The $600 Apple Tax (UPDATED: now only $300 for me)

You think you got it bad cause the iPhone dropped in price by $200? My family has bought three of them so far. Well, four, if you include Patrick’s mom, who just bought one a week ago. She’ll be able to get her $200 back, but the rest of us have paid an early-adopter-tax of $600.

My first response? This is nothing new.

I remember when Steve Wozniak showed me his new die-sublimation printer back in 1990. It cost him $40,000. Today a $70 printer does a better job.

This “reduce the pricing” trend is one of the reasons I LOVE this industry.

Seagate, today, just brought out new hard drives. More capacity. More features. Lower price.

Am I bummed that I spent $2,000 on my first 20 megabyte hard drive when today a $400 model is a terabyte? No. I’m happy!

I celebrate anytime our industry drops prices. It brings more people into what we’re doing.

That said, Terrence Russell in Wired talks about the four mistakes Apple made with the price drop. He makes some good points.

But, I’m cool with paying a high price to be first. I’ll be first in line for the next great innovation too.

I guess I should complain that my $4,000 HDTV now costs about $2,000 after a year and a half. Or that our new cars are only worth half what we paid for them. Or that gas prices are going up (I wish THAT industry worked the same way that the tech industry worked).

Actually, if I had something to be unhappy about it’d match the questions that PodCasting News asked of Apple.

UDPATE: Apple, er, Steve Jobs, just announced that we’ll get a $100 gift certificate for each iPhone purchased before the price drop. That’s awesome.

80 thoughts on “The $600 Apple Tax (UPDATED: now only $300 for me)

  1. I love that the Apple fan kids think they are getting some sort of ‘rebate’ when they have to use that 100 dollar ‘gift’ certificate at the Apple store.

    That is some kind of scam Jobs is running there … LOL…!

  2. I love that the Apple fan kids think they are getting some sort of ‘rebate’ when they have to use that 100 dollar ‘gift’ certificate at the Apple store.

    That is some kind of scam Jobs is running there … LOL…!

  3. I’ll bet most of the complainers are the exact same one’s that in the same sense happily took a bigger whack (comparatively) in the time spent to buy one. why would anyone spend 24 hours in line to buy a product that in 1 days time could be bought immediately!! Where is the wailing about the cost of time spent in line? Should Apple rebate those moron’s who spent hours in line??

  4. I’ll bet most of the complainers are the exact same one’s that in the same sense happily took a bigger whack (comparatively) in the time spent to buy one. why would anyone spend 24 hours in line to buy a product that in 1 days time could be bought immediately!! Where is the wailing about the cost of time spent in line? Should Apple rebate those moron’s who spent hours in line??

  5. The problem isn’t that early adopters pay more. The problem is that the iPhone was overpriced (by a significant margin) to begin with. At $600, I laugh at anyone I see carrying one. At $400, I may still laugh, but at least that gets almost into the realm of being reasonable.

    I have a PPC-6700 (HTC Apache) that I got over a year ago. I paid about $150 for it. It’s a far superior product to the iPhone in almost very way. The iPhone only has two things going for it that my Apache lacks, the iPhone UI, and an 8 GB card for multimedia. My Apache does have a miniSD slot, but the max it can handle is 2 GB.

    Other than those two things, there’s really no comparison between the two devices. The Apache wins in every single case (internet speed, add-on software, e-mail sync, e-mail in general). So, why would anyone pay 4X (or even 3X) for the iPhone?

    Only because they think having one makes them look cool. In fact, having one makes them look dumb.

  6. The problem isn’t that early adopters pay more. The problem is that the iPhone was overpriced (by a significant margin) to begin with. At $600, I laugh at anyone I see carrying one. At $400, I may still laugh, but at least that gets almost into the realm of being reasonable.

    I have a PPC-6700 (HTC Apache) that I got over a year ago. I paid about $150 for it. It’s a far superior product to the iPhone in almost very way. The iPhone only has two things going for it that my Apache lacks, the iPhone UI, and an 8 GB card for multimedia. My Apache does have a miniSD slot, but the max it can handle is 2 GB.

    Other than those two things, there’s really no comparison between the two devices. The Apache wins in every single case (internet speed, add-on software, e-mail sync, e-mail in general). So, why would anyone pay 4X (or even 3X) for the iPhone?

    Only because they think having one makes them look cool. In fact, having one makes them look dumb.

  7. Agree with everyone else on the fact we are talking 2 months (with nothing new about it) vs multiple years.

    I’m starting to think you post this kinda stuff just so people comment and correct you

    Where’d the smart scoble go?

  8. Agree with everyone else on the fact we are talking 2 months (with nothing new about it) vs multiple years.

    I’m starting to think you post this kinda stuff just so people comment and correct you

    Where’d the smart scoble go?

  9. Mr. Scoble, with all due respect, not a single one of your examples is applicable to the iPhone price cut situation. You could not buy your same model HDTV 60 days later at half the price. Moreover, all your examples, (except your car an gas example which have no relevance whatsoever) involve a better product being produced at a cheaper price. What is new and better about the iPhone 60+ days later that justifies the lowering of the price?

  10. Mr. Scoble, with all due respect, not a single one of your examples is applicable to the iPhone price cut situation. You could not buy your same model HDTV 60 days later at half the price. Moreover, all your examples, (except your car an gas example which have no relevance whatsoever) involve a better product being produced at a cheaper price. What is new and better about the iPhone 60+ days later that justifies the lowering of the price?

  11. Unprecedented sales volume = increased economies of scale. Apple’s cutting the price now because they can afford to.

  12. Unprecedented sales volume = increased economies of scale. Apple’s cutting the price now because they can afford to.

  13. “I do not see any natural reason for the price to come down by $200. DO touch-screens become cheaper or the memory of the battery?”

    Actually, I do. How about economies of scale? The iPhone orders that Apple has been placing are probably large enough that they can afford to drop the price without completely sacrificing the profit margins. However, the iPhone is only a drop in the bucket. The product that really lowers the price of the iPhone is the new iPod Touch. No doubt, Apple has ordered massive numbers of these. And I can only imagine that these likely share the same battery,memeory,screen and chassis as the iPhone. And I have a feeling that Apple is going to sell five times the number of these units compared to the iPhone. They are perfectly complementary products, neither cannibalizing the sales of the other (another reason for the price drop, so that the products are priced at smaller ascending increments for more features), yet with such a large number of common parts, it allows the iPhone to become cheaper through economies of scale. This is absolutely brilliant!

  14. “I do not see any natural reason for the price to come down by $200. DO touch-screens become cheaper or the memory of the battery?”

    Actually, I do. How about economies of scale? The iPhone orders that Apple has been placing are probably large enough that they can afford to drop the price without completely sacrificing the profit margins. However, the iPhone is only a drop in the bucket. The product that really lowers the price of the iPhone is the new iPod Touch. No doubt, Apple has ordered massive numbers of these. And I can only imagine that these likely share the same battery,memeory,screen and chassis as the iPhone. And I have a feeling that Apple is going to sell five times the number of these units compared to the iPhone. They are perfectly complementary products, neither cannibalizing the sales of the other (another reason for the price drop, so that the products are priced at smaller ascending increments for more features), yet with such a large number of common parts, it allows the iPhone to become cheaper through economies of scale. This is absolutely brilliant!

  15. “I do not see $200 price drop. I see that Apple either did an error in estimating the size of the market at $600 price point or they purposely decided to take advantage of early adopter”

    They are rubbing salt in NBC’s wounds. When you are sipping your latte in Starbucks watching videos, guess what you WON’T be watching– NBC/Universal c**p.

  16. “I do not see $200 price drop. I see that Apple either did an error in estimating the size of the market at $600 price point or they purposely decided to take advantage of early adopter”

    They are rubbing salt in NBC’s wounds. When you are sipping your latte in Starbucks watching videos, guess what you WON’T be watching– NBC/Universal c**p.

  17. What *everyone* seems to be missing is that this $100 rebate by Jobs is an absolutely inspired move against his competitors.

    Is Dell now going to have to respond whenever its fanbase feel they got miffed by a price-drop? HP? IBM? Apple handed out $100 value, which it knew would be spent in its own store – they effectively bundled content in with the iPod. How on earth will Dell match that?

    The playing field is definitely leaning in Apples direction after this move…

  18. What *everyone* seems to be missing is that this $100 rebate by Jobs is an absolutely inspired move against his competitors.

    Is Dell now going to have to respond whenever its fanbase feel they got miffed by a price-drop? HP? IBM? Apple handed out $100 value, which it knew would be spent in its own store – they effectively bundled content in with the iPod. How on earth will Dell match that?

    The playing field is definitely leaning in Apples direction after this move…

  19. Think everyone’s upset now? Wait til the 3G iPhone is announced later this month in Europe, and goes on sale the day after Thanksgiving in the US.

    Then I’ll be able to buy a first-generation iPhone for $100 from the sucker early adopters! Go me!

  20. Robert, I do not think it is an early adoption tax. Usually I am okay with the decreasing price of consumer electronics because I know that the manufacturing costs fall down over time. In iPhone case, I do not see any natural reason for the price to come down by $200. DO touch-screens become cheaper or the memory of the battery?

    I do not see $200 price drop. I see that Apple either did an error in estimating the size of the market at $600 price point or they purposely decided to take advantage of early adopters – a loyal fan base. If it is the former case, then they should be able to correct the error for exiting buyers too not only for the new ones. It is easy to show a $200 credit on ATT bills. If it is the latter case, then Apple’s fan base is justified in feeling angry with Apple.

    Yes, I accept my analysis wrong if the manufacturing cost actually fell (for an example, Apple could claim they got bigger than expected economies of scales).

  21. Think everyone’s upset now? Wait til the 3G iPhone is announced later this month in Europe, and goes on sale the day after Thanksgiving in the US.

    Then I’ll be able to buy a first-generation iPhone for $100 from the sucker early adopters! Go me!

  22. Robert, I do not think it is an early adoption tax. Usually I am okay with the decreasing price of consumer electronics because I know that the manufacturing costs fall down over time. In iPhone case, I do not see any natural reason for the price to come down by $200. DO touch-screens become cheaper or the memory of the battery?

    I do not see $200 price drop. I see that Apple either did an error in estimating the size of the market at $600 price point or they purposely decided to take advantage of early adopters – a loyal fan base. If it is the former case, then they should be able to correct the error for exiting buyers too not only for the new ones. It is easy to show a $200 credit on ATT bills. If it is the latter case, then Apple’s fan base is justified in feeling angry with Apple.

    Yes, I accept my analysis wrong if the manufacturing cost actually fell (for an example, Apple could claim they got bigger than expected economies of scales).

Comments are closed.