Up, up and away

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.

3 Replies to “Up, up and away”

  1. I’m an Apple fan (2 computers, one iPod), but I really don’t see what all the fuss is about. Early adopters know that prices come down, especially when holiday season bears down on us. That’s the impetus for all the recent announcements: an iPod and an iPhone under every tree and in every stocking (or next to every menorah or as part of every Kwanzaa). I also think the metaphor is somewhat off. They aren’t throwing the early adopters out of the balloon, they’ve touched down and urged more people to get on–to the dismay of the hipsters who felt special by being the only passengers. It’s not like their iPhones wont work anymore because they discontinued the line.

  2. I guess I see the balloon as not just the iPhone, but the whole gadget lifestyle and what that does for our egos and self-esteem and concept of “getting up” in the world. In that sense, the iPhone may not “work” any more for the early adopters, so they just as well might feel thrown overboard. Like you, I’m already on the Apple ride; in fact, I am seriously considering getting one of those new touch screen iPods, if only because it means I would have an affordable Wi-Fi enabled device. Why do I want one? Maybe because I feel I deserve one? I don’t know, but there’s no real practical reason. But, I’m already on this balloon too, in my view. And I would feel “thrown off” if it turned out that the new iPod batteries last only 100 hours and then you have to buy a new iPod.

    Apple is increasingly less about dependable and practical product, IMHO, and more about coolness and entertainment and selling hot air. (Maybe it’s just that I’m kind of mad they’re discontinuing my computer, the Mac Mini, which is practical but un-sexy.)

  3. Ellen,

    The price cuts are actually normal. People expected them not to do what other cell phone companies’ prices do – initially start high then get promoted the hell out of for the purpose of getting them into more homes with price cuts.

    A good comparison: the Motorola Razr. It started at $500. It quickly fell (in a matter of a few months) to the more affordable range, and now a year or two from its release can be had for free on many carriers with two-year contract.

    And, btw, the Mac Mini was just refreshed. It’s demise is certainly rumored, but it’s not discontinued yet…

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