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Stop whining
OK, people, it's no more Mr. Nice Guy. I'm fed up! No more moderation, no more namby-pamby conciliations to those I disagree with, at least not today. I am plain, hopping mad. And who has pushed me over the edge?...
iPhone early adopters. (I'm one of them, though a virtuous one.) You may have heard, they just cut the price on iPhones. Get this:
“I just felt so used as a consumer,” he said. “They hyped up the iPhone for six months and built up our expectations, and then they grabbed our extra $200 and ran.”
Here is another guy:
“I feel totally screwed,” wrote one iPhone owner on the Unofficial Apple Weblog site. “My love affair with Apple is officially over.”
It is you people, you who resent Coase (1972), you people who induce wage and price stickiness and widen the Okun gap. You people, who don't know what it means to sit back and enjoy your consumer surplus. You beasts!
And to think you are all carrying around these wonderful icons of modernity in your pockets...
AAARRRGGGHH!
(I thank a loyal MR reader for the pointer. Please note this post was published from my iPhone.)
Posted by Tyler Cowen on September 7, 2007 at 10:44 AM in Philosophy | Permalink
Comments
I was wondering if I was the only one deeply annoyed by this sort of cluelessness.
Posted by: Dave at Sep 7, 2007 10:53:06 AM
Why are you so mad that people don't behave according to economic theory? Since when did theory make the leap to prescription?
Posted by: Mesbah at Sep 7, 2007 10:58:23 AM
The thing that annoys me most about all this is that most iPhone early adopters didn't uneasily spend $600 on the phone. They gladly spent it. They paid to break their contracts with their existing provider. They lined up in front of stores and camped out to spend $600 on the iPhone. People actually paid for spots in line just to have the chance to spend $600 on the iPhone. By any economic account, Apple under-priced the iPhone when it launched. And now these people have the audacity to "feel totally screwed". Forgive me if I'm not sympathetic.
Posted by: Matt at Sep 7, 2007 11:01:20 AM
Morons. I live right by the Apple Store in Arlington, VA and, after the initial sale, I saw people high-fiving each other and congratulating each other on what was obviously a stupendous accomplishment. Clearly Apple has removed these peoples consumer surplus by allowing the unworthy the honor of joining their rediculously unimpressive little club. It's a freaking telephone.
Posted by: josh at Sep 7, 2007 11:07:18 AM
But aren't they to be commended for whining their way to $100 credits?
Tyler, will you abstain from yours on principle?
Posted by: Jeff at Sep 7, 2007 11:09:15 AM
Yet more evidence that good economics can be bad PR.
Posted by: Brad at Sep 7, 2007 11:10:27 AM
The early adopters did behave according to economic theory. The annoying thing is that they have the nerve to whine about the intensity of their own preferences! Apple got your money because (for whatever reason) YOU had to have an iPhone RIGHT AWAY. Apparently Tyler is in this group of early adopters, but at least he is mature enough not to complain that more patient buyers are now paying less.
Free tip: if you wait two whole years, you can expect to pay much less than $400 for an iPhone with more storage, features, and style.
Posted by: Steve Miller at Sep 7, 2007 11:12:14 AM
But this is just the durable-goods-monopoly all over again. If a company cannot precommit not to lower prices in the future, it will lose out on sales as people defer purchases. Apple runs a very serious risk of driving away early adopters if it cuts prices too much or too early, and it has recognized this.
How many of these iPhone buyers, now put on notice that you need only wait a few months to save a couple hundred bucks, will defer future gadget purchases? That's rational, and it's exactly what theory predicts if you don't look at the iPhone in isolation but as one of a series of pricing games between Apple and its customers.
Posted by: Grant Gould at Sep 7, 2007 11:12:58 AM
These are the same people who think that Apple is "using consumers" when they charge $150 more for a black Macbook than for an identically configured white Macbook. Looking around my law school classrooms, the majority of Macbook owners have gladly paid the premium for the black computer.
Posted by: Joe at Sep 7, 2007 11:14:05 AM
There are many times I've wished I had the leverage to renegotiate the purchase price of an item or service somewhere down the line, after finding them wanting.
It'd be nice to get 2 dollars back for a bad movie or apply for 25% off a sub-par meal.
To me these folks are doofi, in that the perceived value of their gadgets has dropped not because of dissatisfaction with how it works or looks, but because it is no longer going to be such an exclusive symbol.
Yeah, they are a bunch a whiners, but they did manage to wrangle a teat. Gotta give them that.
Maybe next time I'll make a scene at the restaurant or theater.
Posted by: Jeff at Sep 7, 2007 11:18:53 AM
It seems to me is that this reaction is because it's Apple (angels singing). Sony introduced their first Blu-Ray standalone player for approx. $1000 late last year. Within two months, they released a new version for HALF the price, $499. I don't remember there being that much reaction... I'm wondering if it wasn't some other company, there wouldn't have been such the uproar. (granted - the products are in two completely different markets).
Posted by: eric at Sep 7, 2007 11:20:01 AM
Russ Roberts pointed out pretty much the same thing as Steve Miller only he looked at the iPod:
The iPod will be six years old next month. The newly released iPod Classic with 160 GB of memory is $50 cheaper, holds 40 TIMES more songs, plays color videos and displays photos than the original. It is smaller, lighter and has a better battery.
http://cafehayek.typepad.com/hayek/2007/09/good-luck-bls.html
Posted by: Jüri Saar at Sep 7, 2007 11:22:12 AM
So, since you apparently don't want the $100 that Mr Jobs is handing out,
is it okay if I take it?
Posted by: Jason at Sep 7, 2007 11:22:55 AM
The worst part is that they even got Jobs to apologize. I guess their threats were taken to heart, the hundred dollar gift certificate though is an interesting touch. If they were sincere that they wouldn't buy apple products anymore then I suppose the company would have lost money. This way if they actually spend the certificate their probably goign to spend more seeing as how not much in the apple store is under a hundred bucks. But, given apple's unique hardware compatibility and easily identifiable image these certificates are likely to solidify these iphoners as full apple customers. I guess it's karma that they will be greater billboards than they intended.
Posted by: Daniel J. D'Amico at Sep 7, 2007 11:25:35 AM
It's interesting that Tyler doesn't explicitly play the price discrimination card. I wrote about the NYT times article on the topic on my blog, and my favorite part was when a Gartner VP was quoted as saying Apple's strategy was something people must have learned in business school. It's just more reason to believe that one economics class could make the world a better (or at least more efficient) place.
Posted by: jodi at Sep 7, 2007 11:27:45 AM
p.s. I'm not mad anymore.
Posted by: Tyler Cowen at Sep 7, 2007 11:38:11 AM
“They hyped up the iPhone for six months and built up our expectations, and then they grabbed our extra $200 and ran.
I love that quote. Apple did -nothing-. The hype came from the people that wanted one (such as this guy), the analysts ("apple will sell 5 billion units the first weekend!"), and the press.
[happily paid 600 bucks for the iPhone]
Posted by: tim at Sep 7, 2007 11:45:44 AM
You think you're mad now? Wait until the lower the price another $200 and *I* get an iPhone.
Posted by: mobile at Sep 7, 2007 11:47:52 AM
I sure do see how silly and irrational the early adopters are to fail to see both that they got what they initially bargained for and that price drops were to be expected.
But I think it was equally silly and irrational for Apple to fail to understand the psychology of these initial purchasers and that the reaction to the price drop would be angry.
I'm sort of surprised they split the difference at 100 dollars for the credit.
Posted by: Jeff at Sep 7, 2007 11:57:40 AM
That all being said, that chuckling you hear emanating from that blue Cavalier with the scratch down the side may now have a source.
Eat it, yuppie scum!
Posted by: Jeff at Sep 7, 2007 11:59:59 AM
Wow, I've never seen Mr. Cowen lose his cool before.
Whether trendy consumer electronics are priced fairly or whether consumers whine too much, there are more important challenges facing society today.
This hardly seems worth getting emotional about.
Posted by: Giovanni at Sep 7, 2007 12:11:37 PM
It's not a phone, it's fashion (techno-bling) and since when has fashion made any sense? People gladly spend hundreds or thousands of dollars, unnecessarily, in the name of *fashion*. Keep stomping your feet as the holidays are just a few months away and how many of you will wait until Dec26 to do any real shopping? I thought so. So for now, enjoy your iphone. I'll enjoy my $150 (with discount applied) Treo 650 (bling!).
Posted by: Ed at Sep 7, 2007 12:15:29 PM
Lots of very interesting points.
Still, it all highlights something that baffles me about the economic outlook. I look at the posting and many of the comments and think, "So, y'all are saying that people shouldn't be complaining? Shouldn't be feeling used? Shouldn't be trying to get Apple to make amends?"
That response strikes me as ... I dunno, a little nutty or deluded, or something. You're taking issue with people's feelings, as well as with their emotional experience of the market. What's the point of that?
Are y'all the kind of guy who, when your wife tells you about her feelings, tells her she's wrong? (If so, I wish you well!) Isn't it usually more productive, wiser (and safer) to listen to her with sympathy and interest? So why not observe people's experience (including their emotional experience) of the market with interest and sympathy? They aren't mad at you, after all. And isn't it -- or maybe shouldn't it -- be a role of economics to examine and learn more about people and markets? Which would include their emotional experiences, no?
Posted by: Michael Blowhard at Sep 7, 2007 12:19:42 PM
Any early adopter of any technology that doesn't see this coming is a moron.
If you bought one of the very first DVD players you paid like a thousand bucks. If you bought one of the very first home computers you paid like ten thousand bucks. And so on.
I bought some RAM the other day for $100. It's $50 now. Them's the breaks!
Posted by: Noah Yetter at Sep 7, 2007 12:25:37 PM
I agree, that people complaining about the price drop are being a little silly, but it's a completely valid and predictable emotional response.
You guys are basically whining about other people whining.
Posted by: Giovanni at Sep 7, 2007 12:38:15 PM
