Apple Legend Woz Blasts iPhone Price Drop

Stony Stevenson writes "Apple cofounder Steve Wozniak Saturday blasted Steve Jobs' decision to drop the price of the iPhone by $200 just two months after the product was launched. Said Woz: 'Everyone expects technology to drop in price. The first adopters always pay a premium. I am one of them. I am used to that. But that one was too soon, too harsh ... A lot of people from Apple, even a lot of people that worked on the Apple Lisa and Macintosh computers in the beginning now work at Google. The thinking over at Google is very much like early Apple days. The fact that they give people time off to work on their own ideas is exactly matches some of the things that made Apple great. I wish Apple did that.'" We just discussed the price drop last night.

Comments

Supply and Demand

[seanadams.com]

I work in the hardware business and I can tell you it is difficult enough to get enough inventory built for an ordinary product launch, but for what has been called the most successful CE launch _ever_... there is just no way they could have met demand without boosting the initial price significantly. And the problem with keeping the price high too long is that your momentum will dry up, and people won't even be paying attention any more by the time it does drop.

You can call it gouging if you want, but what if they'd instead just run out of stock immediately? Think "tickle me iPhone" - I don't think consumers would have been impressed by that.

Jobs did exactly the right thing. Price no lower than where you meet demand, and only once production has ramped up (which usually takes about two months - go figure) THEN price it at the sweet spot. Also consider seasonal factors which made it necessary to do this before the Xmas shopping season, which for the gadget industry begins right now.

I don't think that ANYONE, not one single person, who can afford a $600 phone and 2yr commitment to a $100+/mo plan, has a valid gripe about paying $200 extra up-front to be among the first to own it. If it was worth buying when you bought it, who cares what it sells for now? Were you hoping it would keep it's resale value or something?

Re:Supply and Demand

[QMalcolm]

It's true. In the end, you were paying $600 for a phone. You can also get phones for $50. By paying WAY more, you either want to get it first or have the absolute best phone possible. Your phone still works. You got it first. If that $200 will actually harm you financially, you shouldn't have bought a $600 gadget in the first place.

It sucks, but there's nothing WRONG about it.

Re:Supply and Demand

[not-quite-rite]

The pricing seemed quite a smart way of letting market forces apply feedback in the control loop for the sale of the iphone.

As much as people cry about the price, it means that those early adopters payed a premium for what they wanted(an iphone straight away gimme gimme gimme), and those slower to take it up, will also buy and feel better about it due to percieved value.

(I'm also happy because it means all the US early adopters took the brunt, while the rest of the world reaps the rewards :P)

Re:Supply and Demand

[RonnyJ]

I don't think it's just the loss of $200 that bothers everyone, the price drop also makes the product seem a little less 'exclusive'.

(I'm sure that's not the factor most people would be annoyed about, but I'm sure a fair few people bought it largely as a status symbol.)

Re:Supply and Demand

[Jeff DeMaagd]

I didn't buy one and I thought it was a kick in the gut. Just about everyone knows that CE devices drop in price over time, but the duration and percentage of the price drop is a bit steep. If they are pricing it for exclusivity, then dropping the price is a bad idea. Still, I wouldn't be buying it to show off, I try not to flaunt any of my consumer electronics stuff.

I wanted one but just couldn't justify it. I'm glad I didn't and it doubly puts me off buying a launch product, I can wait a product generation if I have to, I renewed my contract elsewhere because I also wanted the product to mature before buying into it. It's not a good idea to buy a first revision product anyway. The adage has been well known in the Apple world, though it should apply to any brand product, wait a while to make sure there aren't any systematic flaws.

BTW: the basic 2yr commitment was for a $60/mo plan. It's not well known, but it can be used without a contract, just that the per-minute costs are higher.

Re:Supply and Demand

[W2k]

The reason people are upset is probably that they are coming to realize they paid $600 for a shitty designer phone with an expensive lock-in contract, and by waiting two months, could have paid $200 less for the exact same deal. Still a rip-off, but maybe it'll be another couple hundred less in a year...

Re:Supply and Demand

[Ripping Silk]

I'm in New Zealand, and today I saw a local 'parallel importing' house advertise iphones modded to work with the local vodafone GSM network, for the princely sum of... wait for it... $NZ1199.. that, at todays conversion rate is $US892 !!! These I would suggest come with no warranty or official support as they have been modified outside Apple specs. You'd hafta be keen !

Re:Supply and Demand

[amRadioHed]

A fool and his money are soon parted. Sure Apple accepted their money, but who wouldn't?

Re:Supply and Demand

[Dr. Slacker]

Give me a break. A low price and lack of inventory hasn't hurt the Wii.

Re:Supply and Demand

[x1n933k]

I absolutely agree, it isn't wrong. However in a lot of cases it is the people who cannot afford these items who do end up purchasing them. I use to place a lot of calls for clients to T-Mobile and AT&T who would purchase expensive phones (Sidekicks comes to mind), sign a contract and would be in poor financial shape a few months down the line because they paid $300 for the phone, then $80 data/phone plan with a credit card.

My point is that a lot of customers are lower-middle class who are spend happy on credit they can't support. This is a major problem is North America, and companies can't help but to take advantage of that.

[J]

Re:Supply and Demand

[onetwentyone]

My point is that a lot of customers are lower-middle class who are spend happy on credit they can't support. This is a major problem is North America, and companies can't help but to take advantage of that. You're telling me companies should be responsible for the self control and fiscal responsibility of the individual? Sorry but if someone puts themselves in a bad financial position through unnecessary "for me" purchases, they have no one to blame for themselves. Proper budgeting, hell even SIMPLE budgeting, should be something we teach our kids in school from early to out.

Re:Supply and Demand

[kestasjk]

Simple budgeting is common sense. Imagine teaching simple budgeting in school:

2. ii) You have $3,250 in the bank, 5 unpaid bills, 2 kids, and a five figure income. Do you:
A) Buy an iPhone
B) Invest in the sub-prime market
C) Pay the bills

Haha.

[kraemate]

This guy has reason to be miffed. Didn't he buy, what, 4 of those iphones on the first day or something?

Full transcript of the interview

[Stony Stevenson]

A full transcript of the interview can be read here: Interview: Wozniak slams Apple for iPhone price drop snafu

Just did?

[biocute]

We just discussed the price drop last night.

Then instead of starting a new story, why didn't Woz contribute to that discussion?

That is what makes Slashdot great. I wish he did that.

Apple advertiser slashdot runs third iphone ad!

[plasmacutter]

disclaimer, loyal user of mac computing platforms, self avowed telephone luddite! (if I want my phone to play videos and surf the web i'll run voip on a LAPTOP)

In the news today, the long time apple astroturfing ground, slashdot, has run the third iphone ad in the past 48 hours, topping all records for coverage of apple products since the launch of macos X.4 tiger.

Cowboy neal has yet to respond to questions regarding possible payola or hijacking of the firehose system : )

I can see both sides of the debate

[rolfwind]

but, ultimately, the people who bought it were willing to spend $600. Plus that $200 is insignificant in the long run, you are spending, what? $60 on that phone for 2 years? That 400 + 1440 = $1840 vs 2040. Not that big of a deal. Subtract the $100 giftcard (hey, if you don't want to buy anything with it, it makes a great birthday/christmas gift to someone who does).

I know, I hate when technology drops too, but the psychology of this is fascinating. It's similiar to gasoline - people watch the price like hawks and when its $.05 lower across town, they'll waste 20 minutes driving and another 1/4 gallon to reap "savings" that are not worth the cost in the end.

And people are getting so stressed out over this, you have to wonder if they are the same people who'd buy some new (american) car during the first 9 months only to get stressed out over the end-of-year price breaks into the thousands or the fact that that car is worth a few thousand less once they sign the papers?

Look at it this way: You got a nice product. As a bonus, out of the blue, you got a $100 gift certificate. Now that it's slightly cheaper, maybe you can get your spouse one, whatever.

Re:Why is Woz still relevant?

[Don Negro]

He's still relevant because out of all the engineers who've ever done anything, Woz is very arguably in the top 10, period, of all time, end of story (which makes him one of the few, if any, who are still alive)

He's he first man who built modern computer hardware, then personally wrote the software that ran on top of it, all the while providing an extensible hardware and software system that other engineers could (and did, wildly) build upon. He literally built a huge chunk of this industry by himself, and another huge chunk was built on his shoulders.

The iPhone isn't the same as other Apple products

[bgspence]

No one outside of a small circle in Apple and ATT know what the real deal is. Apple is getting something for the phone and something each month for the service. ATT signed up using a spreadsheet with one set of assumptions. Some suggest Apple gets $200 per phone plus a bit of the monthly service charge. ATT's calculations could never guess Apple would change the equation this big so soon. It's not Apple's normal thing to slash prices. ATT will sell more services, but Apple probably gets a huge iPhone subsidy. I bet Apple took ATT to the cleaners with the deal.

Apple, Google and the iPhone

[shird]

I don't get it. What does the price drop on the iPhone have to do with working at Google over Apple? Did the price drop affect the employees of Apple in some bad way, that Google didn't/wouldn't? Are they going to lose their job as a result? The two stories seem completely unrelated.

Re:Why is Woz still relevant?

[servognome]

He's he first man who built modern computer hardware, then personally wrote the software that ran on top of it, all the while providing an extensible hardware and software system that other engineers could (and did, wildly) build upon.

Many people were doing similar things at the time. The difference was how Wozniak went about engineering focusing on usability and openness. Rather than making personal computers an engineering device (something you make), he made them an engineering platform (something you use)

Re:Why is Woz still relevant?

[chris_mahan]

Bad analogy. Sports require physical attributes that are well-known to deteriorate over time. Mental skills, unless degraded by disease or advanced age, do not.

The genius of Woz is that he used pen and paper to create something that had not been created by people who used actual hardware. He understood the fundamentals completely, but let his imagination run wild on a "what if".

How do you know he is still not doing that right now?

Must skill and artistry, in order to be recognized as valuable, serve the corporation?

Must Steve Wozniak, in order to be relevant in your world of Treasure, build another such financial behemoth as Apple?

Surely you must recognize that there are many people around the world who pursue their interests with dedication, skill, and imagination with little care of the financial gains to be derived.

Allow me to speculate. If Steve were independently wealthy, and no longer constrained to generate income to feed and shelter his family, would it not be a better use of his time to use his talents and breadth of experience to help his fellow man? Perhaps it is completely understandable that he should not relish the prospect of working at a soul-crushing cube farm. Perhaps it is acceptable for a man to stop trying to maximize shareholder investment when such a man has already done so amply, and rather dedicate himself to a different purpose.

Perhaps he has indeed changed what he does. But that does not make him less of a man.

Well at least the Lisa owners got a store credit

[mozumder]

http://www.bbspot.com/News/2007/09/jobs-offers-apple-lisa-early-adopters-store-credit.html/

Happens all the time with cars.

[Animats]

Big deal. Early this year, I bought a 2007 Jeep Wrangler. If I bought the same vehicle today, it would be $3000 cheaper, because Jeep is now offering big sales incentives. And the warranty period was only three years when I bought it; now there's a lifetime power train warranty. (That has more to do with the breakup of Damlier-Chrysler and retaining customer confidence, though.)

What's really annoying iPhone suckers, I suspect, is that their overpriced status symbol just stopped being an overpriced status symbol. The CEO of Rolex once said "We are not in the watch business. We are in the luxury business." That applies here.

RTFA guys

[Edmund Blackadder]

Ok Apple fanboys, before you start flaming Woz and or biting your nails in despair over having to choose between Jobs and Woz, you should read the entire article.

Woz was not nearly as confrontational as the slashdot summary suggests. Also, the summary combines to quotes from completely different and unrelated parts of the interview which is pretty confusing (no Google has nothing to do with Iphone pricing). Also, Woz said that he thinks that Apple is still more innovative, even though he said all these nice things about innovation at Google.

So yeah, the slashdot summary was very sensationalistic and misleading. So no need to tear down that topless Woz poster from your bedroom wall just yet.

Woz vs. Gates

[JonTurner]

Let me put this into perspective:

Woz designed the Apple ][ from scratch, invented the A][ hard drive controller, wrote the system monitor in machine code (without the aid of an assember, mind you!) as well as the Integer Basic interpreter and did this at least twice (he lost the source code) and it was several bytes smaller the second time, etc. etc. etc.

Gates, Davidoff and Allen as a team gave us a hacked version of someone else's basic interpreter. Gates gave us donkey.bas

I rest my case.

Re:Woz vs. Gates

[rs79]

You know, back in the day (70s) gates published code in dr. dobbs documenting undocumented Z-80 instructions. Woz just made $2500 computers that those of us with s-100 systems found rather irrelevant. Gates built his own machine but had no interest in selling hardware, just software, which I kinda wish Apple had done.

Point is, back then Gates seemed like a fellow hacked and woz was just one of 100 guys that started a computer company and did all the hardware design.

I can't say I'm real impressed at having written machine code or done a (very non-statndard) disk controller. We all did that back then.

The first x86 on the net was an S-100 system running Gates Xenix in LA (gryphon.com). I don't think an Apple II ever talked to the network.

Obviously I'm not talking about now. Woz is cool, Bill is not. But that's not how it looked back then. The Apple II was regarded by people that already HAD a computer as a toy not worthy of much of anything and never understood what the fuss was all about. I think the reverance of Woz was strictly by people whose first computer was an Apple.

In a world without Apple there were still lots of choices and I have a greater revernce for say, Jay Miner than Woz. But if Apple hed nevr existed I'm not sure the landscape now would have changed much. Again, much as I hate to say it, MS drove the market and was responsible for the advent of cheap usable computers even your grandmother could use.

Let me be clear, I loathe gates and ms. But if you strip the emotion away gates has done more to get us where we are then woz ever did.

You may now mod me down to "-5, asshole". But you know I'm right. And don't worry it pains me as much to write this as it does you to read it.

Re:Who cares what Woz thinks?

[Opportunist]

Both were lucky. They are complementary to each other, neither of them would have succeeded alone. Woz would've created a computer nobody wants to use, Jobs would've gone bankrupt trying.

Re:Is this who's on top syndrome?

[bentcd]

I'm curious about all the Apple bashing? Apparantly, Apple customers come across as smug bastards and, in a twist of irony, Linux users seem to really really dislike smug bastards. Or perhaps it's just smug bastards from a different camp they dislike, it's a bit unclear. Anyway, this tends to transfer over into any discussion involving Apple regardless of the underlying facts of the matter. The only thing that is holding Slashdot together at the seams is the unsurprising coincident that both smugh Mac-owners and smug Linux-users both harbour an overpowering dislike for Microsoft (which isn't smug, just evil). So long as this tenuous alliance is kept alive with the odd Microsoft-bashing article every now and then, our little community shall prevail! :-)

For the record: I own two Windows boxes, two Linux boxes and one OSX box. I use most of them on a regular basis, for various purposes.

Wow calm down... do the math

[Jahz]

This thread has a level of trolling rarely seen. Way beyond the normal fanboy vs anti-fanboy crap. The iPhone is at least "good." Admit that and then criticize and nitpick if you want. Starting arguments by calling it a worthless piece of crap just shows people that you're a very angry troll and that your post is safe to skip. I have an iPhone... my sister doesn't want an iPhone but wants (for some reason) a smart phone. She said it was too hard to use. I gave it to her last weekend to play with and she figured out *almost* everything on her own. She still doesn't want one, but since we need to get her a phone regardless, I did the math for her:

We're AT&T customers. She needs more text messages than 200 (around 400 would work). She also needs data.

Including AT&T new customer / upgrade discounts, mail-in rebates, etc, the prices for the phones are:
BlackBerry Pearl: $99.99
BlackBerry 8700: $200
Treo 750: $249
BlackBerry 8800: $300
iPhone 8GB: $399

iPhone is the most expensive choice, right? Not so fast. Add in the annual data and text message charges, you get:

All blackberry models:
Monthly:
BB Internet Service Plan: $29.99
200 text/unlim M2M: $9.99

Annually:
Text: $119.88 (200+unlim/mo)
Data: $359.88
TOTAL: $479.76/yr

Treo 750:
Monthly:
PDA Personal Plan MAX: $39.99 (inc 1500 text & web)

Annually:
Data/Text: $479.88
TOTAL: $479.88 /yr

iPhone 8GB
Monthly:
200 text: free
200 more texts: $4.99
Data: $20

Annually:
Text: $71.88
Data: $240
TOTAL: $299.88 /yr

Now multiply out the first year of costs, including phone purchase price, data and text:
BB Pearl: $579.75
BB 8700c: $679.76
iPhone: $698.88
Treo 750: $728.88
BB 8800: $779.76

Wow! Surprise, after the 1 year basic costs necessary to use the internet with your smart phone, iPhone is just average cost! But wait, contract length for some of these is 2 years. Even if it weren't, who spends $250 or $300 on a phone that they'll only use for a year? So lets add another year to the cost analysis:

Two-year cost of phones, including purchase price, monthly data, monthly text:
iPhone: $998.76
BB Pearl: $1059.51
BB 8700c: $1159.52
Treo 750: $1208.76
BB 8800: $1259.52

Oh wow! Looks like in the long run, the iPhone is cheaper than other popular comparable options! If you don't text at all, you can remove the text message options, but it doesn't make a difference in the ordering.

STOP THE BITCHING ABOUT HOW EXPENSIVE IT IS!!
iPhone has high UP-FRONT cost, but reasonable and sometimes even CHEAP long-term costs because of it's inclusive plan!