the iPhone sickness

$599 to $399, 68 days after product launch
the iPhone, circa 1986
It was bound to happen.  Like a million consumer electronic devices before it, Apple dropped iPhone prices from $600 to $400 68 days after product launch.  Angry first-adopters screamed about refunds (and got one).  Breathless wait-and-see types are now vibrating with barely repressed joy at the thought of claiming one of these ‘bargains.’

I am no fan of Apple.  I know there is a cult behind Apple but some of the frenzy behind iTunes, the iPhone, the iPod and the Mac has always eluded me.  I get the general principle.  They look nice and they do their stuff with flair and they aren’t Microsoft.  But let’s face it – if I told you I had a great car, that never broke down, wasn’t susceptible to typical car problems, and looked really cool, but at the same time used a different kind of gasoline that wasn’t widely available, needed car parts that only one manufacturer produced and cost twice as much as your current car, would you be in a hurry to upgrade?  Since 99% of my computer time is now online, it’s hard for me to understand why I would want to pay a premium (and suffer so much incompatibility) for an Apple.  I am sure someone reading this on an Apple will have a good argument…

But when I had to really stop and wonder was when a $600 phone became a source of such consumer bloodlust.  Is this what America has come to?  $600 phones? Are there that many people out there with that kind of money to spend on phones?  That’s a rhetorical question, since I know that many people will buy an iPhone while ignoring their upcoming credit card payment or saving for retirement.  But just stop and think about that statement:  something you can get for free like a cell phone is being sold for $600 because it adds functionality so you can play YouTube videos from lonelygirl15 on a one-inch screen! 

The concept of something-for-nothing that comes out of offering an after-the-fact refund for a price change when none was implied in the sale is terribly annoying to me.  Should I get a break on my house if the prices in the neighborhood don’t go up as fast as they did the year I bought the house?  Should I be able to go back to Pathmark and ask for $1 off a carton of milk if they offer a sale the day after I bought it? 

Of course I can ask. That’s my right as a consumer.  I am willing to bet more stores would consider whether it was worth their trouble.  I remember buying a video-editing device from amazon and seeing a rebate offered before it even shipped that wasn’t available at my time of purchase.  In that case, Amazon acted quickly to grant the rebate when I pointed it out, because it was a matter of hours.  I just don’t understand why Apple felt a need to cave in to demands for refunds 2 months later.  You can’t convince me that your average Apple first-adopter isn’t going to rush out and buy an itouch or an iToaster the second it’s offered, no matter how many times they get screwed.  Apple should have said hey, $200 is your instant gratification premium!  This is your premium for being among the touched – the divine – the ubercool!

It’s this kind of consumer mentality that leads almost directly into consumer debt.  I can whip out a credit card and buy something now for $400 but pay $200 on it in interest because I don’t have the cash on hand to pay for it.  Or, I can wait 2 months and pay $400 in cash.  I know that this seems obvious to most of the people who read personal finance blogs, but I think a large segment of America just doesn’t get it.  At all. 

I have learned that you have to stop and think before you buy stuff.  I have also learned that rushing out to buy stuff is a good way to retire poor.  The iPhone and the iPod and so many of Apple’s products have become so trendy and so cool I continue to wonder when a backlash will come and they will become uncool, and people will realize that there is no need to pay a premium simply based on design.  I suppose it will happen when someone else comes up with a neater, cooler product and not before, rather than when the American consumer suddenly realizes Apple – like a million other "brands" – is giggling all the way to the bank.

7 comments

  • Hey there…good article, I agree with you for the most part. But I am curious about the “incompatibility” issues you think Apple users have. I only use Apples and always have, both in business and at home. There are ways to do everything! 🙂

    That being said, the cult of Mac can be a scary place, but I wouldn’t leave for anything. If I can get my mom to use a Mac and never have problems, (rather than phone calls every week with a blue screen of death), it’s worth the price of admission.

    Oh, and never buy an Apple product when it comes out, they always go down pretty soon!

  • I think Apple would have definitely lost sales on the next iToaster if they didn’t give this rebate. Even for their (and other company’s) usual price drops, 33% off in 68 days is crazy. If you look at gaming systems, they get price drops too, but it usually amounts to something like a 10-20% drop after a year or more. Apple realized that they can’t expect the market to pay 50% more ($400 to $600) in a 68 day “gratification premium.” The market reaction told them they had gone too far. They didn’t want to get in a situation where people expect that discount after 3 months and wait. It becomes self-fulfilling. By setting expectations that their will be a big discount in three months, people don’t buy the product, which causes Apple to drop the price due to lack of sales. Apple doesn’t want to live in that world.

    Plus, didn’t they just give $100 rebates, and in the form of store credit? Given their high margins, it’s really not going to affect their bottom line.

  • Well said! Our instant gratification illness is digging us deeper in debt. We want all (and more) of the things our parents had… but we need it NOW. Hey, why work two months for something that I want when I can have it now, for ‘free.’

    Personally, I’m not an early adopter of anything. While I enviously watch the world around me play with their new gadgets, I have made a commitment to hold off on any of my ‘wants’ for a few months. I see something I want and I say, “okay, in x months you can have it if you still want it” (x depends on how much money it costs). Usually, the desire subsides by the time my deadline arrives.

  • @David – I guess I wonder about what apps do and don’t work on the Apple. Maybe it’s easier to find software than it appears to me, but if I work in an environment with PCs – and probably 95% of American workers do – it seems moving documents around, etc. would be a pain.
    @Lazy – Every tech product – or even clothes, food, etc. – has price drops. But when they occur there’s seldom a retroactive refund for the initial purchasers. You can’t use that store credit on iTunes, which seemed like the natural thing to spend an Apple store credit on. And I base this on nothing but my reading of news articles but I doubt Apple could do much at this point to turn off the ravenous early adopters of their gadgets. People whine, but what are Apple devotees going to do? Go out and buy Toaster XP? I think they’ll line up for the iToaster when it’s out. There is no competition that would allow people to shun them for egregious pricing practices. But again, I’m just basing that on my own idle speculation.

    @WC: That is 100% correct. You can’t approach buying gadgets any better than that.

  • Anything you use on a PC, you can use on a Mac. Not only do they run Windows software, but there are versions of everything that match up as well. It’s no problem, really!

  • Why pay for Windows/Mac when you can get Ubuntu for free? 😉 I’ve been using Ubuntu for over a year and never look back. My mom and dad are using Ubuntu that I installed and they never had problems.

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