Print 78 comment(s) - last by Zandros.. on Sep 10 at 2:19 PM

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 Michael Hoffman on 9/5/2007 5:28:15 PM , Rating: 2
Considering Jobs said Apple is closing in on selling one million iPhones - expected in late September - I don't think the price cut is due to no interest from consumers.

I wonder how much the price cut will help them with the holiday shopping season quickly approaching.

RE: Wow
By retrospooty on 9/5/2007 6:56:49 PM , Rating: 2
Umm... One million was supposed to happen the first weekend of Launch in June. It is now over 2 months later and they still have not hit the 1st weekend's target.

RE: Wow
By Zandros on 9/5/2007 7:07:49 PM , Rating: 2
According to whom? Not Apple, analysts. Sales beat Apple's expectations, but they always do, since they set them so low.

RE: Wow
By retrospooty on 9/5/2007 8:50:14 PM , Rating: 2
"According to whom? " - Steve Jobs in June 2007.

"Sales beat Apple's expectations" Not according to Apple, or wall street. Stock fell 7 1/2 points on the news.

RE: Wow
By Zandros on 9/10/2007 2:19:41 PM , Rating: 2
Hm. I was certainly under the impression that Apple set its sales goals around 200k units the first weekend. Nowhere near the one million, which even the cited article was for the last of September.

Wall Street data from one day only isn't a particularly good argument, stocks often overreact and is corrected the next day.

RE: Wow
By deeznuts on 9/5/2007 7:27:37 PM , Rating: 2
The iphone was on pace for 720K roughly by the end of September, with Apple's original target of 1M by the end of September.

But the number of iPhones sold was below the pace needed to meet Apple's target of selling 1 million phones by the end of September, said Greg Sheppard, iSuppli's chief development officer. “It's a pretty darn successful product, but (its sales are) probably lower than what everyone else is expecting it to be,” he said.

You guys are drinking some Apple kool-aid if you think this price drop was for anything but spurring demand because sales have been slower than expected.

Here is another AP article after the drop:

RE: Wow
By ghostbuster on 9/5/2007 11:25:02 PM , Rating: 2
You guys are drinking some Apple kool-aid if you think this price drop was for anything but spurring demand because sales have been slower than expected.

Agreed. When the iPhone launched iSuppli estimated $280 BOM cost for the 8GB model and a healthy ~50% margin.

After the price cut Apple needs to sell two iPhones to make the same profit as for a single iPhone until now, and so the sales must be pretty bleak to justify cutting price by 1/3 in the hope of at least doubling the sales.

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