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Cringely: Jobs planned iPhone credit

updated 12:25 pm EDT, Fri September 7, 2007

Cringely on iPhone credit

Apple CEO Steve Jobs dropped the iPhone's price by $200 to make a buck and bolster his ego, according to PBS.org columnist Robert Cringely. The price cut -- which Jobs announced on Wednesday at the end of Apple's special event in San Francisco less than three months after the iPhone's initial launch -- was "a carefully and tightly scripted exercise in marketing and ego gratification," the columnist said. "It wasn't an accident. It wasn't a thoughtless mistake. [...] In the mind of Steve Jobs the entire incident had no downside, none at all, which is yet another reason why he is not like you or me," said Cringely, who worked in Jobs' garage during some of Apple's earliest days. "Steve does things like this because he can. It reaffirms his iron grip over both Apple and Apple's customers. It's a lot about ego and a little about business, though with Steve Jobs they are hard to differentiate."

"Apple introduced the iPhone at $599 to milk the early adopters and somewhat limit demand then dropped the price to $399 (the REAL price) to stimulate demand now that the product is a critical success and relatively bug-free. At least 500,000 iPhones went out at the old price, which means Apple made $100 million in extra profit."

The columnist insists that Apple would have left it at that if no customers had complained, but that Jobs expected complaints and had an answer waiting in the form of a $100 Apple store credit.

"This was no knee-jerk reaction, either. It was already there just waiting if needed."

Jobs knows that some customers will never use their store credit, according to Cringely, and that many iPhone owners who purchased the device from an AT&T store who do use it will have to make their first-ever trip to an Apple Store. Further, most purchases making use of the $100 credit will add up to much more than the credit itself, netting Apple more profits in the end.

"So Apple still comes out $75 million ahead, which is important to Steve Jobs."

Cringely also says Apple's chief makes most of his business decisions as reactions to the company board firing him back in 1985, when company shareholders settled instead for marketing professional John Sculley. Sculley tried his hand at marketing strategies as Apple's leader, but Jobs ultimately regained his position as CEO in 1997.

"In the 22 years since that humiliation, Jobs has devoted himself to proving: 1) that he can deliver the numbers (and does he -- Apple is the best-managed computer company on Earth), and; 2) that he is a better marketer than Sculley, the supposed marketing genius," Cringely explained. [corrected]




by MacNN Staff

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Comments

  1. cmoney

    Joined: Dec 1969

    0

    incorrect statement

    "Sculley tried his hand at marketing strategies as Apple's leader until Jobs took the reigns once again in 1997."

    This makes it sound like Sculley was CEO the entire time between 85 and 97. He wasn't. Jobs took the CEO spot from Gil Amelio.

  1. Rezzz

    Joined: Dec 1969

    0

    little about business..

    he then goes on to say how it was all planned to maximize profit and marketing. make up your mind, cringely.

    $100 million extra. rebates waiting in the wings. little about business, indeed.

  1. rtbarry

    Joined: Dec 1969

    0

    Exactly...

    ...seriously exactly what I thought.

  1. milhouse

    Joined: Dec 1969

    0

    And...

    Good article. Jobs can still suck it.

  1. robttwo

    Joined: Dec 1969

    0

    amd wow!!

    All this incredible analysis from someone brilliant enough to land a job with PBS!!!

    Of course, Jobs is the ONLY CEO in he business world with an ego. What an idiot Cringely must be. There is not a marketing person in the world without a big ego.

    Oh, of course, except for the geniuses at PBS.

    Doofuses.

  1. mgpalma

    Joined: Dec 1969

    0

    Whatever

    Like he KNOWS anything. Typical of news people in general. They remind me of MS techies, say something as fact (even though it isn't) to make yourself look important and smart and that they are "in-the-know," to manipulate what people think. Talk about ego-gratification! Yeah, I am sure there are marketing elements at play here, but stop vomiting up the negative, spiteful attitude like you know better than anyone else. I find PBS a pretty somber and depressing 'media' outlet anyway, so I am not surprised.

  1. rtbarry

    Joined: Dec 1969

    0

    Cringely is actually...

    ...one of the best commentators on tech out there. He is the guy behind the Triumph of the Nerds mini-series, among other very well done explorations of the history and current state of affairs in Silicon Valley.

    I don't always agree with him, but he is certainly credible.

  1. ZinkDifferent

    Joined: Dec 1969

    0

    once in a while...

    ...Cringely gets it right... at least a portion, a small portion, of what he writes.

    :-)

  1. cblackmo

    Joined: Dec 1969

    0

    $100 is a lot

    You can also think of it as a way to get a second iPhone for $100 less than everyone else. But there are still a bunch of other great things in the Apple Store that would be covered by a $100 store credit:

    1) iPod shuffle 2) iPod accessories 3) Bluetooth keyboard/mouse 4) iLife '08 5) iWork '08 6) Scanners/Printers 7) Blank DVD/CDs

  1. sosumi1981

    Joined: Dec 1969

    0

    Actually...

    This was a wonderfully insightful piece. I'm not sure that Cringely is right about everything, but he seems to know Jobs a lot more intimately (or at least extensively) than most other columnists who’ve written articles about him. I definitely could see this being a business move, and an excellent one at that. As far as how much Jobs ego plays into it, I really have no idea, but again Cringely’s insight seems far superior to most other columnists who write about Jobs. Definitely an interesting take on the whole situation.

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