Was the IPhone Price drop clever marketing

Lets think about this for a moment, a major price drop for the Apple IPhone from 599 to 399, and the real cost back to apple is 100 dollars in credit that folks can spend in the apple store. 599 is a pretty steep price for most people to come up with, but as an owner of a Motorola Q, at 250 dollars, we would not hesitate to purchase the IPhone at 399, where we would at 599.

Clever like a fox because this means that the IPhone, already the hottest selling property at a very high price, just got into the reach of the average person. Unfortunately, we will not change wireless carriers, but then there is the whole unlock system for the IPhone, and that it might actually have a legal loophole that would make it possible to get onto our present carrier with the IPhone and avoid ATT.

In a survey done by Compete, they found:

* 8% of consumers said they would be willing to pay for the iPhone at its original price point of $599.
* At $399, interest increased almost 2.5X to 18%.
* The “sweet spot” of consumer interest appears to be $100-$299.

The introduction of the iPod Touch adds an interesting component. Basically the iPod Touch is an iPhone – without the phone. At a price point of $299, Apple seems to be signaling to its customers that the iPod portion of the iPhone is worth $299, and the phone portion is worth $100. That’s right in the sweet spot, which could mean even more iPhone interest moving forward than the 2.5X increase we’ve shown above. Source: Compete

We are getting the IPod touch as soon as we can weasel or purchase one, and given the price points, Apple just priced this in such a manner that they could sell 18% more phones just based on interest at their new rate. We think that they will drop this puppy down to the actual sweet spot identified by compete.

In the longer run, with the price drop and the honest response and willingness to make remedy of 100 dollars apple still comes out ahead.

Both economically and politically with their users.

Not a bad strategy to be pursuing, while the longer run might be interesting, especially with the idea of Apple being the new Bully in Town replacing Microsoft, this one might be a good step or a bad step depending on how the core loyal apple fan people react to this one.