September 06, 2007[Full disclosure: I have been an Apple Macintosh user since the late eighties and I bought an Apple iPhone the day it was released.]
For those of you who know me or for those of you who read hypocritical, you realize there is an evil, evil marketer buried within me. One with whom I have to battle. One I have to keep at bay.
I'm a Darth Vader in the making, if you will. Even if you won't.
So when I see the whole Apple iPhone price-drop-rebate thing? The evil marketer cackles with morbid cacophony.
It's the same kind of cackle that erupts when people say things like "How did Prince get to play the Superbowl halftime show?"
And then, it changes into a sad, sad headshake. Pawns we are. All of us, pawns. P0wned.
Oh, I'm sorry. What Apple iPhone thing?
Well, in case you didn't hear, Apple recently cut the price of the iPhone by $200. And then, all of the early adopters whined. And then Steve Jobs became Mr. Magnanimous and gave us all $100.
Wow. What a heartwarming story.
If only it hadn't been planned from the beginning.
Here's my hypothesis about what really happened:
The Apple rebate? It's all marketing, people. Marketing.
And I'm willing to bet the price-reduction-rebate tango has been part of the product launch plan since day 1. Or at least day 2.
Apple wanted... nay needed to hit a certain number for the financial community. That number was based on the "new" price of the iPhone ($399). That number was not based on the "original" price of the iPhone ($599).
The original price provided Apple with a good deal of float. So that, if they could sell more than they expected, it was all gravy.
They were pocketing $200 above and beyond the required price of the product.
Because most of us iPhone buyers? We were going to buy it anyway. Price be damned.
But not everyone is as rabid as we.
They were planning to drop the price all along. And they knew people would squawk.
They have to drop the price to make it through the holiday season. No one is going to shell out those kind of funds for gifts. It had to be done. Well, Apple users will. But the general AT&T customer?
So, I guess the point, more correctly, is that Apple didn't need to drop the price. AT&T did.
So, to get more folks, they have to make it appear that they have "substantially lowered the price" of the iPhone.
Mind you, Apple is just moving the iPhone price to the required price now. (And I'm not even going to mention how the new iPod Touch has bolstered Apple's buying and production power, allowing them to make the iPhone at an even cheaper price than they could previously. Let's just ignore that thread for now.)
But they still have $200 extra for every iPhone that has been sold.
So now, as if by script, Steve Jobs comes out and says he's going to give us early adopters a $100 rebate.
They dropped the price, waited patiently for the public outcry that they knew would come, and then provided the gift that they had always planned to give.
Winning hearts and friends.
$200 - $100 = Apple is still $100 up.
What's more? That $100 rebate is a store credit. It's not cash folks. It's a gift certificate.
You know what happens if you don't use a gift certificate, right? The company gets to realize that revenue after a set amount of time.
And if we do use the gift certificate? They get that revenue back and move more product.
And they're still $100 up.
Genius. Marketing genius. Evil, but genius.
Apple iPhone rebate: A hypothesis
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