Tyler Cowen takes the iPhone early adopters to task:
It is you people, you who resent Coase (1972), you people who induce wage and price stickiness and widen the Okun gap. You people, who don't know what it means to sit back and enjoy your consumer surplus. You beasts!
And to think you are all carrying around these wonderful icons of modernity in your pockets...
AAARRRGGGHH!
(I thank a loyal MR reader for the pointer. Please note this post was published from my iPhone.)
As an occasional early adopter myself, I suspect that the first emotion that the iPhone buyers felt was not anger at Apple, but anger at themselves for having such insistent preferences. The regret that youare a moron, however, is much harder to bear than the regret that Apple has turned out to be evil.
Simple question: Won't this ultimately bite Apple in the ass? When Apple's next hot product comes out, won't a lot of folks wait for the price cut instead of buying right away?
I've been so scarred by the Apple wars on the Intertron before that I always end up weighing in. But one of the things that I truly do not understand about Applephiles is their tendency to speak and act as though Apple is not an enormous multinational corporation that exists and operates (as all corporations do) solely for its profit motives. What do you expect? If Apple can make money screwing people they will. The fact that they play at being a part of counter-culture (which is the product, of course, of public relations firms, data-analysis, focus groups and every other marketing tool available) doesn't somehow make them benevolent agents, trying to bestow virtue to people through the things they sell. Apple is in business, and beyond their ability to generate profit through you, they don't care about you. They don't. People are simply deluding themselves.
I just think it's one of the pitfalls when you make purchasing commodities a surrogate for personality or ideals. I have said again and again that people who like Apple products should buy them and use them happily. But the ideological baggage they tend to carry is just ignorant and unthinking.
Surely, the $200 was worth it for all of the preening and self-congratulations that the many early adopters exhibited (which I admittedly fed into by oohing and aahing every display of the iPhone).
Also, how does this make Apple evil? Isn't this classic market segmentation?
"The fact that they play at being a part of counter-culture (which is the product, of course, of public relations firms, data-analysis, focus groups and every other marketing tool available)..."
I don't own a single Apple product or any Apple stock, so I could care less, but this is plainly false. Apple isn't just "playing" here: its roots go back to the counter-culture of 1970's computer geek hippies. Steve Jobs didn't backpack around India in the 70's because a focus group told him to.
"Simple question: Won't this ultimately bite Apple in the ass? When Apple's next hot product comes out, won't a lot of folks wait for the price cut instead of buying right away? "-Posted by Fred
Ah, but that will be an opportunity for extra distinguishment. People who snap up the next Apple glitzware will be even more elite for having bought something new despite knowing full well that a better and cheaper version will soon be available. Therefore there will be even more of them.
If they have sold 800,000 iPhones then giving everyone their money back would only cost $160,000,000 not that big a deal for Apple. Since they are already giving everyone $100 back - it would only cost them $80,000,000. For 80,000,000 they get to say we love you we're sorry here is your money back - enjoy the phone.
It doesn't make any sense.
Freddie - some people start companies to make money, others start them to do great and interesting things. Often the profits flow from that desire to do great things.
Take GM and Toyota. GM tried to make more money by building crappier and crappier cars hoping the public wouldn't notice. Toyota focused on building the best cars it could and their profits and dominance have flowed from that.
I would assume you think that Toyota and GM have the same desire to make money....?
. Apple isn't just "playing" here: its roots go back to the counter-culture of 1970's computer geek hippies. Steve Jobs didn't backpack around India in the 70's because a focus group told him to.
That's entirely the problem. You're ascribing an ideology to a corporate culture based on the experiences of a single leader in a corporation. Do you really think that those feints at being counter-culture can overwhelm the enormous weight of corporate norms and behavior? This is a classic example of over-valuing the symbolic and ignoring the tangible. Apple is in the business of making money. Pretending that they offer an alternative to the norm is a strategy that helps them make money. But if they had to choose between actually pursuing the ideals that they supposedly embody and making a higher profit, do you honestly think that Apple, a publicly traded company with a board and share-holders to answer to, is going to choose the former?
Take GM and Toyota. GM tried to make more money by building crappier and crappier cars hoping the public wouldn't notice. Toyota focused on building the best cars it could and their profits and dominance have flowed from that.
Surely you recognize a difference between saying "Company X is dedicated to producing the best product possible" and saying "Company X is a benevolent organization whose products represent individualism and beauty, while their competitor Company Y is an evil organization intent on spreading their wares through fraud and malfeasance."
Freddie wrote: as though Apple is not an enormous multinational corporation that exists and operates (as all corporations do) solely for its profit motives. What do you expect? If Apple can make money screwing people they will.
This seems to be the standard 'truism' that everybody spits out when it comes time to criticize corporations, and it's true as far is it goes (which is to say, corporations exist to make money), but used in this fashion it reeks of parachute journalism. The profit motive does not mean that all corporations are monolithic blocks with the same methods and personality stamped across each; to claim such is to substitute lazy rhetoric for an actual, fact-based analysis of what is going on in the market right now.
Yes, you can make a quick buck by screwing people. But you can't establish long term trust relationships (and thereby make a long-term buck) in this fashion, which for a company like Apple is effectively death -- the bulk of their sales are in consumer electronics and education. Their continued success depends on maintaining that trust relationship, and for the most part, they've succeeded both times that Steve Jobs was at the helm.
It's a pretty typical thing that when a successful company has its founder or a founding member in the hotseat, it tends to (1) do very well for itself and (2) carry a lot of his or her personality traits in its business methods. Notable examples that come to mind are Apple, Google, Microsoft, HP while Hewlett and Packard were still running the shop, and AMD prior to Jerry Sanders III's retirement.
Freddie: I've worked with companies that were started by engineers so they could do cool, geeky, engineering stuff. The money was TOTALLY secondary.
"But if they had to choose between actually pursuing the ideals that they supposedly embody and making a higher profit, do you honestly think that Apple, a publicly traded company with a board and share-holders to answer to, is going to choose the former?"
I've seen companies go under because the executives were so focused on impressing each other with their geek cred that they couldn't be bothered to build a product their customers wanted. When faced with focusing on a product their customers wanted or pursuing thier own pet projects... all I can say is the executives let the company go under.
Have you ever worked in corporate america, Freddie?
Jmo - Actually, Apple is giving $100 credits toward new purchases of Apple products, so you'll have make another Apple purchase to get your $100 "back". Not at all the same as giving every one $100 back.
Hmm, kool-aid. Tastes like apple.
Have you ever worked in corporate america, Freddie?
Never.
Look, I'll concede that it's possible for a corporation to perhaps operate in a way that isn't purely driven by the profit motive. But here's the thing. People who believe that Apple is this virtuous organization have to demonstrate how, precisely, they are. What corporate policies or behaviors does Apple follow that distinguish themselves from their competitors? Do those policies actually work to make Apple a more responsible, ethical or moral company? How well do those policies elide with the perception of Apple by Apple lovers? I think those are fair questions. I guess I'm just responding to the outsized rhetoric of a lot of the people who insist on making the kind of computer one uses into a question of individualism, or even morality.
"I would assume you think that Toyota and GM have the same desire to make money....?"
They may have had the same desire, but they were faced with very different circumstances. After WWII, US industries such as steel and automakers led the world, with virtually no competition, and they got soft. Japan had to struggle. More importantly, Japan had to change its reputation in order to export, especially to the US.
If Toyota had been selling the same garbage that GM sold in the 1970s and 1980s, no one in the US would have bought it. They had to be better in order to capture market share.
So, both companies may have been maximizing profits at the time, given their constraints. Of course I think there's an effect on corporate culture that can have lasting effects, for Toyota, GM or Apple. But when the circumstances and incentives change, the culture is likely to gradually change as well.
Freddie: I can give you this example: When designing the first MAC OS - Steve Jobs insisted they get the boot time down. He figured that if they could shave 10 seconds off the boot time x the millions of macs they would sell x the millions of times the users would boot up their machines = they were saving not just man-hours but man lifetimes.
I work in the software industry and can relate countless incidence where developers, to save themselves a few hours of work, have designed a solution that requires multiple extra steps. To save himself 6 hours, he's consigned all the end users to waste countless thousands of hours performing these extra steps.
I've worked for serveral different companies ranging in size from huge to medium-sized (10,000+ employees to a few hundred). They all ultimately are trying to make money. However, everyone in the company was aware that you can't maximize the profit of every transaction. You lose money on one transaction to make more on another. Also, the decisions are made by people (and worse, often by groups of people) and so boneheaded decisions are sometimes made.
This whole iPhone pricing thing is probably a blunder more than anything else. It's possibly even a series of blunders.
EI
I really don't understand the mentality of first adopters. Why drop so much money one something that will inevitably get better and cheaper in future iterations?
I know personally of one guy who drove two states away to buy the iPhone on its day of release. He's a classic example of this behavior. He spends most of his income on gadgets, toys, cars, computer stuff, and video games. But he can't seem to scrape enough money together to pay his child support. Funny how that works.
"the people who insist on making the kind of computer one uses into a question of individualism, or even morality"
who does that? I've been buying and using macs and wintel and I've never heard that. most of us use technology that works and if it doesn't we use something else. apple makes a great music player like sony makes a great tv. early adoping means 'I can't wait!' and nothing more.
read this
Steve Jobs, Puppet Master
http://www.pbs.org/cringely/pulpit/2007/pulpit_20070906_002891.html
who does that? I've been buying and using macs and wintel and I've never heard that.
Many, many people.
This comment deleted for rampant trolling
This comment has been deleted for rampant trolling. Its author is in danger of having the IP address of his bridge banned
anony-mouse - "Yes, you can make a quick buck by screwing people."
Are you assuming that Apple's starting with a higher price and then lowering it really is screwing people? I don't agree.