iPhone, Early Adoption, and $100

Or living life in the technology lane...

So I have an iPhone. This means that I am, according to Steve, one in a million. Which is, I like to think, a very nice thing for him to say about me, and not just a statistical statement based on the number of iPhones sold to date.

It would be safe to say that I fall into the category of ‘early adopter’, doubly so given the fact that the iPhone isn’t even released over here. Early adopters are well aware of the risks of buying first-generation products; and are also well aware of the likelihood of price cuts as the product meets the market, and vice versa. Even $200 price cuts on an iPhone after only a few months on sale?

If you want to read lots of well-thought-out opinions on the price cut, a good place to start is The Price Cut Heard Round the World on Daring Fireball.

Steve was kind enough to send me a personal email shortly after the announcement of the price cut, which you can read at “To all iPhone customers” in which he explained the thinking behind the price cut, and offered $100 store credit. I paid $699 (and a bit more to get it to this country) for my iPhone, and I felt it was definitely worth that. I also know that future iPhones will be faster, better, slimmer, smarter, and cheaper. (And some may even be sold in the UK). As Steve says, “This is life in the technology lane.” Whether the $100 store credit was a knee-jerk reaction or a carefully planned move we can only speculate, but it was a pleasant surprise.

Actually, my immediate reaction on hearing the price cut was not one of anger or annoyance, but a fear that this move would dissuade more people from buying first-generation products from Apple in future. By providing the $100 store credit Apple hopefully retains the trust of early-adopters, and avoids a potential relation to the Osborne effect in which people delay purchasing a new product in case the price drops significantly mere months after launch.

I’m really pleased to see the price cut on iPhone. The old 4GB iPhone at $499 looked to me to be purely a way of making the entry price seem low, as almost everyone would (and did) opt for the 8GB model instead. So dropping the 4GB model was an obvious decision, in my opinion. I would have expected the 8GB to drop to the price of the 4GB model, $499, so the extra $100 drop was a bit of a surprise. Was it desperation to hide flagging sales? I don’t think so. I think the logic behind the price cut is clear: as Steve says, “It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone ‘tent’.” Just imagine what would have happened if this logic had been applied in 1984 after the launch of Macintosh.

The other great news is the introduction of the iPod touch, an iPod with the same Multi-touch interface as the iPhone, and a lot of the same applications. Starting at $299, this device is going to be a another great way of getting people in to the iPod ‘tent’: people who want the sophisticated interface of the iPhone, but don’t need the telephony capabilities, or who live in any country other than the US and therefore can’t make use of the telephony capabilities.

The combination of the greater affordability of iPhone, and the introduction of iPod touch, makes it easier for more people to literally get their hands on this new platform and interface. To me, this is the important thing: it isn’t just about getting new customers in to the iPhone ‘tent’ or the iPod ‘tent’, it is getting them in to the Apple ‘tent’. And that’s why it won’t be like ‘1984’ this time.