Apple has achieved a very clever balance of zealous early adopters willing to pay anything (and go through anything) to be among the first to get their hands on Apple’s stuff – witness the iPhone craze – AND they’ve figured out how to get the late majority to lust after their products as well. That is amazing and rare.
One of my earlier posts was on the desire to fit in. People who buy iPods fit in. They are part of the in crowd, the so called iPod generation. People who buy iPhones stand out. And both like it like that. Chapter 1 and Chapter 3 in my eBook discusses how Apple has made this happen.
P.S. some people don’t want to do either…they are closet iPod users.
BTW, my eBook is only 8 pages long so it’s worth the read and won’t take much of your time – perhaps I should have called it an ePamphlet.
Stand out, fit in? People that are zealous about apple are for a very particular reason! The same reason they drive around V’dubs & drink starbucks! It is called QUALITY! We drive the cars with the best performance, drink the coffee that tastes the best, and yes yes yes, we EXCLUSIVELY use the best operating system on the planet and we MOCK every late adapter, we MOCK the masses as they slowly wake up and say, “boy, this is a good product” – We’ve known it since The apple II – As apple has grown, so has our self awareness – the awareness that things can be simple, things can be unique, and most imporantly, they can look AWESOME too! How is the iPhone you ask? Well… I say AMAZING but just don’t ask me to touch it unless we’re friends. Hype Hype Hype, the world will wake one day and Microsoft will be gone. Thank you apple for sticking with the masses though they don’t deserve your genius.
Zeus, good comments. Yes quality drives Apple. You can’t get people excited about your product if it doesn’t reek of quality from the moment you open the package to you buy your next model. Take one look at the quality of the entire experience Apple offers – from the Apple store to the website to the product itself. It, like Starbucks (good analogy, Zeus), understands that it is selling a premium product and certain people will pay for – and demand – high quality. Read Steve’s apology note and pay careful attention to the last paragraph…that says it all.
I just discovered your site and decided to drop my two cents in. I and everyone else who bought the phone, felt the price was fair at $599 and knew that eventually, either the prices would drop or that future phones would have better specs for the same price. The price drop did come awfully quick in terms of technology, but that leads me to the next point. I believe this was the plan all along, from price drop to store credit. Looking at it pragmatically, it makes perfect sense. Analysts have said that Apple sold 1 out of every 50 phones sold last month. Their goal had been to gain just 1% of the overall market share of cell phones but they were tracking at 2% based on recent numbers. So why the price drop now?
Lets say you are a company with brand loyalty wanting to get into a new, but well-established market. You release your product at a premium after hyping it and creating a serious buzz around it, knowing that many of your brand loyalists will buy. You price it at a premium, so if the sales are weak, you can boost them with a price reduction and not lose any money. If the sales are strong, the buzz will eventually die down and will need to be reinvigorated to regain interest for the holidays. Either way, a smaller audience will buy the product, but they serve as a second tier testing group, bringing to light any issues that might have been unforeseen with the phone in actual use, without ruining the market wth millions of disgruntled owners. The cost not only controls the volume sold, but it also offsets any potential disaster if sales were horrendous.
The phone was doing well, but the buzz was dying down as expected, plus, Apple was releasing new iPods this month, which could also dampen iPhone holiday sales (one of the new iPods is essentially the iPhone without the phone or email capability). The buzz would need to be reintroduced. The price drop makes news and in turn regenerates the buzz. People who were on the fence because of price, would be more likely to buy (while smirking at the original buyers). People who had forgotten about the phone, would be reminded and enticed with a lower price. Even stories of disgruntled early adopters made news and buzz (no such thing as bad PR). Lastly. Jobs gets to look like a great guy by waiting 2 days, then stating that he has heard the customer outrage and feels Apple should do a better job in taking care of its early adopters. He then gives those customers $100… in store credit. Apple loses nothing as that money will be spent at Apple. They get even more PR mileage for the iPhone, and they look, on the surface, to be a fast reacting company that listens to its customers and cares. Oh, and we are all talking about the iPhone again.
I am not trying to be an apologist for them, this just seems to make good business sense to me. It is a radical and risky move, but those are the moves that generally work the best. Like I said, I was happy with the phone at the original price. I am even happier that I am getting $100 in credit, so I don’t feel cheated. I wasn’t out anything more than before the price drop and I get a freebie to boot. Why not $200? Apple’s fiscal year ends in August. Profit from large margins this year, profit from volume sold next year. They’ll easily have 2% of the cell phone market by the end of next year.
Napoleon,
Great minds think alike. Bob Cringely agrees – thinks this whole act was scripted: http://www.pbs.org/cringely/pulpit/2007/pulpit_20070906_002891.html
I don’t think it worked exactly that way (read my comments in an earlier post) but just another example of the magnetic pull of Steve Jobs over the media.