Sep 6, 2007 3:55 pm US/Eastern
Apple Offers $100 Apology For iPhone Price Cut
SAN FRANCISCO (CBS News) ―
Apple Inc. CEO Steve Jobs apologized and offered $100 credits Thursday to customers who shelled out $599 for
the most advanced model of the iPhone, only to have the company unexpectedly slash the price $200 in a push to boost holiday sales.
In a letter on the company's Web site, Jobs acknowledged that Apple disappointed some of its customers and said he has received hundreds of e-mails complaining about the price cut.
But Jobs added that "the technology road is bumpy," and there will always be people who pay top dollar for the latest electronics but get angry later when the price drops.
Jobs said Apple will hand out $100 credits for Apple's retail and online stores to iPhone customers who aren't eligible for a rebate.
Customers who bought an iPhone within 14 days of the price cut can get a refund of the price difference if they have the original receipt.
Apple stock dropped $2.13, or 1.6 percent, to $134.63, in Thursday morning trading. On Wednesday, after the price cut was announced, shares fell 5 percent.
It's a rare move, as Apple typically discounts only older products, reported CBS News correspondent Susan McGinnis.
The price cut, from $599 to $399 for the 8-gigabyte iPhone, immediately set off a debate on online tech forums between early adopters, who said paying a premium price came with the territory, and those who said they felt burned. The price reduction was too much too soon, some complained.
In a discussion on The Unofficial Apple Weblog site, the views were split evenly.
Many customers took the iPhone price cut in stride, however. Ryan Roth, who bought one for $599 on Friday after months of research, chalked up his purchase to "the worst timing ever."
"I realize this is not their problem: I agreed to the original price - it's my fault," said Roth, 32, of New York, who has been thinking about getting a cell phone for four years but held out until the last week. "It just kinda sucks."
The steep price cut less than three months after the iPhone's launch on June 29 - and the discontinuation of the 4-gigabyte iPhone, which sold for $499 - were surprising from Apple, which usually keeps prices steady while adding new features. It normally discounts products only when they age.
Analysts said quick discounts are typical for the cell phone industry, however. The world's best-selling cell phone, Motorola Razr, for instance, debuted at $499 but can now be bought for less than $100.
"This is about Apple learning how to become a cell phone retailer," said Jeff Kagan, an independent telecommunications industry analyst based in Atlanta. "All of a sudden it's in the cell phone business, and everyone is trying to figure out how to measure it, and we don't know yet."
Apple Chief Executive Steve Jobs said the company is on pace to sell 1 million iPhones in the United States by the end of September.
The newest iPod media players, also announced Wednesday, include a model called iPod Touch that incorporates the iPhone's touch-screen and adds the ability to wirelessly download songs directly from the new iTunes Wi-Fi Store.
The iPod Touch also has a new partnership with Starbucks to buy songs while waiting for your frappuccino, reports CBS News science and technology correspondent Daniel Sieberg.
"It's one of the seven wonders of the world, it's just incredible," Jobs told employees and journalists gathered at a special media event near downtown San Francisco.
Also new are a version of the best-selling iPod, the Nano, that plays video and a larger capacity, 160-gigabyte version of the video iPod, newly dubbed the iPod Classic.
Apple executives said the revamped and expanded iPod line - in which the iPhone is recast as the top model - is the company's most robust lineup ever for the holiday season. In 2006, Apple sold a record 21 million iPod players during the holiday quarter, about 50 percent more than in the same period the year before.
Apple has now sold more than 110 million iPods since they debuted in 2001.
(© 2007 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
