Apple (AAPL) CEO Steve Jobs must have spent his morning speed-reading a lot of e-mail. Jobs said today that, after reading hundreds of angry missives from iPhone customers who bought the device for $500 or $600 before he slashed the price to $400 yesterday, he has decided to give them all a $100 credit at the Apple Store.
While the move will pacify many of Apple’s loyal customers, some others will point out that the credit will bring iPhone buyers into Apple’s stores to spend more money – which isn’t exactly as convenient as offering customers a rebate check. By offering a store credit, Apple stands to benefit if, for instance, a customer decides to buy a new iPod nano, or a new Mac.
It was becoming clear that this was a move Apple needed to make. After yesterday’s presentation in San Francisco, I was chatting near the stage with Natalie Kerris, who handled public relations for the iPod and iPhone lines. She asked me what I thought of the announcements, and I told her that I suspected Apple would have to deal with quite a few angry iPhone owners. Kerris said that there had been quite a bit of debate at Apple about how to handle the price cut – so I bet the company was already poised to offer this store credit as a backup move, just in case things got ugly.
Jobs’s open letter comes barely 24 hours after his presentation, and at least one competitor was already beginning to capitalize on the company’s customer service gaffe. Nokia (NOK) had begun running Google ads that tempt iPhone owners to defect to its Mosh social network.
Apple will also face pressure later this year in the phone space. Motorola’s (MOT) RAZR2 is launching on all the major carriers, including Verizon Wireless (VZ), AT&T (T), Sprint (S) and T-Mobile (DT). And Research in Motion’s (RIMM) BlackBerry continues to do well among business users.
Below, the text of Steve Jobs’s letter.
PHOTO GALLERIES: NEW IPODS TAKE ON THESE RIVALS
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| THE NEW Check out the fresh nanos | NOKIA (NOK) Trying to take on the iPhone | SANDISK (SNDK) shuffle’s nemesis? | SONY (SNE) Return of the Walkman |
To all iPhone customers:
I have
received hundreds of emails from iPhone customers who are upset about
Apple dropping the price of iPhone by $200 two months after it went on
sale. After reading every one of these emails, I have some observations
and conclusions.First, I am sure that we are making the
correct decision to lower the price of the 8GB iPhone from $599 to
$399, and that now is the right time to do it. IPhone is a breakthrough
product, and we have the chance to ‘go for it’ this holiday season.
IPhone is so far ahead of the competition, and now it will be
affordable by even more customers. It benefits both Apple and every
iPhone user to get as many new customers as possible in the iPhone
‘tent’. We strongly believe the $399 price will help us do just that
this holiday season.Second, being in technology for 30+
years I can attest to the fact that the technology road is bumpy. There
is always change and improvement, and there is always someone who
bought a product before a particular cutoff date and misses the new
price or the new operating system or the new whatever. This is life in
the technology lane. If you always wait for the next price cut or to
buy the new improved model, you’ll never buy any technology product
because there is always something better and less expensive on the
horizon. The good news is that if you buy products from companies that
support them well, like Apple tries to do, you will receive years of
useful and satisfying service from them even as newer models are
introduced.Third, even though we are making the right
decision to lower the price of iPhone, and even though the technology
road is bumpy, we need to do a better job taking care of our early
iPhone customers as we aggressively go after new ones with a lower
price. Our early customers trusted us, and we must live up to that
trust with our actions in moments like these.Therefore,
we have decided to offer every iPhone customer who purchased an iPhone
from either Apple or AT&T, and who is not receiving a rebate or any
other consideration, a $100 store credit towards the purchase of any
product at an Apple Retail Store or the Apple Online Store. Details are
still being worked out and will be posted on Apple’s website next week.
Stay tuned.We want to do the right thing for our valued
iPhone customers. We apologize for disappointing some of you, and we
are doing our best to live up to your high expectations of Apple.Steve Jobs
Apple CEO
