Cringely: iPhone Pricing Incident Tightly Scripted

Bob Cringely, an expert observer of Apple and Steve Jobs, wrote at PBS on Friday that the entire iPhone incident, from price reduction to public letter and store credit was a tightly scripted exercise in marketing and ego gratification.

"This week?s iPhone pricing story, in which 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. It wasn?t an accident. It wasn?t a thoughtless mistake. It was a calculated and tightly scripted exercise in marketing and ego gratification. In the mind of Steve Jobs the entire incident had no downside, none at all, which is yet another reason why he is not like you or me," Mr. Cringely wrote.

The noted observer of the computer industry admitted he had no inside information, but opined that Apple wanted to milk early adopters and also limit demand. When the product because a critical success, it was time to set the REAL price [emphasis Mr. Cringelyis].

If no one had complained, Apple needed to do nothing but absorb the extra estimated US$100M in profit. However, people did complain, so "It [the $100 credit] was already there just waiting if needed. Apple keeps an undeserved $50 million and customers get $50 million back."

But in fact, the customers donit get all that money back because 1) Some might not use the rebate, 2) Some might buy items costing more than $100 which is just more revenue for Apple, and 3) Some customers who bought the iPhone in an AT&T store will be seduced into the Apple retail stores for the first time. All in all, not much of a loss for Apple.

"So Steve does things like this because he can. It reaffirms his iron grip over both Apple and Apple?s customers. It?s a lot about ego and a little about business, though with Steve Jobs they are hard to differentiate," Mr. Cringely concluded.