iPhone

iPhone has fallen in price twice. Time to repeat it

               

Outside is January 2019, and Apple officially ran into a problem that had been predicted over the past few years. For the first time in many years, iPhone sales have not just slowed down. And fell.

The official reaction to this is still scant: employees will be gathered for a meeting, and investors were warned in advance. Obviously, Apple’s strategy will change in the future .

But how exactly is an open question.

There is a solution, and Apple knows it

If you read the message for investors , it may seem that Apple is not at all to blame.

The dollar is increasing, the demand for smartphones in China is falling … There are attempts to block the wall of PR, while leaders are discussing ways out of the problem.

But everyone understands that Apple itself is to blame for its problems. Smartphones and other equipment companies are becoming too expensive, and China’s competition – quite serious.

Many of the observers, especially from among simple users, see one simple way out: a reduction in prices, and a significant one . But Apple is proud and will not do so on level ground.

Or not?

Now few people remember, but in the summer of 2007, Apple did just that. I took and brought down the price of the iPhone almost 2 times.

How the iPhone 2G fell in one day, and everyone was stunned

Despite the announcement in January 2007, the first iPhone did not go on sale until June 27. The 4 GB model cost 499 dollars , and the 8 GB version costs 599 dollars .

In the meantime, there were fierce disputes within the company. Some thought that the pace of sales could be increased, and that it was the high price that scared most buyers away. Others did not want to reduce margins: let them sell as is.

The controversy ended on September 5, 2007 . Apple officially stopped production of the 4-gigabyte iPhone model, and for the 8-gigabyte model, it made a discount of $ 200 .

That is, it was $ 599, and it was $ 399 , minus 33% of the original price.

By October 2007, it became known: the risk was completely justified. Sales of cheap iPhones soared more than 50% , literally eclipsing the decline in profits from each device.

The company has done nothing of the kind before or after.

But how did those who managed to buy an iPhone at the old price react to this? Guess it.

Negative , of course. In the West, dozens of selections of dissatisfied quotes from iPhone owners came out , and analysts managed to call the decision itself a mistake that could damage the brand’s reputation.

A day later, Steve Jobs answered them directly on the official website .

Letter to iPhone owners from Steve Jobs, September 6, 2007

To all iPhone users:

I received hundreds of emails from iPhone owners, frustrated by Apple’s decision to lower the price of the iPhone by $ 200 two months after the start of sales. After reading absolutely all the letters, I want to share my observations and conclusions.

Firstly, I’m sure that we made the right decision, reducing the price of an 8-gigabyte iPhone from $ 599 to $ 399 , and that now is the best time for that. The iPhone is a breakthrough product, and it has every chance this season of holidays.

The iPhone is well ahead of the competition, and now it will be available to even more people. Attracting new customers to the iPhone “camp” will benefit both Apple and every iPhone user. We believe that the price of $ 399 will help us in this in the New Year period.

Secondly, I have been working in the field of technology for more than 30 years and I can confirm that the path of technology development is thorny . Something is always changing and improving. And there are always those who buy a product before its price drops, a new operating system comes out, or something new appears.

This is the reality of the way technology If you constantly wait for the next price reduction or an improved model, you will never buy anything, because new, more affordable options always appear on the horizon.

There is good news: acquiring products of companies that provide decent support, as Apple tries to do, you can successfully use them for many years, despite the appearance of new models.

Third, let us do the right thing by lowering the cost of the iPhone, and even if the path of technology development is really thorny, we must take better care of the first iPhone buyers , while aggressively pursuing the rest with a lower price.

Our first customers trusted us, and at such times we must justify this trust with actions .

Therefore, we decided to offer each iPhone buyer, who made a purchase directly through Apple or AT & T and did not receive discounts or other concessions, $ 100 to purchase any product in the Apple Retail Store or Apple Online Store.

Detailed terms are being worked out and will be published on the Apple website next week. Follow the news.

We want to do justice to our valuable iPhone buyers. We apologize for disappointing some of you, and we do everything to be worthy of your high expectations from Apple.

Steve Jobs 
Apple CEO

What happens if Apple repeats the price now?

Of course, it was a different time. Then a million iPhone managed to sell for 2 and a half months. The number of people who bought the smartphone earlier and therefore the discontented was disproportionately less than it could be now.

But Apple today, to put it mildly, a company of the wrong level. According to forecasts for the end of the first financial quarter, it will have 130 billion dollars of free money. In October 2007, she had “only” 15 billion dollars.

Even if it repeats that legendary step – it will distribute $ 200 to each buyer of the iPhone Xs and iPhone X R – the company’s well-being is unlikely to significantly decline.

And the growth in sales around the world will make it possible to fight again with Huawei and Xiaomi, who have taken the bread away from the company both in China and in other countries.

If we apply the same 33% discount to prices in Russia , we get:

• iPhone X R for 44,282 rubles. 
• iPhone Xs for 59,953 rubles. 
• iPhone Xs Max for 66,085 rubles.

Such prices are actually a verdict to Android’s flagships, who are increasingly penetrating the bar of 40 thousand rubles and even 60. So, sales would definitely rise in Russia, not to mention other countries.

Dreaming is not bad, I agree. But history has proven that Apple is capable of such steps, and the risk has fully justified itself. Is it time to repeat?

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