Apple's (AAPL) iPhone Refund Confirms: Sales Below Plan

From Silicon Alley Insider: Whining works! Thanks to "hundreds of emails" complaining that Apple slashed the price of its high-end iPhone by $200 just two months after its launch, the company will offer early adopters (who paid up to $600 for a phone now priced at $400) a $100 store credit to make up for some of the difference. A more sincere apology wouldn't require iPhone buyers to spend their refund with Apple, but, as Jobs told USA Today, "well, that's what happens in technology."

In an open letter to consumers today, Jobs is a little more contrite. He describes the "technology road" as "bumpy," and apologizes for "disappointing some of you." Then he insists that cutting the price was correct.

The real issue isn't Jobs' PR-foul up -- a rarity for a man blessed with astonishing showmanship. The bigger issue is Jobs' obvious misjudgment of the market for a flagship product. This is a 33% price cut in 2 months -- rare for any consumer electronics manufacturer, let alone savvy Apple -- followed up by a reactive apology and partial refund. This price cut clearly wasn't planned. Meaning iPhone sales are missing Apple's internal targets. Bumpy, indeed.

See Also: iPhone: Flaky Device Overrated, Expectations Out of Hand, Analyst: iPhone Price Cut Is Good News, and Apple Snubs AT&T, Hoses Early iPhone Buyers

Comments

[Bjorn Tipling]

Well, Bits, the nytimes blog had a different take. It suggested the lower price drop could mean great sales, which led to Apple having reached a point where it could lower prices which would be ideal given that more people would be willing to buy the product at a lower price getting a platform in more people's pockets from which Apple could build a lucrative profit center.

[p. lee]

A friend of mine has been waiting for the price drop to buy the iphone. While one anecdote would hardly make any inroads in the iphone market, I don't think it would be unbelievable if sales do surge. A $300 smart phone is reasonable and competitively priced. (Disclosure: Not a shareholder or AAPL fan.)