I’m not usually concerned with news from the world of gadgets, but I just had to comment on the recent news that Apple has drastically slashed its price for that holy grail of modern consumer technology, the iPhone. The phone, which debuted two months ago at a price of $600 (and which scores of “early adopters” waited in lines for, just so they could be the first one on their block to have it), has now been reduced in price to $400. This has broken an “unwritten rule” that price reductions on new products generally aren’t supposed to happen for at least six months. To add insult to injury for the early adopters, Apple has decided to incorporate its gee-whiz touch-screen interface — possibly the main selling point of the iPhone — into a new generation of iPods, making the iPhone seem suddenly… not quite so cool.
Surprised by all of the expressions of hurt and betrayal from his army of loyal status-seekers, Steve Jobs later announced that people who bought $600 iPhones will get a $100 store credit on other Apple products. But the damage has been done for many people who have been all too willing to automatically chase after the latest gadgets simply for the bragging rights. Now dawns the first glimmers of the uncomfortable realization that they, too, are a disposable segment of Apple Inc.’s business plan, and aren’t guaranteed membership in some sort of exclusive club, by virtue of their disposable income. (As if you couldn’t already have gathered this by the fact that you couldn’t replace the batteries in the iPhone; even iPods seem vaguely designed to be essentially disposable.)
Steve Jobs’ mistake was not that he was aggressive in attempting to lessen Apple’s potential losses with the somewhat struggling iPhone (fewer people than projected are buying it, and even fewer activating them with AT&T). The problem is that he got panicky and dumped the ballast over the side of his balloon too fast and too obviously. And the problem isn’t that the more devoted adherents of the Apple Cult got hurt; indeed, many of them (deeply invested in the acqusition of gadgetry) proclaimed, “Well, I felt angry for a moment, but I still think I probably would have bought it right away even if I knew about the coming price reduction,” and comfort themselves with the knowledge that they can do neat stuff with their toy anyhow… and isn’t that worth the extra $200 to have it first? So, some of the folks thrown overboard are still gallantly hanging on to the ropes.
But the problem is that people on the ground, who are not hanging on to the balloon themselves, have witnessed a small but shrieking cohort of consumers being thrown over the side. Watching this, they start to wonder if they should accept future invitations for balloon rides… from anyone.
Of course, this is not what the professional balloon pilots do. When you use people as ballast, it has to be done carefully: what you do is simply allow the people to drop off one by one (aided with efficient blows to their fingers, if need be) to keep others from noticing. After all, if everyone gets wise or wary and jumps out of the basket while they still can survive the fall, you’re left with a balloon you can’t control: headed toward the stratosphere, but irrelevant to the earth… until the fuel runs out and gravity finally asserts itself. Thus, thousands of people formerly invited on the balloon ride will be thrown off in this manner (see: subprime lending). So, Steve Jobs rather screwed up with this, I should think.
This all reminds me of a memorable scene from a recent movie called Enduring Love. (The movie itself was not so memorable, alas, but you can watch the scene here.) There comes a moment when you just have to let go of the basket. It is a tough call.