All Articles in Editorial

figures 1 and 2: On the left, Pete Blackshaw. On the right, Mike Mace.

I’m really sorry. I swore that some other article was the last thing I’d write on the price drop, but these both showed up, and I just have to highlight it.

Point: No one Cuts Prices after 2 Months

First off, Mike Mace at Mobile Opportunity has the following tidbit to say:

“no one I know in the tech industry — and I mean no one — cuts the price of a consumer tech product two months after launch unless they’re seriously worried about demand. [...] If current iPhone sales are okay, the only other reason I can think of to cut prices this soon would be if you’re worried about a competitive situation.”

Counterpoint: Oh Yes He Did

On the other side, we have Pete over at Consumer Generated Media. Pete thinks that the letter itself is a PR coup, and that the letter is going to be put in PR textbooks throughout the world.

“While Menu Foods practically hid their CEO during the pet recall issue, Mattel put their CEO, Bob Eckert, on the website video airwaves to nurture trust and confidence in the wake of the toy recall (a still-in-progress case study). Now we have Steve Jobs, who just wrote and posted the most remarkable letter in response to concerns about iPhone’s recent price decrease. He coupled an apology with a $100 Apple credit for all early-buyers of the iPhone. This is classic Defensive Branding. I predict it will be one of the most discussed, debated, and linked-to letters of the year“

Pete more or less dissects the letter sentence by sentence, picking out all sorts of PR thingies that do PR stuff. There’s a ten-point analysis of the entire letter that explains the hows and whys of the language in the letter and its effect on a consumer…

Anyway, so Mike Mace thinks that the price cut is unpossible, unfathomable, you just don’t do price cuts after two months. Pete of CGM adroitly notes that Steve just did exactly that, and explains how from the PR side. Neither gets in to why a price cut was done (Well, Mike Mace does postulate that some new Nokia smartphones could give Apple a headache, but I don’t buy that.) You’ll have to listen to our podcast for the full discussion, but Dieter and I both agree that a glove has been thrown down. Apple wants to own the smartphone industry.

Mark Rasch, a law-talkin’ guy, analyzed the iPhone contract in depth (print). For anyone worried about the legal consequences of modifying their iPhone, this could be worth a read. For the record, I’m not a law-talkin’ guy, and so what I’m about to say isn’t law-talkin’ advice. But I don’t think anyone has to worry about getting in trouble for modding their iPhone one way or another. AT&T and Apple just don’t have the resources to sue everyone involved, and they’re not as regressive as the RIAA — they’ll not stoop to suing individual customers for modding.

Holy smokes! Apple has put a $200 price cut on the 8 GB iPhone, and dropped the 4GB version altogether. That’s right, the 8GB iPhone is now $399. Where do I line up for my $200 check? I’m equal parts filled with rage for paying a $200 early adopter fee, and equal parts filled with glee for a $200 price cut. I’m glad that it makes the iPhone that much more accessible for everyone else. I just feel a little sore when I sit, that’s all.

I have colleagues that believe the price cut is a portent of a hardware refresh. I have a hard time believing Apple would refresh their iPhone hardware so soon after launch, but I should float the idea out as speculation. I believe a 3G version is possible, perhaps in the 1st or 2nd quarter of 2008. The part of me that hopes I’m wrong is the part of me that wants my iPhone to be new forever. Sigh

There’s an iTunes update tonight that will bring Ringtones support. For a select portion of their music catalog (about 500,000 songs altogether, or 8% of the songs available on iTunes), you can make a ringtone if you’ve already purchased the song. All in all, the song to play on the iPod and the song to play as a ringtone is $1.98. Song portion: $.99, same as always. Ringtone: $.99. I think the extra fee is for the ‘public performance’ licensing aspect of ringtones. It will be interesting to see if the iTunes update breaks iToner, iFuntastic, or the indomitable iPhoneRingtoneMaker. Let’s hope not.

The iTunes Wi-Fi Music Store will come to the iPhone in an update later this month. Look for it on a Tuesday afternoon this month, I’d bet. You will be able to purchase any music from the iTunes store and download it via wi-fi. I doubt you will be able to purchase it via EDGE. After all, it’s not the iTunes Wireless Music Store. Why not, though? It’s easier to say, and less cumbersome to type.

The iTunes Wi-Fi Music store will also be available from a bunch of Starbucks in most areas by 2009. The Starbucks in the larger top-ten cities in the US will get the update treatment first, and Starbucks figures they’ll have “most major metro areas” by late 2008. Um, I could rollout a storewide wi-fi network faster than that.

In other iPod news, Steve announced the iPod sister to the iPhone, the iPhone touch (8GB for $299 and 16GB is $399), to be available later this month. It’s slightly smaller, you’ll note from the picture above, and its application functionality has obviously not been totally disclosed. Notably missing from the iPod Touch thus far is a notes app and a maps app…. Hmmm.

The iPod, newly rechristened the iPod Classic, saw updates bringing a new, drastically thinner 80GB version ($249) and a thinner-than-the-previously-thickest 80GB version is the 160 GB version ($349).

The new iPod Nano, regarded by many as an ugly duckling, gets the full iPod treatment. It gains a video-quality screen, and is available in 4GB ($149) and 8GB ($199) versions, and it still works with the Nike+iPod sport kit. As you can see in the picture from Apple’s website above, it’s a little wee thing, absolutely tiny.

Huh. Apple’s iPod lineup looks like a steamroller right now. The Zune, Creative Zen, Sony Walkman line, et al, all look like bumpy roads waiting to be flattened this holiday season.

[via, via, via]

Haha, just kidding, iSuppli. Actually, it was more like… hmmm, what’s $26 million (cost of iPhone development) divided by 270,000 (# of iPhone units sold). Carry the… Hmmm, $96.30! Software as a $7 line item, indeed. And of course, that’s just the software R&D. There’s many other iPhone-related info from Apple’s 10-Q.

Read the rest of this entry »

A lot of the Analysts are trying to figure out why the iPhone did so poorly over the launch weekend, and a lot of sites are trying to figure out why the overall number of phones sold (270,000) is so much lower than, ahem, some analysts predicted. I haven’t seen it covered yet, so here it is: analysts were basing numbers based on the launch weekend, Friday the 29th, Saturday the 30th, and Sunday the 1st. Note that the 1st isn’t in the 3Q results: Apple reported on the first 30 hours of launch. That would be the 29th and 30th. It seems the market already knows it, Apple’s all back up to $143 in pre-market trading now, but it ought to be said.