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Apple does the unthinkable with the iPhone

Do you hear that sound? It's the sound of thousands of iPhone customers crying their hearts out. In addition to the new iPods, ringtones for the iPhone and iTunes Wi-Fi Music Store, Apple has announced a price cut for the iPhone.

Apple has dropped the 4GB model from the iPhone lineup. Its sales have been lagging behind the more spacious 8GB model so Apple decided to remove the dead weight. In addition, Apple has cut the price of the 8GB iPhone by $200 – the device will now retail for $399.

This move by Apple even undercuts the pricing for refurbished iPhones that was announced in late August. Refurbished 4GB and 8GB iPhones were listed on the Apple Store for $399 and $499 respectively.

Apple is being quite aggressive with its iPhone and the $200 price cut leaves room for a 16GB model on the high end in the future. Considering that the iPhone-esque iPod touch comes in a 16GB model, the move is inevitable.

Update 9/5/2007:
Although Apple is discontinuing the 4GB iPhone, that isn't stopping the company from offering it for $299 at the Apple Store until the supply is exhausted.

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RE: Wow
By akugami on 9/5/2007 4:06:59 PM , Rating: 2
Well...volume sales does decrease cost and in as competitive a market as phones and smart phones, you would want to decrease the price of your phones as much as possible. And volume sales in this case is likely for the touchscreen and similar electronics such as that used to run the touchscreen and wifi between the iPhone and new touch iPod.

There are definitely sound business reasons to cut the iPhones cost. Reduced price being a better sell for one thing. Another is to get the jump on your competitors and price it at such a cut throat profit margin that others can't compete while your higher volume sales gives you volume savings that makes the difference between profit and loss. Heck, it'd be better if they could get it down to $200. Then I believe it'd really take off. As it is, it's doing well for a smart phone but probably not that good as a phone.

And if you recall some guy called Rockefeller, he priced his product to such an insanely low price that he was the only game in town. Then he jacked up the price till no one could afford his product. Of course, that's when the government stepped in but that's a different story.

I thought Apple's stock was inflated anyways so it dropping down 5% is not a huge deal except to those directly involved with Apple stock (of which I am not one). Apple's stock holders can swallow a stock price drop if they feel that there is a clear and sound strategy to profit for the company and thus for them.

"A lot of people pay zero for the cellphone ... That's what it's worth." -- Apple Chief Operating Officer Timothy Cook

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