits to his website - he has admitted to this in the recent past - and thus drive his advertising revenue, contained within. ... and yet, here I am. ouch!
But -
If you are already an Apple Mac user, old / new or even a Windows user and want to read a very interesting article that starts with an exposé of the truth behind FSJ aka, Fake Steve Jobs and then an excellent article on the history and the stories behind the various operating systems, from the very early days up to this point in time. Then I suggest having a good look at Daniel Eran Dilger site " RDM Tech " at -

http://www.roughlydrafted.com/RD/TechQ307/TechQ307.html

This Daniel guy spells out every thing. very succinctly.

zaxzan.

Not in anyway connected to RDM Tech, I just love his ability to dispel the myths and get to the heart of the story - no bullshit like Mr Cringely.

zaxzan | Sep 09, 2007 | 5:34AM

Fred what you don't understand is that while Apple is "cooler" Microsoft has more money. And when it comes to business I'd have to say that more money wins the who did better award every time.
Besides I don't know anyone who buys songs from apple, and I only am friends with 1 person who owns a full fledged ipod (2 have shuffles, and they now use their cell phones for music), but all of them have windows pcs (1 also has a mac).

Craig | Sep 09, 2007 | 6:04AM

Awww, Robert. So you think Steve screwed you because you were an early adopter of the iPhone and blinded yourself to the reality of technology purchases. "I screwed myself so everyone who buys after me has to be screwed, as well (but the screwing stops after what -I- consider to be an acceptable timeframe - maybe six months or a year after I buy so I don't have to feel like a shmuck for standing in line for 27 hours at the Apple Store).

BJ Levine | Sep 09, 2007 | 11:03AM

Your articles are always interesting, but I only rarely agree with them. I am completely persuaded by this one though. The only suspicion I would add is that they may have used the price difference to fund some other project - who knows, maybe to offset an unusually expensive advertising compaign, or to offset giving iPhones to all their employees?


I adore Apple, though I have plenty of experience with other environments, but I wish very strongly that they would transition away from being a company which uses hype and secrecy. Despite their amazing success, they won't sustain their success unless their PR department begins to understand what life in the internet era means. Anyone can google a prospective product, or digg for leaked upcoming product photos now. The future lies with businesses that are transparent to the public. That's so far opposite to what Steve Jobs is that it'll be hard for them to change.

anon | Sep 09, 2007 | 11:24AM

I still find it odd how people see the iPhone as a revolution in phone technology. As a phone it's direly lacking in things it should have, and really is being sold on the hype surrounding the iPod brand (not the Apple brand, the iPod brand). If it were to be revolutionising the phone market, the least they could have done was bring more basic features up to scratch with the competition.


But until Apple lose their somewhat fanatic and rabid fanbase, their products regardless of true quality will continue to sell.

anon | Sep 09, 2007 | 12:01PM

>> still find it odd how people see the iPhone as a revolution in phone technology.

me too: it's a revolution in phone interface design, not in technology.

ed. | Sep 09, 2007 | 2:59PM

Come on guys! Whenever you buy a 'new' product, by definition you will be late, somehow... There's allways new and better goodies around,behind the corner of a short timeframe. And as for the price, it's a free world, or what? We make choices ourselves!

Steve Jobs must necessarily be quite a damn' character: you wouldn't bring Gates' "lost cause" to fruition otherwise. And believe you me: I'm a very satisfied USER of Apple Mac's products.

Would you believe it, I've been waiting 5 years (!) on the real future successor of the Powerbook G4. I'm already licking my fingers when I think about what Steve's team will d e l i v e r !!!

dennis douchy | Sep 09, 2007 | 2:59PM

The conspiracy angle is just dull but more importantly this article fails to acknowledge that the significance of the iPhone is probably in the innovative interface.

nev | Sep 09, 2007 | 4:11PM

This article smells just like cheap gossip.

Nissim Levy | Sep 09, 2007 | 9:47PM

This article smells just like cheap gossip.

Nissim Levy | Sep 09, 2007 | 9:47PM

This is PBS, not Hello magazine.


david bennett | Sep 09, 2007 | 9:54PM

I don't understand the wailing about this price cut. In my view, you paid $200 to be able to say "I got an iPhone!" for 2 months. I understand the social value of that, and I think it's worth $200.



I admit that I did not buy an iPhone, precisely because I expected it to get better, bigger and cheaper within 6-12 months. All techno-gadgets do. I'm willing to wait.



The annoying thing here is the expectation that Apple "owes" something to the early buyers. I daresay the early buyers -- characterized as Apple's "most loyal customers" -- seem more taken by fad than function, by bling over value.



Cringely's opinion is quite mis-placed. Apple is out to make money -- that's not debatable. The question is what are the early buyers out to do? The answer is "brag!". They did. It costs $200 to do that.

bryan watson | Sep 10, 2007 | 8:41AM

Its perfectly OK to post a note saying "Nothing to report this week" when you've run out of interesting things to write about. Would save us from reading through a bunch of crap to see if there is any meat to the story.

Where are the TECHNOLOGY articles you used to write. Is the real "BOB" on hiatus, and a writer from US WEEKLY substituting?

Bill P | Sep 10, 2007 | 9:05AM

Interesting article,

but what about pointing out how despite your firm predictions, Apple did NOT reveal or release plans for a 3G iPhone?

DougB | Sep 10, 2007 | 9:30AM

Mark Stephens -

Your bitterness of being a hi-tech wannabe failure is overwhelming.


fred | Sep 10, 2007 | 10:48AM

So, how is your tin-foil hard disk coming along?

woz | Sep 10, 2007 | 10:52AM

I went into the AT&T store where I had previously purchased my iPhone and they gave me a no-hassle $200 credit on my bill. Took about five minutes.

Squeamish | Sep 10, 2007 | 12:28PM

Ah Steve milks the Apple crowd, gives a discount,
the crowd roars. The world applauds. He may be
the true Anti-Christ of computers. All Bill Gates can just say is, "I make more MINKEY." Interesting to see how this pans out. Oh well selling smoke and mirrors can be soooo fun.

janlcairmont | Sep 10, 2007 | 3:47PM

Here's the REALLY INTERESTING THING about the pricing. When initial iPhone pricing was originally announced, Steve justified the $500 price tag by saying it was a smartphone ($250) plus an ipod ($250).

NOW, when you compare an 8GB iPod touch ($300) to an 8GB iPhone ($400), the price difference is ONLY $100. And the only things different between the two products are the phone and the camera. So Apple's suggesting through its pricing that the phone and camera are worth ONLY $100, while the iPod is worth $300 ($50 ***MORE*** than before)!!!

This is a deft and brilliant move to commoditize the phone and maintain/enhance the value of the iPod w/ the touch interface. Competitors probably can never copy the iPod+touch combination due to patents and design challenges, so Apple maintains its advantage. Brilliant, brilliant move....via pricing.

CM | Sep 10, 2007 | 4:13PM

I'm just surprised Jobs didn't offer a substantial rebate on the iPhones instead of a price drop. This way he could milk the new product a bit more before dropping the price. I know a lot of people wouldn't send in their rebate slip.

jezsik | Sep 10, 2007 | 5:04PM

What you don't realize Mr. Cringely (and you too Bill) is that Steve HAS won and will continue winning. The fact that Bill has an unwilling rope around the neck of corporate america is not a win. Not even close. Bill developes crap. His software is terrible. Steve, on the other hand, developes quality. So who's the winner here? Bill has become very rich selling a load of goods to a group of largely unhappy customers who can't afford to change platforms. Steve has become very rich selling great products. The real winner is Steve and every Mac user and Apple fan understands that they also win the process. Calling Bill the winner in this battle is like saying that Ford is a winner over Porsche. Winning is NOT only about the amount of customers you have. Winning is also about developing quality. That's something that Microsoft does not, and will never, understand. Long live Apple. Long live quality.

Todd | Sep 10, 2007 | 5:10PM

"Apple got free publicity worth tens of millions and the iPhone, which was already the top-selling smartphone in the world, will now sell two million units by the end of the year, up from an estimated one million."

First of all, iPhone is not a smartphone. It is too "dumb" to be a smartphone. It is a multimedia phone, altough seriously lacking features wise.

Pretending it was a smartphone. How could it be the top selling one, with mere one million sold since its launch? Nokia alone sells more than 1.2 million phones every day, and more "smart" phones in few days than apple has ever sold. I mean, seriously.

Tero | Sep 10, 2007 | 7:36PM

One thing all these comments suggest is that dropping the price $200 has generated talk about Apple that just bringing out a couple of more ipods would probably not have done. Apple, Apple, Apple, Apple, Apple, Apple, Apple, Apple.. big smile

David Bennett | Sep 10, 2007 | 8:00PM

The above article assumes that Bill Gates is a very rich and successful "nice guy," and Steve Jobs is a (oops, I have to not use profanity).
Ahem. Gates is a ruthless, lying, cheating, slash-and-burn competitor, out to KILL all competing technologies, ESPECIALLY by Apple, just to secure Windows' monopoly status.

We all would be a lot worse off without Steve Jobs trying to "win" against a fascistic purveyor of inferior and even dangerous technologies.


http://www.roughlydrafted.com/RD/RDM.Tech.Q1.07/8AA115DC-2398-456E-9319-FE5842A41BD1.html

and

http://www.roughlydrafted.com/RD/RDM.Tech.Q1.07/5F0C866C-6DDF-4A9A-9515-531B0CA0C29C.html

Laurel Paley | Sep 10, 2007 | 10:50PM

Oops
The two articles I posted, above, are meant to be read in the other order. Read the bottom one first. Then read the top one.

Laurel Paley | Sep 10, 2007 | 11:14PM

The funniest thing is the way Bob bases the psychoanalysis on Jobs wanting to get one on Gates, while not realising that Jobs was snubbing Bob! No-one likes to be told they're not valuable enough to talk to, but anyone in media gets it, and most of us are secure enough to not turn it into a hack job.

boris | Sep 11, 2007 | 2:07AM

While man/woman does not live by one platform alone, I have to agree a bit with Bob. For all the complaints that Gates isn't about open systems and such, Apple in it's own way is just as proprietary.

Any while I know neither Bill or Steve, I do know of how Bill and Melinda spend the wealth Bill has built Looking at the two men I would want to be more normal like Bill than more normal like Steve (or Paul Allen for that matter - thank you for buying the Seahawks but...).

I have, over the last few years taken a more harsh view of Steve and Apple (yes, you can call it a love/hate relationship anyway) and a much less critical view of Bill and Microsoft overall (not product/patches specific) as I watch both and their companies continue.

I'll listen to music on my Moto Q 9M while my step daughter fires up the iPod Nano. That's about as close as she's getting to an iPhone for now...

David | Sep 11, 2007 | 2:29PM

A few things:


*YouTube will soon be using only Quicktime/H.264. Why? Because Steve wants it that way, and because no one ever says 'the Iron Man trailer in glorious Flash'.


*HTC and Apple really should be working together. The HTC Shift has a fantastic form-factor, but its innards are not all they could be. Imagine an over-clocked iPhone chip set running at 1.2Ghz, same hi-rez screen from the iPhone increased to 7inches, and iPhone OSX running its own versions of iLife, iWork, etc, etc, all the while getting a true 8 hour battery life.


*If you're reading this Steve Jobs, and I know you are, I really, really, really, really, really, really want a 12inch MacBook Pro for Christmas.


Thanks!


John

John | Sep 11, 2007 | 10:09PM

First off, I'm surprised you didn't mention the Job & Gates interview at D5 (free via podcast on iTunes btw).

As to how Jobs snubbed your interview... I half wonder if he sent you to Gates first thinking you wouldn't get the Gates interview and he'd be off the hook.

The $100 gift cert is good for Apple on many levels, and I wouldn't be surprised if they had this in the wings all along. However you assert that Steve did this primarily for reasons of ego (getting a thrill off being able toy with customers), but I'm thinking it's the there way around. That the business case was the higher priority... but who knows?

Have you considered contacting Gates to get permission to release the audio from that old interview? Might give some interesting perspective on what Bill thought back then about Jobs vs. the recent D5 interview... I'd listen to it :)

G

Agent G | Sep 12, 2007 | 1:07AM

Here's a question for "The Steve": It has been way over 67 days since Apple released the latest version of the Mac Book Pro. When are you going to drop the price of them by 33%? You did it for the iPhone and you even stated that price drops like this happen with technology. So where is the price cut? I guess I'll be waiting a long time for that.

Joe Seefus | Sep 12, 2007 | 2:33AM

We all wonder what motivates Mr. Jobs. There's the public persona of a overbearing driving manager. It seems to many of us that his personality is very public. Out there for all of us to critique. There are many people who make their living trying to figure out what drives certain people. Sort of sideways influencing the course of events. I suppose when someone makes hay out of their public persona then they're fair game. I for one find it both interesting and revolting. The whole idea of celebrity really needs an examination. Personally I think those that help to change so much in our world are due some public scutiny. Remember though, these people are driven by motives that are self-serving. Success and avarice, both for money and fame. There are those who are not as driven by these qualities. Those who created the internet for example. Sometimes the drive for profit cuts though and quantifies what's important and what's not. Sometimes a committee can make something happen. What will move the world along and what won't require scutiny at all levels. Mr. Jobs has a vision I suppose, even after 30 years. The market decides if his vision has legs. I suppose his public lifestyle gives more attention to Apple's work and therefore he's serving his company well by making sure it gets noticed. He's not a charlatan though. His products are revolutionary of sorts and do push the human race along....a bit. I think though that perspective needs to be given to what really matters to people. We're on this planet for a short time. We need to stop short, look around and decide that a ipod or a iphone, as much fun as they are to have are just a small drops in the lake that is human knowledge.

cmara | Sep 12, 2007 | 9:19AM

I found the article highly interesting.

Unlike some other people here, I understood that the point is not to bash Jobs or praise him, but to try to understand him. I know people who act like Steve Jobs; for them, everything must be calculated out to the nth detail to handle all scenarios. The point of "winning" for them isn't that they make the most money, but that they are seen as the purveyor of "cool".

Taken in that context, the "he has to know he can never win" comment by Bill Gates underscores how different the approach Steve Jobs takes. He doesn't want the biggest selling PC, or the takeover of the corporate boardroom, but rather wants something that is somewhat different: something that can be seen by everyone -jocks, nerds, techheads, media, politicos, corporate jockeys, you name it- as so cool that you simply have to have it.

Think of the old Detroit shows of the 50's and 60's; you had to have the latest car because it was so cool. Making something like portable music or a portable phone or a PC so cool that you have to have it makes such an item recession-proof. In a cyclic business like the computer industry, you simply can't understate that fact enough. Guaranteeing regular profits and getting to look cool to everyone for designing leading edge products (just look at the commercials for Apple products during the NFL season for a sampler on what demographic Apple is hoping to sell to) is what makes Steve go.

Oh, and being able to pull coups like this to maximize profit doesn't hurt, either.

Thanks for the insight, Bob.

not a luddite honest | Sep 12, 2007 | 2:41PM

This is such a coincidence. I have two friends called Steve and they are both also a little odd.

Martin | Sep 13, 2007 | 6:51AM

The image of Steve Jobs henpecking Bill Gates conjurs up a twisted visage of the very oddist of gay marriage matches. Steve would definitely be the woman but Bill would be the henpecked husband. eeeek....enough sad. I don't want to imagine any more of this one!

Fred | Sep 13, 2007 | 4:00PM

I find the most interesting statement, and key comment to figuring out someone I know is:

"but they also have opinions and NEEDS — two characteristics Jobs (and for that matter almost any CEO) would like to do without."

On a personell level, within a department, opinions and needs are a fact of dealing with people with fairness, and sensitivity to get the product out and have an atmosphere that is encouraging of the best from the staff members. I think some CEOs, have no feeling for connections that run TWO ways. It has always been to their honest reflections ONE way, ie up towards them. Opinions and needs are abundant and cheap, but it is neither desirable nor possible to trim them all away. For example, one of those needs is "hope".

edo river | Sep 13, 2007 | 7:22PM

Apple will win. At least this round. Why? People looking at Apple's hardware and software tend to say stuff like "I want that!" or "Wow! That's cool". People looking at Microsoft's new software offerings are mostly saying "Why should I buy that when what you've already sold me does what I want?". Apple's hardware and software tends to 'just work'. Microsoft's software tends to do what it wants to. Go figure.

SeaGROL | Sep 14, 2007 | 3:13AM

I think Jobs intentionally priced the iPhone at $500 and $600 to reduce the lossees if the phone was a flop. Demand was pent up and some people may have paid more. If it flopped, initial sales number would justify reducing production. The analysts said "drop it $200" at this sales point and we'll still rake in the bucks. Done.

The $100 credit is like Itchy & Scratchy money: good only in one place, Apple. Apple wins. $100 doesn't buy much there.

DanSz | Sep 14, 2007 | 2:51PM

> It's not so much WHAT Apple does, but HOW they do it that separates them from the pack.


Exactly.. The reason the iPod is such a phenominal success is based more on how easy to use it is (even my parents and grandparents have them). Too many people don't get this. I went through dozens of mp3 players, starting with the original one from Diamond back in the day.. and the iPod is the first one that is both useful, and easy to use.

Sure, there are plenty of players out there that are far cheaper.. but for anyone outside techies (and let's face it, even most of us that can use them often just don't want to have to do all that work) they're just too complicated.

The iPod was the first digital player for the masses, and has dominated because of that, and because they keep making it better, while keeping it simple and intuitive to use.

Miguelito | Sep 14, 2007 | 5:50PM

Steve Jobs and Apple are on a roll and early adopters will forgive the company for this price drop. After all, many early adopters are similar to evangelists and would like millions more to buy Apple products. There is no greater satisfaction as an Apple fan (not a fanatic) to see their products competitively priced. That makes one look smart, not just like a loyal devotee.

Tomas Sancio | Sep 15, 2007 | 7:47PM

It is not just that the iPod is easier to use for non-techies; it is easier to use for techies too. Who needs more complexity in their life? I just want music. When I want complexity, I'll pop in the earbuds, and open an xterm window. When I want simplicity, I skip that second step.

My theory on why Jobs dropped the price: Apple has *always* had supply problems with new products. They wanted to seed the market, but not get customers angry when they order an iPhone, and can't get one for 90 days. Now that the factories for the special parts have ramped up, he can drop the price and open the floodgates.

Neil Prestemon | Sep 17, 2007 | 4:11PM

Everyone is complaining about the price drop of the iphone. It reminds me when I splurged and bought my wife tickets to the Barbra Streisand millennium concert in Las Vegas. Up until that time her tickets would sell for $200-$300 and everyone would end up selling them for $1200 to $2000 to the folks who really wanted to attend. This concert Streisand controlled her own destiny and sold the tickets for $800 to $2500. Why shouldnt she profit by the sales instead of some third party mark up? All you had to do was look on eBay for the iphone the day after it was released and you would have seen thousands for sale, selling for $700-$800 or more. The iphone would have sold for that much on eBay regardless what the retail price would have been. The folks who were willing to shell out the bucks to get the product didnt seem too concerned about the price at the time. Every product has a price point. If $599 is too much then they shouldnt have bought it. Did the folks who waited in line on day one really expect that the price would never come down, that the product would never be improved?

Lawrence | Sep 18, 2007 | 2:40PM