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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Sunday, September 09, 2007

How Steve Jobs Lost Control of iPod Launch


Last Wednesday Jobs donned his costume of black mock turtleneck and jeans-like Olivier dabbing on the greasepaint-and unveiled to a San Francisco crowd of media and employees a bunch of cool stuff. But this time Jobs lost control of his story.

In June, as you can't help but know, the iPhone became Apple's most-hyped product ever, so much so that the company's fate became intertwined with the groundbreaking device.

Before he left the stage, Jobs dropped a bomb: Apple cut the price of the iPhone from $599 to $399. Slashing the price by $100 might have been high-tech business as usual. But slashing the price tag by a third, only two months after hogging high tech's red carpet, was startling. And it became the story of the day. Since reports had been rife that sales of iPhones weren't soaring, some critics opined that this drastic cut was born of desperation. And wouldn't those who bought one at the higher price now feel like suckers?

Jobs ... was making a timely gamble. A lot of people are going to be giving phones as holiday presents, and Apple's research, he says, shows that they want to choose an iPhone but believe it costs too much. Bringing the price down means making the sale. "We have one chance to go out and go for the holiday season," he said to me. "If we don't take that chance, we wait a whole other year. We're willing to make less money to get more iPhones out there." What about people who just bought one for $599? "I feel for them," he said. "But, you know, we're not harming anybody."

(I find it ironic that the same Apple fans who in June were lofting their newly acquired iPhones in the air like they'd won the Stanley Cup are now complaining that they paid too much.)

Then you don't understand the mentality of these people, Mr. Levy. They're proud and defensive about their insular little private club. Now that they've been revealed as stooges, these guys have lost their cachet and thus their sense of self and ego. Not only are millions and millions of people suddenly getting into their club, they're doing so at a vastly reduced price. Imagine buying a Lexus for $40,000 and then watching the company put it on sale for $25,000 two months later. And no, you didn't get $15,000 worth of use out of in two months, delusional self-justification notwithstanding.

Anyway, Levy is right about one thing: The iPhone price cut certainly did overshadow the new iPods. But that's brilliant, because Apple will sell tens of millions of these new iPods this year regardless. Now they can sell millions of iPhone too. Brilliant.

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