CHICAGO - Bill Schober refused to wait in a long line to be the first guy in his neighborhood to buy the super trendy iPhone. Instead, he waited until the middle of August for his new toy, “to make sure there wouldn’t be any problems or recalls.”
Now, three weeks later, “I’m feeling a little stupid,” the Chicagoan said. “I know you never buy Version 1 of a gadget and I broke the rule.”
Schober and thousands of other iPhone buyers expressed chagrin Thursday in the wake of Apple Inc.‘s unexpected decision to slash $200 off the price just two month’s after its release.
Responding to the outcry, Apple CEO Steve Jobs posted a letter Thursday on the company’s Web site acknowledging the firm made a mistake - and will pay for it. Jobs said iPhone buyers who paid $599 for the 8-gigabyte model and $499 for the 4GB version will get a $100 refund in the form of store credit.
“We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price,” Jobs wrote. “Our early customers trusted us, and we must live up to that trust with our actions in moments like these.”
While most iPhone buyers were aware that one day Apple likely would cut the price of the smart phone or add features, they were stunned by the sudden and steep discount for a popular product that arrived this summer.
Call it the curse of the early adopter, which the first buyers of high-definition TVs, TiVos, iPods and Xboxes understand: You pay a price to be at the head of the line. But usually you get more than a few months of bragging rights before everyone on the block can afford a product.
“You get used to these bumps and bruises when you’re among the first,” said Steven Jones, an Oak Brook, Ill., technology executive so familiar with the concept that he’s created his own little museum dedicated to technology’s early heroes. Included is the first TiVo, a Segway and the original 5GB iPod.
“I bought that the week before the second generation iPod came out,” he said with a sigh. “Apple can be very callous with this kind of thing.”
Yet despite the iPhone’s sudden price cut, Jones wouldn’t change a thing - and that includes waiting in line for three hours to buy an iPhone on Day 1.
“I had two months to gloat,” said the founder of Capable Networks when he learned he will get $100 in credit. “This is great.”
Apple’s admission that it angered it’s loyal customers - those that can’t wait for the company to introduce a new iPod or upgrade its operating system - pleased Chicago author Elaine Soloway, a longtime Mac user.
“Apple really infuriated their fans, the people who urge other people to buy Apple products. We are ambassadors for them,” she said. “I wanted an admission that they had messed up and an acknowledgment of appreciation to their core constituents.
“I think $100 is fair,” she said. “This shows they are listening, maybe even reading the forum postings and understanding that hubris got the better of them.”
Apple listened, said Greg Joswiak, the company’s vice president of iPod and iPhone marketing, in an interview Thursday.
“We realized there were people who were disappointed at this time,” he said. “We did not want to anger” longtime Apple fans.
“Clearly we’re in the business of making people happy. We want to make our products a joy to use, fun to use,” Joswiak said. “When people are disappointed with us, we try to make things right. That’s why we did this.”
Melanie Herman, a salesperson for home furnishings retailer Urban Archaeology, was very upset about the price cut.
“I bought the iPhone on the Monday after it was first released,” she said. “Apple should give a discount to the people who first came out.”
Indeed, one reason for the sudden price slash may be that Apple sold about 270,000 iPhones the first three days it was available. Since then, they have likely sold about 500,000 more, said Van Baker, a technology analyst with Gartner Inc.
“They saw the order rate drop off pretty precipitously so they flipped the switch on the price cut,” he said.
The lower price should lure more iPhone buyers during the crucial holiday season, a time Joswiak said has always been very good for iPod sales.
“We want the iPhone to partake in that,” he said. “It was the right time to do this.”
Schober, an editor for the In-Store Marketing Institute in Skokie, Ill., sees the $100 giveback another way: It’s a payoff for being a sucker.
“Steve Jobs actually put a price tag on my suckerdom, $200, and now he’s trying to drain off some of that embarrassment” with the rebate.
“I don’t know what I’ll do with that $100 at the Apple store,” he laughed. “I guess I’ll get a martini at the genius bar.”