I suppose it’s fair to say I know Steve Jobs; at least more than most people know him. I’ve been in meetings with him, I’ve been chewed out by him (more than once), I’ve had lunch with him, and I’ve even been in his house. But it was all ‘in the line of duty’, and didn’t give me the kind of insight into how he thinks that I wish I had today.
Because today, like the past two days, I’ve been trying to figure out what really happened with the iPhone price cut, and the subsequent outrage that led to Steve apologizing to us early-adopters. Was it planned from the beginning, and carefully orchestrated (as has been suggested by many commentators)? Is Steve some kind of evil genius who plans these things out seventeen moves in advance, with no regard for how it affects his loyal customers? Or was is a simple case of Apple/Steve underestimating the backlash and then doing the right thing? I want to know as a marketing professional, and I want to know as a long-time Apple observer and Apple fan.
As I’ve poured over some of the countless articles and forum posts which have appeared since Wednesday, I’m unhappy to find that the cynics do make some valid points. I’ve also reached back into my memory bank to find any clue or scrap of evidence which might help illuminate this problem.
What I Think I Know
Conclusion
Considering these points, I just can’t buy the idea that Steve and company deliberately delayed the announcement of the rebate to see if they could ‘get away with it’, thereby saving a lot of money. It seems far more likely to me, although still difficult to understand, that Steve was advised by his inner circle that there might be some backlash, but not enough to worry about. So he chose to go ahead without any sort of gesture of appreciation for the early adopters. Only after the announcement when the switchboard lit up with unhappy customers, and forums everywhere were flooded with vitriolic posts, did they realize the error they had made.
To their credit, they acted swiftly to set it right. Even though it will cost Apple at least $50,000,000. Or that’s what I’d like to believe.
On the other hand…maybe it really was all planned in advance and it won’t cost them that much anyway, as everyone will use their store credit to buy a new iPod, and the drama of the delayed announcement will make those users even more loyal Apple customers.
I’m so confused. I wish I knew Steve well enough to ask him. But I’m not sure anyone knows him well enough for that.
What do you think?
Your conclusion is not there.
Yup, still writing it. It’s sort of a ‘reality show’ where you get to see me try to write something.
Thank you for your ruminations.
I, too, have ruminated and have read many many sites. First, I want to throw out one speculative point about the stock price. As most everyone knows, the share price always drops the instant the rumor becomes real. Looking at the Yahoo “beta” share-price site the other day, the day of the show, I saw that the price dropped precipitously at one o’clock. (And if it was the West Coast investors, why did they wait until Eastern Standard Time, at one, to sell?) This was in advance of Jobs’s announcing the price drop. In other words, I believe the share price started going down very precisely (as it always does), but did so in advance of the announcement regarding the iPhone. The so-called analysts (who I believe mostly seek to manipulate the market not explain it) inferred a causal connection between the price drop and the share drop. But it was, I think, a relationship of contiguity not causality. The fact is, as always, those who think badly of Apple came up with “bad” explanations, and vice versa (almost). It’s odd that the hardcore financial world should be so ostensibly emotional. Or, in fact, are not some of them–both in their admiration of Apple, and in their dislike–as Machiavellian as Jobs is thought to be? In other words, many of them are agents provocateurs with ulterior motives.
I.e., no different from the cynical rendition of Jobs’s character. Which brings me to the questions you ask yourself. There is this Manichean view of Jobs: either the evil genius or the merely temperamental visionary, the bad guy or the good guy.
The reason for our confusion and uncertainty regarding Jobs is because we use overly simplistic distinctions with which to think, both in general and about him. The dichotomy you set up in your distinction is the source of your confusion, I believe–not Jobs’s actions, or Apple’s.
There is no contradiction between Apple’s being “good” and its being “cunning.” The move could be planned seventeen moves ahead–as, after all, you would hope it would be, yes?–and that would not preclude the company’s having good motives, being (I emphasize this) as good a company as it would be possible for it to be while being both a company that operates in the context of companies. Yes, the way it has played out is probably beneficial to Apple. Does that make Jobs bad? And even if the rebate had the anticipated effect of making Jobs seem momentarily “good,” or better than he was (when he was the evil genius), does that mean he is a hypocrite? Or bad because he only “looks” good? or that Apple is? If a company does something that only “looks good” even if it is good, does that make it bad? If I say something to someone to make them feel better, even if it’s not true, does that make me a bad person? These situations are ethically and logically much more complicated than everyone is willing or able to admit.
See the NYTimes squib about How Jobs Was Telling the Truth. Assume that Apple really does want vastly expand market share by selling intensely into this holiday season. It sounds like a good business plan to me. Of course they knew people would be upset; and of course they anticipated assuaging folks if the noise became too loud. They had a plan. And their plans have back-up plans, and I bless them for it (yes, I own stock). And of course the rebate helps both the company and the people receiving the rebate.
Wherein lies the problem? Why shouldn’t a company sell its product for as much as the market will bear? Is this immoral? Why do Apple folks (I’m one of them, of course) expect Apple to be good in a way that is peculiar to people but not corporations. In spite of the folly of American law in this regard, corporations are not people. They are teams, I suppose. Would you expect your favorite team, pro bono, to give the other side a few chances to score against them? Just to be “fair”? Is that rational? The reaction of many to this so-called flap ultimately implies that America should not be the kind of country it is.
I can understand people being upset thinking they are “out” $200 (they are not, of course, they got what they wanted, value for money etc.). But they could be upset because they have less of what they want . . . cash. If they are upset because they feel betrayed by Apple or Jobs, or because they think he, or Apple, must be either good or bad, sincere or cynical, well, they are just bring a childlike distinction between good and evil to bear upon very complex situations.
Just like America.
We are immersed in a shallow sea of folly.
Sorry to go on so.
Thanks again,
Alarik
I am glad to see you writing again. I knew you would get back to it so i kept you in my nice little bookmarks bar waiting for the day when you started writing again and here you are off to a good start. I do agree with what you have said about the iphone in that steve jobs must of have some sort of advanced notice that this sort of thing would happen and i too am glad he fix it right away. I sure this will make people even more loyal to apple seeing that they do care about the customers. Keep up the great writing!
-Nate
comments seem to be buggy i guess or something.
Nate, what bugs are you seeing?
oh never mind i think i just needed to clear my cache that seemed to fixed it silly me.
-Nate
I have also read extensively on this topic and have given it much consideration. I am a cynic. Ok, now that is out of the way. I have been an Apple follower for a long time and think that generally, Apple will do “the right thing” but only to the point of not hurting themselves (much). I think they weigh the “cost” each way, and sometimes the cost isn’t measured only in greenbacks.
I am starting to think that this whole scenario was planned from the get-go. Remember the press coverage when the iPhone came out. It was voluminous and generally positive–EXCEPT–there was considerable coverage particularly in the non-Mac-centric press about the price being way too high.
Apple is VERY good at pricing. Think about how they have priced iPods (and iMacs) over the years. They are masters at hitting the price point. Almost without exception they have priced the various models of the iPod to elicit the exact response they want–moving pontential buyers up to a higher level model then the might have purchased, based on price (and value). With this backdrop of near perfect pricing strategy–framed by the announcement last quarter of upcoming lower margins–the evidence leans toward a deliberate plan to lower the price.
If Apple is great at pricing, they are fantabulous at getting good bang for the buck at product release time. They massage the press (and the public) like no other company can. This price LOWERING is getting a lot of press, just like the HIGH PRICE did earlier. To me at least, this appears to be their cunning, masterful way to get TWICE the publicity that they might have. Their PR group (or whoever devised this plan–Steve?) deserves a raise.
Anyone else believe this is possible?
Alarik and mmmmark make excellent points, as do you.
I think it really is simply that Apple is going for market share, especially for video-playing devices, and also wifi devices. The more video-playing devices, the more influence Apple has with video content creators to get content, which will help sell AppleTVs. So the pricing of the nano at 149 and 199 (8GB) is crucial, which leads to the iPod touch being priced at 299 (8GB), and thus the iPhone has to be priced at 399, to keep them all in balance, and allow for upsell.
Also, the more wifi devices sold, the more likely wifi hotspots will appear (whether independently or in partnership with Apple), which will help Apple eventually shake loose of the cell industry. So the iPod touch has to be sold at an attractive price, which again causes the iPhone to be priced correspondingly.
Apple has got one ever-increasing web of related properties – merging media, Internet, computing, and mobile, along with retail. And the more Apple grows in one area, the more leverage Apple gains with related companies already in the space. Apple has been pricing aggressively every Christmas, and it is doing so again.