iPhone Price Cut: 10 Reasons Why Apple Did It
Yesterday’s iPhone price cut — from $599 to $399, 68 days after product launch — came sooner and was deeper than anyone expected. Why did Steve Jobs do it?
“We want to make iPhone even more affordable for even more people,” was the reason he gave. “We want to put iPhones in a lot of stockings this holiday season.”
But is that the whole story? Apple (AAPL) watchers have been pondering the question overnight and have come up with at least 10 other possibilities. Cutting and pasting from various websites, we offer them here:
1. Sales are slowing, and a price drop will re-invigorate them.
2. Other smartphones are entering the market and a $399 price tag kicks those where it hurts.
3. iPhone is a classic platinum turkey — a high-end phone that sells a million units rapidly but then quickly loses momentum.
4. The new iPod touch was likely to undermine iPhone sales.
5. Apple early adopters would have paid any price. $600 was just short term profit maximization for the launch.
6. Apple has reached a milestone that can justify a price cut. Development costs have been recouped. (It’ll be a lot cheaper to produce the next million iPhones than the first, so Apple hasn’t given away its margin.)
7. iPod Touch and iPhone share certain parts, thus bringing manufacturing costs down for both products.
8. Apple promised AT&T the price cut if they could offer the iPod touch this holiday season.
9. If Apple learned anything from the Mac war with Wintel, it was that maintaining hardware margins at the expense of marketshare was a mistake.
10. Clearing out inventory to make way for a 3G iPhone ASAP.
Source: Business 2.0
