Apple to offer $100 store credit to iPhone customers
After protests over its decision to cut the price of the iPhone by $200, Apple will give iPhone users a $100 store credit.
Apple CEO Steve Jobs unveils the iPod Touch on Wednesday. It looks like the iPhone, but there's no phone there.
(Credit: Ina Fried/CNET News.com)The company on Thursday posted an open letter from CEO Steve Jobs on its Web site defending the decision to cut the price of the 8GB iPhone from $599 to $399, but acknowledging that Apple shouldn't have treated its early adopters in such a fashion. Jobs had announced the price cut just a day earlier at a San Francisco event at which the company unveiled a refresh of its iPod line, including the new iPod Touch.
"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," Jobs wrote. Details on how to obtain the $100 store credit will be posted on Apple's Web site next week, he said.
An Apple representative said the $100 store credit will not apply to the iTunes Store. The store credit also does not apply to customers who are eligible for a rebate because they bought a $599 iPhone either 10 or 14 calendar days before Wednesday (10 days for online sales, 14 days for retail sales).
In the letter, Jobs echoed comments he made to reporters Wednesday that Apple wants to attract new customers this holiday season with more aggressive pricing. "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," he wrote.
He also pointed out that this can be the way of life in the technology business. "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," Jobs wrote.
Early iPhone adopter letdown
talk about the iPhone price drop.
Apple doesn't often admit mistakes, and the letter was a forthright admission that the company didn't handle the price move correctly. "We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple," Jobs wrote.
How Apple could not have forseen the backlash, I'm not sure. But the move should go a long way to mollify some iPhone customers peeved by the steep drop, although a store credit isn't as good as money in hand. Still, those who were iPhone early adopters likely own a few other Apple products, and will want to update those in the future. Leopard's coming soon, after all.
Some Mac bloggers and users seemed satisfied with Apple's response to the iPhone flap. "I think it's clear that Apple was taken by surprise by the magnitude of the backlash regarding the price cut. They've responded quickly, humbly, and well, to avoid letting this issue spoil the good news from their impressive product releases yesterday," wrote John Gruber on his blog, Daring Fireball. Scott McNulty, on The Unofficial Apple Weblog, wrote "While I still think the reaction to the price reduction was way overblown, this is a great example of Apple listening to their customers and trying to make the situation right."
Others noted that Apple, so dependent on a core group of loyalists to help create buzz for its products, had little choice. "You just don't screw over your most ardent fans...always a bad plan. You may not pay for it intitially, but you will long-term," wrote poster TBaggins on AppleInsider's forums. Samir Bhavnani, an analyst with CurrentAnalysisWest, saw a savvy business move in offering a store credit instead of a refund. "They'll get new traffic to the site and stores, and almost everything costs more than $100 in any case, so customers will be spending even more of their dollars with Apple," he wrote in an e-mail.
But on our own TalkBack section, Jake Kushner, president of JK Media, said that Apple's response doesn't go far enough to satisfy those who bought a 4GB iPhone for $499, only to see the 8GB model become $100 cheaper. "I feel wronged and misled by Apple. Such a quick price reduction indicates that Apple pre-meditated this reduction before the initial release. I read your public response on apple.com to this issue, but I still feel that the solution you are offering is not adequate," Kushner wrote, calling for Apple to offer a free upgrade to a 8GB model to owners of the 4GB iPhone or a $200 rebate.
Some iPhone customers are reporting that they have received at least partial refunds from their local Apple stores. And some AT&T customers have said the same thing, as my colleague Maggie Reardon noted earlier today. It's difficult right now to tell what exactly is going on at individual stores around the country--we're trying to get more details about people who received at least some cash back.
Jobs pointedly did not address in the letter whether iPhone sales were living up to expectations, although he said Wednesday during Apple's iPod event that the company remains on track to hit its stated goal of shipping 1 million iPhones by the end of September.
Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, online advertising, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom. 
complaining about a price cut? Give me a break. If Apple had
introduced a 16GB iPhone at a higher price point, and kept the 8
GB at $399, you wouldn't have had any complaints... but since they
just lowered the price, you do. Lame.
before the end of the year.
Come on -- if you didn't read the fine print going into a contract
with AT&T, don't blame Apple for that. It would be good for
AT&T to come up with a solution -- Apple isn't the carrier here.
This is an issue with any AT&T phone, not just Apple. I don't
know if the other carriers have a similar problem. The US
carriers definitely give an extra screw to US customers. I hear all
the time how in Europe, you only pay for outgoing calls and
folks laugh at the fact we get charged in both directions.
apple's beloved hype is that there may or may not be something
new coming out tomorrow. I've thought about what my response
would be had I bought the day bfore the discount, but really, what
can you do? That's life.
Apple's policy is to refund the difference if there is a price change.
That said, if you bought an 2nd gen nano and want a 3rd gen nano,
that's trickier. But then again, unless you were under a rock, you
probably knew to expect a new crop of iPods for the last week.
Now if we had the option of going to an Apple store and bringing in a selection of Bluetooth handsets, chargers, travel adapters, and cases in exchange for $100 off a new iPhone, THEN we could be comparing things correctly. Somehow I don't think you'd get that sort of deal though.
So on one hand it's good that they recognized their horrible PR move and are willing to do something about it.
On the other hand, offering people half of the amount that was cut, AND doing it through a shady store credit only deal is a bit of an insult.
How many more times can you insult your loyal customer base, I wonder? What sort of excuse can you use? Jobs had one-
"That's technology."
And that's me not buying into your excuse.
Do you also go back to your car dealer and declare they should
now give you that rebate they are offering today for the car you
bought two months back?
This was a good compromise on Steve's part. Bravo to Apple for
listening to the complaints and doing something about it.
Oh, that's right... you don't have one.
Price cuts are the nature of the beast; Apple didn't have to offer anything at all to earlier purchasers (Dell, HP, MSFT, etc certainly don't), but Apple did anyway.
[i]"How many more times can you insult your loyal customer base, I wonder"[/i]
Ask Dell, HP, or any other OEM that does such things with impunity on a very regular basis ;)
/P
Where are the Microsoft complaints?
Oh wait, I remember now ... you only complain about Apple. ;-)
I'm sure Apple is never going to satisfy your need. So go run
your WindowsMobile phone and be off.
As someone who did buy an iPhone at $599, the $200 price
drop stung, but I also realized it was part of being on the
bleeding edge. A $100 store credit makes that much more
bearable.
Yes, I'll buy more Apple stuff.. but I probably would have done
that anyway. iWork, Leopard, Bluetooth headset, and there is lots
more.
bucks of anything Apple? Hey what about 100 songs for your
phone?
SHUT UP. CRY BABIES!
They can give folks back something or risk loosing future sales, what costs more money?
Have you ever taken a business class?
4500.... not three months but 3K?
Other companies do this all the time. They price something really high and they lower it just a couple of months later. For example Harman Kardon AVR 347 came out at $800-$900. I can see it priced at $600 at some places now. The H/K AVR 745 came out last year with MSRP of $3499. You can buy a new one for $1199 or $1099 now. I bought a refurb for $775. $100 gift card is actually pretty good since you can use it to buy a variety of things at the Apple Store (physical or online). May be Leopard. May be .Mac renewal. May be iWork, iLife.... Printers, etc.
one month later it was on sale for 100.00 dollars I didn't hear any
one complaining about that. Thats right its not an apple product so
there isn't people just looking for a reason to flame them.
wonder if the early iPhone people realize that they're actually
COMPLAINING ABOUT HOW APPLE PRICES ARE NOT HIGH
ENOUGH!!!!!
Retards all.
then why did you buy it in the first place?
Had I thought the iPhone was worth $600, I would've bought it,
and though a $200 price drop within 2 months would **** me off a
bit, that's the price of being an early adopter. I accept that.
Technology goes on.
Another slap in the face from the Steve, the devil himself.
I'm starting to almost feel sorry for you sheep. Almost...
trying to offer this w/o taking it in the shorts.
Apply your $100 credit to:
iPhone case
iPod speakers
Bluetooth headset
iWork '08
Mac OS X 10.5 (Leopard)
AppleTV
iPod nano
iPod shuffle
iPod classic
no regrets ...... rebate or not ....
Just imagine, at this rate, the iPhone will be free in 120 days, right after Christmas when AT&T will give it away if you sign up for service!
The iPhone will join the Motorola Razr and other 'hot' items that had their moment in the sun, and then got widely imitated by everyone, leading to a collapse of pricing.
Consumers win.
Now.... about that Google phone rumor....
I want my free phone!
C'mon, fanboys. You knew this was gonna happen. Don't act shocked because I wasn't, that's for sure.
Why do I have no sympathy for a bunch of crybabies who felt they had to be the first to have the iPhone?
Couldn't you wait a few months? Do you always have to camp outside the first day to get the latest gadget or fad?
Not only does the price come down but all you early suckers have all the bad firmware and bugs to deal with.
Too bad fo yu...
Apple went above and beyond with the store credit. And I don't think its the Apple faithful that were making the fuss, early adopters always get screwed on price. Happens with all kinds of products, technology and otherwise. It's hardly a secret.
It would be nice to be able to use the credit for music, but my guess would be that retail and the music store are different business units and you don't want the negative numbers from one unit screwing up the numbers for another. It's business.
And for the Apple haters, why do you waste your time reading and posting on Apple articles? You just like to hear yourself talk? How many times to you see Apple "fanboys" posting comments on Windows articles saying that it sucks? You don't see it, we'd rather spend our time reading and posting about things we're interested in.
The Zune was never meant to be a contender in this market.
It'd be great if Steve Ballmer jumped around the stage, sweat pouring from his face and armpits, yelling "Zune dead! No Zune! Zero for Zune!" Or something like that.
Then, it'd be really great if he took out a Zune, poured lighter fluid on it and torched it, just like Hendrix did to his guitar at Monterey Pop Festival.
Yeah, that'd make my week.
At this point...who really cares what Zune 2.0 will look like? I'm sure it'll be better than the one-pound brick out now, but it's still going to have Ballmer's sweaty-feet stink to it.
- Has a hi-tech firm ever done this before?
- by kcar27 September 6, 2007 4:45 PM PDT
- I'm a bigbig Apple fan, but I have to say that Apple goofed in cutting the iPhone's price so soon and so drastically. Part of me is exasperated with those complaining about the cut, and part of me realizes I'd be shocked and upset if it happened to me.
- Like this Reply to this comment
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Showing 1 of 3 pages (87 Comments)Anyway...does anyone recall a computer company or any other hi-tech firm offering a rebate like this because of an unexpected and deep price cut? Companies have extended warranties and offered refunds when their products fail or don't work as advertised, but I can't recall a previous rebate because of a price cut.
I hope this move eases the unhappiness of most early buyers. It may be that the next time Jobs introduces a big product, he'll have to promise not to slash its price within three months in order to get people to buy.
One final thought: was this cut due to the impending announcement of the Google phone, which could be even better than the iPhone?