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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
You know, there's a fascinating book review in The Economist this week. To quote selectively:
"One of his recurrent warnings is to allow for the complexities of human emotions. [...] [Y]ou are liable to come up against the general truth that people hate to feel manipulated."
I suspect that the author of whom this was written could put together a great argument that Apple's early adopters feel that their passion for the brand has been manipulated to squeeze a few hundred dollars out of each of them. They may feel, in fact, that their brand loyalty has been in effect taxed. Of course, this is only perception, but Apple lives and dies on the perception of its products among its loyal user base.
(Me, I'm just happy I decided to wait until next year to get one)
Posted by: Dolohov at Sep 7, 2007 12:39:28 PM
I live in southwest Florida, and a couple of years back, people were more than happy to buy a house for 200,000 and sell it 3 months later for 250,000 so they could upgrade to an even bigger mortgage and house. I feel about as sorry for those folks as I do for the apple phone buyers who waited in line to shell out $600 a few months back.
Posted by: anne at Sep 7, 2007 12:42:46 PM
How about the opposite case?? Nintendo has kept the price of its Wii at 250, and made retailers toe the line. Yet it can't be
found anywhere. It sells for about 330 on EBay. They could easily get 100 dollars more per unit.
Is their strategy rational?
Posted by: Jeff at Sep 7, 2007 12:47:02 PM
I know this is a humorous article, but I do find it discouraging when the perception is that when people fail to conform to economic theory, it's the people who are wrong.
Economics is the study of *human* commerce, so obviously it is economic theory that is (currently) insufficiently subtle to model human economics.
It's also why people are loath to trust economists with setting economic policy. "The policy is perfect. Unfortunately, the electorate is defective." (And then Bryan Caplan wonders why economists don't get the respect they deserve.)
Posted by: Tom West at Sep 7, 2007 1:04:19 PM
Without Question, your best post ever. Congrats!! Love that line about sitting
back and enjoying consumer surplus.
Posted by: Mark Broski at Sep 7, 2007 1:06:01 PM
"No more Mr. Nice Guy, no more moderation, no more namby-pamby conciliations." Yeah! Right on! Way to go! I agree, Tyler should be more like Alex!
Posted by: Alex Tabarrok at Sep 7, 2007 1:15:36 PM
Nah bollocks. This is status economics. They were sold the iPhones on the basis that they would be members of an exclusive club, and then suddenly that exclusive club went and allowed in thousands of new lower-class members.
Unless you somehow thought that Apple was in the business of making things that were valued purely for their technology, which would be a very strange conclusion to draw from the last ten years of Apple.
Posted by: dsquared at Sep 7, 2007 1:19:09 PM
Let's see, the early adopters got to have bragging rights for some period of time and they also got to use the device as well.
I also fail to see the problem, they paid extra for these services. Buyer's remorse is such a common occurrence that ebay even has rules against people using it as an excuse to renege on purchases.
Posted by: robertdfeinman at Sep 7, 2007 1:21:07 PM
Watch out rdf, by one day you find yourself agreeing with a whore, the next day you'll be walking the streets selling your integrity.
Posted by: TGGP at Sep 7, 2007 1:27:32 PM
Tyler isn't upset by the price drop because Tyler bought an electronic gadget which loses absolutely none of its functionality just because other people can now buy it for less. The people who are angry are the people who thought that buying an iPhone would make them hip, cool, and envied. It would make them part of an elite. Apple's drastic price drop, coming so quickly after it skimmed the money from the early adopters, has made the early adopters look foolish rather than hip and cool. The people who were trying to buy social status have actually just lost the product that they paid $600 (or more) to get. They actually have less status now than they had before they bought their iPhones.
In some respects I consider these people to be fools who got what they deserved, but I also think they are right to be angry with Apple. They may be fools, but Apple has consciously cultivated their foolishness for years. Apple's marketing has, for many years, pushed the idea that buying and using Apple products is a symbol of hipness and coolness. "Think different!" "Hi, I'm a young, cool Mac and that guy is a stodgy, unattractive PC." Apple has been pushing pure image advertising of this sort for the entire lifetime of some of these iPhone buyers. I think they do have a right to expect that Apple will not take actions that will strip away the image that they just paid for. Just because the contract is implicit, and conveyed entirely by visual symbolism and background music, doesn't mean that a contract wasn't made.
Again, I think the whiners were foolish to buy into a product mystique cultivated by a corporate marketing department. But I also think that Apple has just betrayed them, and even fools have a right to be angry at betrayal.
Posted by: johnrobert at Sep 7, 2007 1:29:18 PM
I think the iPhone discount brouhaha will end up adding 2 or 3 pages to my forthcoming book: Dorks, Nerds, and Geeks: A Reference Guide.
It gets filed in the same chapter with people who get angry when you skip watching the first seasons or pick up the DVDs to quickly catch up on shows like Lost or Battlestar Galactica.
In this subculture, being first or earliest to do something is a status symbol. Why companies don't take greater advantage of this is odd. Imagine if George Lucas released the Star Wars movies one month early, but only for one or two nights and charged $25 a ticket.
Posted by: 8 at Sep 7, 2007 1:29:55 PM
But buyer's remorse is interesting, no? Perhaps it's even an interesting economic phenomenon, worth paying attention to, taking into account, and investigating as part of a quest to understand economic behavior and experience.
I confess I don't quite get this shouting-down of people's direct responses ... It's a little like listening to people grumble about how they disliked a movie and then telling them they're wrong, the movie was perfect, they really should grow up and know better. Infuriating as people's responses can be, y'know, it matters a lot less that you think the movie was perfect than how most people responded to it emotionally.
All this said while appreciating and enjoying the humor and brains behind posting and comments ...
Posted by: Michael Blowhard at Sep 7, 2007 1:31:28 PM
Tom West makes a great point that I think gets overlooked too often.
Posted by: shecky at Sep 7, 2007 1:38:29 PM
If they wait long enough (maybe another month?), they can buy another iPhone with that $100 voucher. ;)
Posted by: econ2econ at Sep 7, 2007 1:51:13 PM
What Apple did turned many of their early adopters from being the self-proclaimed cool kids on the block (as noted above the iPhone is very much a status good) to being overpaying dupes, in the eyes of many.
Which means, odd as it seems to hear the whining, that they *do* have a point.
It would have been smarter for Apple to simultaneously come up with some way of rewarding the early adopters without hurting revenues much, possibly offering free trials or beta-tester status for some online services.
Posted by: jonm at Sep 7, 2007 1:55:45 PM
paraphrasing Ashley "I you must keep whining, please try to do it in a rhythm we can dance to"
Posted by: jim at Sep 7, 2007 1:58:57 PM
The economic illiteracy of these people reminds me of the bloke I talked to who said that because it is tough on people if they get laid off, layoffs should be made illegal.
Seriously.
Posted by: LemmusLemmus at Sep 7, 2007 2:11:15 PM
Reading through these comments it struck me that I am perhaps the only person who bought the iPhone because I just wanted a phone that works. Apparently everyone else bought it to be part of some club...
Posted by: yoshi at Sep 7, 2007 2:15:14 PM
Is the revenge of the nerds (and hipsters) imminent?
Posted by: Jim Outen at Sep 7, 2007 2:39:07 PM
"people complaining about the price drop are being a little silly, but it's a completely valid and predictable emotional response"
Apple knows this too. They are too smart not to. I think they planned out the discount AND rebate well ahead of the iPhone's release. Not only will most the POed people be appeased by the rebate, but these early adapters will also be carrying around even more new Apple products. I bet most of them will spend more than the $100. Coincidentally, many will be rockin the new iPod ($249) or Nano ($149).
Posted by: Steven at Sep 7, 2007 2:41:36 PM
Hahahahahahahahahaha!
Apple did error substantially. The 1/3rd price drop was unforced (sales had not tanked). If they had dropped the price $100 or $75 a month ago, and again in another month or so, then there would have been a lot less whining.
And it is whining. Status symbol aside, if the product was worth $600 to you last week, then it makes no difference what the value is this week. The only people I heard complaining were the recent purchasers. Many stores do have a 30-day price protection scheme. That would be a nice way of handling the matter.
As for those who buy technology as a status symbol, SURELY they've learned by now that the price on everything drops.
Posted by: Nathan Zook at Sep 7, 2007 2:46:58 PM
All indications are that Apple is cutting prices because it overestimated the initial demand for its product, not that this was a pre-meditated strategy of price discrimination. Moreover, the early adopters surely understood that they were paying a premium to be the first on their block with an iPhone. They’re just mad because the premium turned out to be much higher than they had any reason to expect given Apple’s previous pricing policies.
I don’t quite understand Tyler’s argument that this will somehow will increase price and wage stickiness. I’m guessing his argument is that future producers of monopoly goods will be more reluctant to lower prices, in order to avoid the public relations fiasco which Apple is currently undergoing. But isn’t it just as likely that future monopolists will try to avoid Apple’s current fate by setting their initial price closer to marginal cost? And wouldn’t that be a good thing?
Posted by: RC at Sep 7, 2007 2:49:05 PM
All indications are that Apple is cutting prices because it overestimated the initial demand for its product, not that this was a pre-meditated strategy of price discrimination. Moreover, the early adopters surely understood that they were paying a premium to be the first on their block with an iPhone. They’re just mad because the premium turned out to be much higher than they had any reason to expect given Apple’s previous pricing policies.
I don’t quite understand Tyler’s argument that this will somehow will increase price and wage stickiness. I’m guessing his argument is that future producers of monopoly goods will be more reluctant to lower prices, in order to avoid the public relations fiasco which Apple is currently undergoing. But isn’t it just as likely that future monopolists will try to avoid Apple’s current fate by setting their initial price closer to marginal cost? And wouldn’t that be a good thing?
Posted by: RC at Sep 7, 2007 2:51:15 PM
I can't relate to any of this. After all, I still don't even have a cell phone.
But then, I carry lots of cash around, although all those folks who think that
"everyone takes credit cards now" are also probably the same folks who think
that "housing prices cannot go down." Anyway, Thorstein Veblen taught us all
about this over a century ago. Why are we surprised?
Posted by: Barkley Rosser at Sep 7, 2007 2:51:17 PM
Yoshi, I think you may have made a bad purchase. As far as "a phone that works" goes, the iPhone has had it's issues. Ever other modern phone on the AT&T network can receive multimedia messages, iPhone users have to check a website on another machine to receive theirs. And, as we are all learning, adding a crappy camera and video player to a phone does not magically make the phone part work better. If you just want a phone that works, consider buying a phone that doesn't take the swiss army approach.
Also, Apple's marketing strategy for a long time has been selling the 'Apple lifestyle' more than just the product. For Apple, it's all about the club. Hell, one of the biggest online retailers of Mac goods calls itself Club Mac. So I don't really see what you're saying. You're standing the the Cirque de Soleil wondering where the elephants are.
Posted by: Trea at Sep 7, 2007 2:54:36 PM
I think Steven is right. This was all part of Apple's master plan. Lower the price. Wait for people to whine. Give them a little $100 gift certificate (it's a gift certificate, not a rebate, remember.). Reinforce in their heads that "Apple is such a great company."
Posted by: Sameer Parekh at Sep 7, 2007 2:54:53 PM
Hey, the whining worked. (Unless Jobs had it all planned out.) So who's "rational" now?
Posted by: Michael Blowhard at Sep 7, 2007 3:06:59 PM
And the people who sold the ipod in ebay 4 o 5 times its price will really complaint?
Posted by: juancarlos at Sep 7, 2007 3:12:28 PM
So, what Apple should have done is label the first two-months worth of production "First Edition" and then dropped the price while keeping the device identical.
Posted by: JJG at Sep 7, 2007 3:17:07 PM
I don't use any Apple products. They try to make their stuff all ergonomic and user-friendly or whatnot, but it just puts me off, though perhaps if I was not used to Microsoft it would work the other way around. I might try Linux since so many geeks rave about how great it is, but from my limited experience the learning curve seem rather steep. Linux doesn't have any equivalent of the i-[insert here] or Zune/X-Box for fans to rave over, but it has nevertheless managed to develop an elitist subculture that annoys others. BSD doesn't seem to have that, but perhaps the annoying fanbase is just too small for me to have taken notice.
Speaking of smug Mac commercials, get a load of this mocking of Paint. I have to admit I laughed.
Posted by: TGGP at Sep 7, 2007 3:25:48 PM
Jeff, they might be. It might be good PR. "Look how nice we are, we're selling it cheap! OK, so you can't get one, but... that's not our fault, right?".
And though it sells for 100$ more to the dedicated buyers at ebay, does not mean it would be more profitable for them to sell them for that. There is price discrimination at work here, ebay sellers are skimming the most dedicated wiidiots.
Wiidiot is an affectionate term, by the way. I just made it up, so I get to decide.
Posted by: Harald Korneliussen at Sep 7, 2007 3:53:58 PM
Jeff - you can't find a Wii? I see them everywhere. Gamestop has them, for instance, and is selling refurbished ones for $229. If you can resell these things on eBay for $330, then there's some arbitrage opportunities out there, because in Texas, they are not in short supply.
Posted by: scott cunningham at Sep 7, 2007 3:57:01 PM
Wiidiot. Very nice.
Even selling at 80-100 over list through referred vendors, the Wii is the #1 or 2 item in the videogame category on Amazon. That doesn't just include the expensive rival consoles, but games, controllers, etc. that run for much less.
I can see them keeping the price down to grab market share. I would guess they make at least as much long term from selling games and those other items. But at some point the mystique of scarcity will surely be replaced by frustration.
I'm really surprised that after a year or so, they haven't been able (or willing) to ramp up production to meet demand.
Posted by: Jeff at Sep 7, 2007 4:06:09 PM
Scott, no they are still scarce here (one state north). I've seen a batch of 5 one time in a Target. Thought about buying it to sell over EBay or even keep, but didn't.
Posted by: Jeff at Sep 7, 2007 4:08:26 PM
RC & Trea make excellent points above. I will venture a guess here: Apple product pipeline is probably empty for forseeable future(3 yrs+). Not a good time to buy the stock. I say short Apple and go long on S&P.
Posted by: sa at Sep 7, 2007 4:11:46 PM
Ah, Tyler, now the truth comes out.
I always suspected that you were really just a shill for corporate interests like Apple.
Now it's just so obvious. You've misled me all these years.
From now on, I'm going to blame the big corporations for all the vicious greed in this world.
Posted by: Daniel Klein at Sep 7, 2007 4:25:53 PM
Why are people angry? No mysery - Its pure economics.
Given complexity and uncertainty, written contracts are inevitably incomplete, so vendors have implicit contracts with customers, reflected in their brand, about these non-contractible aspects of their bargain. In particular, customers assess how much a durable good will depreciate or experience negative capital gains when they decide whether to buy. The effective "rental" cost per month of usage, is in part based on these costs. For example, Apple promises not to capriciously stop supporting products so consumers can expect its products to retain much of their value. Conversely, when the iPhone price was cut, the value of the existing customers iPhones dropped by about $200 as well. They felt that Apple had renegged on the implicit contract. Many might not have purchased an iPhone in August if they expected the price to be $200 less in September. The effective "rental" cost of that month was $200 more than they expected. The costs now exceeded the benefits for that month for many of them.
So they got angry. And Apple made good on its implicit contract, thereby preserving its brand equity.
Nothing irrational or uneconomical about that. You just need to think more deeply about how durable goods markets are priced, especially when contracts are incomplete.
Posted by: A student of economics at Sep 7, 2007 4:32:31 PM
Yoshi, you're being disingenuous.
Here's an arguably better phone, on the same network, for 1/3 the price:
http://www.amazon.com/AT-T-8525-PDA-Phone/dp/B000KFWUMG
Here's another for free:
http://www.amazon.com/Samsung-BlackJack-Smartphone-AT-T/dp/B000KJS8CI
Just like everyone else you wanted an iPhone. Don't worry, we still love you.
Posted by: mike at Sep 7, 2007 4:37:27 PM
TGGP:
Even a stopped clock is right twice a day. Which means that even libertarians agree with me on occasion.
By the way you might prefer my newer essay as it applies directly to our two eminent hosts, instead of generally to economic shills:
Charles Koch and Libertarianism
Posted by: robertdfeinman at Sep 7, 2007 5:00:58 PM
A $200 price drop just two months after introduction is unprecedented, especially by Apple. I think some of the anger is justified.
Posted by: David at Sep 7, 2007 5:02:38 PM
You've got no idea how happy I am that I'm not the only person fed up with early iPhone customers.
Posted by: Katie at Sep 7, 2007 5:08:47 PM
All this snarking at annoyed iPhone early adopters is missing the real point here. Apple will hard a hard time next time hyping a new product, and getting people to stand in line and generate massive buzz for free.
This has tarnished the Apple brand, and since Apple lives and dies by the brand, it's not good economics on their part. Or even good common sense.
Posted by: foo at Sep 7, 2007 5:51:28 PM
Does anyone think this apology and rebate might have more to do with Apple's customer base? I have no direct evidence, but I'm pretty sure there is a high correlation with more of an anti-business, lefty political tendency for Apple's customers. They feel that corporations, like the Gate's evil empire, take advantage of them, while Apple is somehow different.
Posted by: Yogi at Sep 7, 2007 6:03:23 PM
The exact same thing happened with the Motorola Razr when it came out a couple of years ago. First it was a $500 cell phone, then the price dropped to something reasonable, and now you can pick one up for free like the cheap Samsung I have in my pocket. That people are SHOCKED, SHOCKED! means they simply don't pay attention to the cellphone market.
Posted by: Timothy at Sep 7, 2007 6:05:56 PM
A fool and his money are soon parterd. Only a complete draws attention to his foolishness.
Posted by: Max at Sep 7, 2007 6:09:34 PM
Trea is right about cellphones in general. My $10 refurbished Erickson phone outlasted the $250 motorola KRZR I got as a gift. Also, the microphone and speaker work much better than on the motorola, since they're not encased behind sleek-looking plastic. Oh, also, the battery life is longer, and the keypad is nicer. I don't really miss the camera or the sleek uber-cool look.
Posted by: Lucas at Sep 7, 2007 6:38:53 PM
Even a stopped clock is right twice a day. Which means that even libertarians agree with me on occasion.
I make sure my stopped clocks keep moving, just to ensure they are never right throughout the day.
By the way you might prefer my newer essay as it applies directly to our two eminent hosts, instead of generally to economic shills
It is quite informative, but I don't think it qualifies as an essay. In short, it is all truth about the world around us with no input from you! I also think that you arbitrarily neglect all the other GMU libertarians (though you did briefly mention Vernon Smith but not Buchanan). You can find them blogging at Econlog, Cafe Hayek, The Austrian Economists, Stationary Bandit, Overcoming Bias (well, Robin Hanson is from GMU and Will Wilkinson is a libertarian, so if you combine them it counts), Volokh Conspiracy and probably others you can find on their side-bars. Oddly enough, the person at GMU whose identity is most strongly wrapped in their libertarianism is Daniel Klein, who does not have a blog but has a page here.
mtraven, who I know from Mencius Moldbug's Unqualified Reservations, just recently discovered the terrifying power of the Kochtopus. Just goes to show that he should have bought Brian Dougherty's book.
Posted by: TGGP at Sep 7, 2007 6:40:56 PM
"Again, I think the whiners were foolish to buy into a product mystique cultivated by a corporate marketing department"
To the excess at which it was, yes. Same thing with Snakes on a Plane and 300. But at least the IPhone is decent.
But the whining worked, Tyler, and Apple can continue to exploit these people for more and more money because their brand was preserved.
Who's the winner? Apple.
The losers? Hint: "That people are SHOCKED, SHOCKED! means they simply don't pay attention to the cellphone market." A fool and his money are always parted. ;)
Posted by: Robert Olson at Sep 7, 2007 6:41:26 PM
I've never read anything more absurd than the article on so-called durable goods monopolies.
Posted by: Bill Stepp at Sep 7, 2007 6:42:49 PM
I like how Michael Blowhard is whining that people like me are whining about other people whining about the iPhone price drop. I am also amused that he can't accept that our emotions are as completely as valid as the whining early adopters' emotions. I also like how his emotional (and superior economic/human nature) understanding leaves him mystified at people being upset over overprivileged yuppies demanding unearned income from other people.
That conforms to my experience with people who insist that "emotions can't be wrong." What they mean is, "*My* emotions can't be wrong. By not immediately accepting mine, and any accompanying worldviews that inform them, you are denying them and hence feeling a wrong emotion."
Posted by: Sandy at Sep 7, 2007 7:07:28 PM
Tyler, read Cringely on this. And then take that with a grain of salt. Yes, this was a scripted marketing exercise by Apple. But no, this only superficially has to do with making Apple and Jobs seem all customer responsive and appreciative of the impact on early adopters. If it was about that, Jobs would have gone Japanese executive (i.e. slit his wrists).
This little stunt is just about boosting the street cred of the iPhone. The same thing happens with every other phone to hit the market, except customers don't whine and nobody even hears if they do. We're all giant suckers for being drawn into this at all, you included for dissing the so-called complainers. Everyone I know who has an iPhone is happy about the price cut because they can get one for a friend or family member.
Posted by: Brad Hutchings at Sep 7, 2007 7:15:28 PM
Apple is a religion. People did not react to the $600 iPhone. They reacted to what they perceived as a betrayal by their Idol. Me, a cheapo LG and a cheapo PC, sorry, I have a standard main line religion. Don't need Apple.
Posted by: Rob at Sep 7, 2007 7:17:23 PM
From rdf's little piece on our authors:
"The three Koch foundations contributed $23,030,497 between 1985 and 2002 to the university, its foundation and its Institute for Human Studies."
So how much is that, enough to fund the usual IHS programs and maybe two dozen grad students for one whole year???? I swear you people are like Doctor Evil: "One MILLION dollars!" [pinkie to mouth]
23 million over 17 years is a bargain for a huge free-market conspiracy. Who knew it was so cheap?
Posted by: Steve Miller at Sep 7, 2007 8:56:44 PM
I told the kids in the office that I'd wait until iPhone-equivalents were free with wireless contracts. You should have seen the outrage! They said "They can't" and I said "actually, I think they will, the relative patents aren't that tight."
I am not a lawyer, and I may have missed news of a really good tight patent, but really I think the dynamic here is that Apple can charge (could charge) $600 where other companies could not. And so they got to lead the technology curve based more on the price they can charge (through brand appeal) than on the unique intellectual property they owned.
So maybe my "free with 2 year contract" phone won't have every UI wrinkle, but it will have the functionality.
If I'm an old guy who got tired of paying early-adopter prices 10 years ago, I can live with that.
(maybe some others just got their early-adopter education)
Posted by: odograph at Sep 7, 2007 9:04:36 PM
No one whines when seagate hard drives come down. The whiners are upset because their status symbol just got destatused.
But, of course, if one buy's a status symbol for the status, then perversely, that is an indicator of low status. So by opening up ones mouth and complaining, one loses even more of the status one just paid $600 for.
Posted by: James A. Donald at Sep 7, 2007 9:06:30 PM
I understand how Tyler feels in some ways. Why should a person complain simply because another person gets a better deal. It should have no effect on whether the deal you received was good. However, there are at least three answers to this:
First, people are not just concerned about whether they have purchased an item that is worth more to them then the amount of money they have paid, they are interested in getting an item at the best price possible (or a "fair" price). Lets say the iPhone was worth $1000 to a particular customer, she has a consumer surplus of $400 when she purchases the phone of $600. That is a good deal, but if the consume was able to buy it for $400, they would have $200 to purchase other items, increasing their utility to at least $1200.
Second, Apple sells a product, but they also sell an (exclusive) culture. By increasing the number of people who can buy, they reduce that exclusivity. When a person purchased the phone for $600, they expected the price and the level of exclusivity to remain that high for a period of time (at least a year, let's say). When Apple reduces the price, it just reduced the value after the purchase was already made.
Third, Apple breached a custom that has value: selling a product at the same price to each consumer. It might be efficient for many companies to sell products at different prices to different consumers in order to extract the maximum revenue. And this could benefit most people by encouraging the production of valuable products, increasing the number of people who will want to purchase an item, and lower prices for many consumers. However, variable prices come with their own costs. When people know prices might change it adds an incentive to try to get the lowest price possible. This could encourage people to delay purchases, to invest time into investigating price changes, and generally increase transaction cost. Ever know someone who spent every day checking flight information looking for price drops? Ever tried to find out the real price of a car? Getting a good deal can be a pain in the ass. Having a norm of giving everyone the same price reduces these transaction costs.
Posted by: c&d at Sep 7, 2007 9:21:04 PM
But, of course, if one buy's a status symbol for the status, then perversely, that is an indicator of low status. So by opening up ones mouth and complaining, one loses even more of the status one just paid $600 for.
I call bullshit on that one. Admitting you bought it for status causes you to lose status but just think of Rolex, ferarii, yachts and whatever other status goods you want and I think it's pretty clear that people gain status all the time by purchasing goods just to do so.
As far as people feeling upset I think getting mad at people for being upset is equally irrational as getting mad at the price change. It's just a fact of life that utility isn't solely dependent on consumption. Two people in the exact same economic situation are going to feel totally differently depending on whether they see themselves as having gotten a good deal or gotten screwed over. The idea that utility and consumption are straightforwardly related has been debunked so many times that it shouldn't even be an issue anymore.
However, ignoring that point for the moment I think there is a much more rational way you can see this reaction to apple. People being angry at another party in a negotiation is really a sort of negotiation strategy. Being mad at apple is a way of saying 'you better give us some more money or we won't buy your products at adoption anymore' and IT WORKED.
Posted by: TruePath at Sep 7, 2007 10:18:03 PM
From the GMU web site:
The Koch Foundation’s generosity includes assistance in the recruitment in 2001 of Vernon Smith and his team of six distinguished economics professors to Mason. Smith, now a Nobel laureate, is a leader in the growing field of experimental economics. At George Mason, undergraduate and graduate students across related disciplines evaluate the performance and function of real-world markets and institutions.
Bringing in seven people as a team is not insignificant as the tone of the press release rightly indicates. The thing about early money is that it determines the course that is followed subsequently.
I suppose that arguing with shills and their adherents is pointless, but denying the power of donors who give money with strings attached is disingenuous or naive.
It is also impossible to know how directly some of the biggest supporters of this site benefit from the arrangement since they chose to hide behind screen names.
Let's just say that the number scholars who push the libertarian philosophy and who aren't tied to the core of big conservative donors is extremely small. In most advanced countries they don't get any notice at all. If the libertarian ideas are so important than why is it a creature of just the US and the wealthy donors who make it possible?
Posted by: robertdfeinman at Sep 7, 2007 10:42:50 PM
Isn't it great when an economist illustrates his total lack of awareness of human behavior and human nature in such an obvious way?
Forget the mumbo jumbo or regression analysis, this is why one should never trust an economist, especially one trained at Harvard (I speak of what I know).
Praxeology will always find an answer and never will Mr. Nice Guy be fed up again.
Resent Coase (72), induce wage and price stickiness and widen the Okun gap!?
Give me a break.
I see this blog becoming a little more polemical and disputatious every day.
Are you trying to raise the number of comments in order to prove your worth and sell to the highest bidder?
The kind of posts I came here for in the first place are becoming few and far between.
Posted by: Pat at Sep 7, 2007 11:26:00 PM
Resent Coase (72), induce wage and price stickiness and widen the Okun gap!?
Give me a break.
Dude. It was a joke. He was teasing.
Posted by: Bob V at Sep 8, 2007 12:56:28 AM
I suppose that arguing with shills and their adherents is pointless, but denying the power of donors who give money with strings attached is disingenuous or naive.
I'm of the naturally cynical sort, but I think when it comes to politics you have to stop assuming anyone's behavior makes a lick of sense. For Roosevelt's sake, some people are even libertarians! It's rather Public Choice school libertarian of you to believe that money has such a corroding influence on our democracy, but tons of idiotic policies that benefit fat cats are quite popular.
Like Barkley Rosser, you might not want to support John Lott, but you can do like I did and go in a book-store and browse through the section in Freakonomics on campaign contributions and their effect on politician behavior. The most sensible conclusion seems to be that they really do believe the awful policies they enact are for the greater good. I think if you look at total academic donations in the United States you'll find that the Kochs play a fairly minor role (I honestly don't know if there's an equivalent of www.opensecrets.org for that kind of donation).
Furthermore, if you divide libertarians into Koch affiliated and not, you'll find the former are much less strident! Look at the Mises Institute/Lew Rockwell Center crowd and you'll find them regularly denouncing Cato for their unprincipled deviations from pure-libertarianism (one somewhat legitimate area seems to be flip-flopping on pharmaceutical importation but I think their bete noire Tom Palmer stayed opposed to it). Mencius Moldbug would say this betrays the pernicious influence of Koch, but I think it's an issue of selection where the prickly and crackpotish don't wind up affiliated with Koch or quickly sever their connections.
I suppose that arguing with shills and their adherents is pointless
Assuming others are arguing in bad-faith is not the way to go. Take a lesson from Chris Capel. I'm not saying you shouldn't assume I'm a bad person, but I'm not a bad person for any reasons I'm keeping hidden. I'm upfront about not being concerned with the greater good or believing there is such a thing. The persistency with which other libertarians argue with me over this on the internet leads me to believe the vast majority really believe they are working for the good. Their morality is no smoke-screen.
It is also impossible to know how directly some of the biggest supporters of this site benefit from the arrangement since they chose to hide behind screen names.
I use a screen-name because I'm too unimportant for my real name to mean anything to anyone I've encountered online and because people often assume greater honesty on the part of the pseudonymous. Send me an e-mail if you want and I'll let you know who I really am.
Let's just say that the number scholars who push the libertarian philosophy and who aren't tied to the core of big conservative donors is extremely small.
Give an estimated range. Also, I don't think Koch can be classified as a conservative.
In most advanced countries they don't get any notice at all.
So do you believe the libertarians there are actually sincere?
If the libertarian ideas are so important than why is it a creature of just the US and the wealthy donors who make it possible?
I believe there a great many important ideas that NOBODY believes because they haven't been thought of yet. I believe that the majority of humanity believes in religion and even those that don't are insufficiently atheist for me to consider them sensible (hyperbole, but you get the point) in that area. There is no reason to assume that because an idea is important or valid people will believe in it; that's a non-sequitur. If you really want to know about what libertarianism was like before the Kochs, read Brian Dougherty's "Radicals for Capitalism". You'll find yourself saying "Thank God Koch marginalized those wackoes!"
Posted by: TGGP at Sep 8, 2007 12:57:42 AM
Bringing in seven people as a team is not insignificant as the tone of the press release rightly indicates. The thing about early money is that it determines the course that is followed subsequently.
----------------------------------------------------
they all left, right?
Posted by: GoodneesOfFit at Sep 8, 2007 8:27:21 AM
My point was very simple: even a pretty rich donor only gives a few million a year to various political causes. That's a tiny portion of funding in the think thank world. It's a tiny portion of money spent on endowed professors, or even grad student funding. And compared to total spending on political advocacy of all sorts, it's nothing. Funny how no one ever compares Koch foundation grants to those of say, the Ford Foundation or the MacArthur Foundation. I'd guess, roughly, that 70% of corporate/foundation money for policy research funds academics, grad students, etc. who are vaguely or explicitly left-wing. Maybe 25% could possibly be called conservative, and 5% is free-market/libertarian. The "follow the money" schtick is at best wrong and at worst disingenuous. People do not generally vote their self-interest, and donors do not generally support political causes out of self-interest. And I'm just talking about funding from private groups. Then there's government funding. It's a strange conspiracy theory that doesn't take government spending on similar activities into account.
All that said, the libertarian movement must be much more successful than I think, if it has people like rdf so worried. I just assumed so few people with so little money and a completely irrelevant political party wouldn't bother people who are happy that government spending is a few trillion dollars a year and growing. Seriously, could the current administration be much less libertarian? Or congress? Or the Supreme Court? Universities? If there is a vast libertarian conspiracy, then it has failed spectacularly. Get a grip.
Posted by: Steve Miller at Sep 8, 2007 8:33:35 AM
Steve Miller makes my day with the post above.
On a related note, I don't think rdf's point is completely invalid. Our hosts are indirect beneficiaries of a significant largesse. But brainwashing is the objective then will it work? It hasn't for me. I come to MR not for it's ideological musings but for interesting everyday stuff. I think most visitors to MR are too smart to be brainwashed anyway. They can spot an obvious trick when they see one. Also, the vast majority of visitors here are pre-selected by their ideological leanings.
Posted by: sa at Sep 8, 2007 9:39:48 AM
Tyler was mad at other people who used the price drop of the iPhone as an excuse to vent about their buyer's remorse.
Prersumably, he used the occassion to demonstrate superior status as a economic thinker.
And other commentators are downright snarky about the lack of economic wisdom that the early adopters reveal by their venting.
It would appear that most commentators believe that their own light shines more, if they put the other fella's light out. And isn't that the source of buyer's regret - the future self remonstrating the past self about its hasty decision making.
Posted by: michael webster at Sep 8, 2007 11:09:13 AM
Apple's decision is a very good business decision.
In the future, Apple will release more products. Everybody realises that these products will follow appromiately the same price pattern. Now there is some number of people who may want to wait for the first price reduction before buying the technology. If Apple does not get enough early adopters and enough people wait for the price to fall, the product will not be a success.
I would guess that Apple would have to make this rebate a tradition for every new product.
Posted by: ranon at Sep 8, 2007 12:22:01 PM
I claim that a core group of super wealthy has an undue influence on policy and political philosophy in the US. I also claim that most people don't think this is so and doubt that such a small group could have so much power.
I try to offer some evidence to support my hypothesis, but I don't see any from the other side. It is natural that most Americans, having grown up with the concepts of democracy and the founding fathers, would find the idea that we have a functional plutocracy hard to accept. This is especially true since the issue is hardly ever discussed in the press and since many of the group I'm discussing aren't even household names.
So here are some random links for anyone who wishes to explore. First, since someone mentioned Ford Foundation:
http://www.sourcewatch.org/index.php?title=Ford_Foundation
(Their funding isn't relevant, only the projects they support). Look at 2005 and see if you can see an ideological policy bias (besides the wish to "do good")?
Now use sourcewatch and look up the usual prominent think tanks: Heritage, Hoover, Manhattan Institute, etc.
You will see the same small group appearing over and over again - Scaife, Mars, Olin, Koch, Templeton, etc.
Remember a "think tank" doesn't need a large budget to be effective. Many of the staff are employed elsewhere as well, there is no big infrastructure to keep going, just some offices and there are no expenses as in an academic department. In other words a little money goes a long way.
As for academic departments it seems contrary to the goals of a university that a department would have a specific philosophical outlook. When one says U of Chicago one has a pretty clear idea of what sort of material will come out of their economics department. If the goals of a university are to allow students to discover the "truth" then built in prejudice is contradictory. This is especially true of a public institution.
Obviously there are schools that are set up for the opposite purpose, there is a new book out about Patrick Henry University which is specifically aimed at turning out Christian, conservative activists.
Ideologically inspired "research" is not only bad science, but undermines the credibility of the entire profession, whether economics or English lit criticism.
Posted by: robertdfeinman at Sep 8, 2007 2:15:33 PM
I claim that a core group of super wealthy has an undue influence on policy and political philosophy in the US.
Do you believe there is such a thing as "due influence"?
It is natural that most Americans, having grown up with the concepts of democracy and the founding fathers
What in Sam Hill are you talking about? The founding fathers didn't care for democracy, that's why the majority of the population was disenfranchised when they founded the country. You had to be a landowning white male to vote.
As for academic departments it seems contrary to the goals of a university that a department would have a specific philosophical outlook. When one says U of Chicago one has a pretty clear idea of what sort of material will come out of their economics department. If the goals of a university are to allow students to discover the "truth" then built in prejudice is contradictory. This is especially true of a public institution.
A lot of Chicago profs have won the highest awards in economics. These guys aren't hacks. Same with Vernon Smith and Buchanan from GMU.
Obviously there are schools that are set up for the opposite purpose, there is a new book out about Patrick Henry University which is specifically aimed at turning out Christian, conservative activists.
There's a really good Gene Expression post about that I think you'd be interested in.
Ideologically inspired "research" is not only bad science, but undermines the credibility of the entire profession, whether economics or English lit criticism.
I don't know how to break this to you rdf, but a huge number of people have considered academia to be ideologically tainted for some time. The most vocal of those people is David Horowitz, whose www.discoverthenetworks.org (whenever someone insists LVMI/LRC should be shunned by conservatives they cite this page) reminds me of your own page detailing the backing of libertarians. I don't go much for conspiracy theories, so look at polls of academics, which you can find a collection of here. Libertarians are greatly over-represented in universities: there are about as many of them as there are conservatives (who are greatly underrepresented, for reasons of self-selection I believe). Both groups are tiny in comparison to the left (whether progressive or establishment).
If you want to claim that libertarians have hijacked our democracy, I think you need to explain why Ron Paul votes alone so often.
Posted by: TGGP at Sep 8, 2007 5:37:07 PM
Is it not possible that the individuals that are unhappy about the price drop were those who got positive surplus as Tyler claims, but that had they known the price would decrease so fast so quickly (c.f. their presumed expectations that the price would drop but less quickly) they would have maximised surplus by waiting six months.
The issue here doesn't seem to be that the price dropped as Tyler (I suggest somewhat superficially) posits, but that the price dropped faster than expected, and that the backlash is as a result of a breach of the imaginary contract of expectations, that the purchasers of the iPhone believed (rightly or wrongly ) that Apple wouldn't behave in this way.
Posted by: Robbie at Sep 8, 2007 9:06:42 PM
---Why are you so mad that people don't behave according to economic theory? Since when did theory make the leap to prescription?
I found that most game theory I was taught in grad econ courses was similar. The profs were always so angry when people didn't play the game correctly, constantly confounding them.
Posted by: anonymous at Sep 8, 2007 10:27:21 PM
Anyone who has Tyler's reaction to the Apple iPhone customer complaints about the price cut should never try to get a job in marketing at Rolex or Rolls-Royce.
Tyler is homo economicus raging in frustration at homo sapiens because homo sapiens refuses to act like homo economicus.
Posted by: Randall Parker at Sep 9, 2007 1:07:48 AM
People don't NEED the iPhone, they need something to show off to others and carry proudly on their hips. These people see the latest thing on the market and automatically purchase it at retail price knowig that in six months the price will drop dramatically and the phone will ultimately have more attractions and work more efficiently. The surplus of iPhones is now at a high demand(just coming out into stores) so the producers released a certain amount while customers waited and paid to be in long lines for theis over priced product.The total bebefit for Apple is a great number ranging high above the cost to actually make the product. After hearing complaints about the iPhone and how it doesn't work like it is supposed to and the sevice it terrible I wonder why people pay the higest amount for something they don't need when the quality and price will both be better in a matter of months?
Chelsea Meffert
Posted by: at Sep 9, 2007 5:53:00 PM
@randall:
People act like homo economicus, in fact they want their money back. Tyler is raging about the bad moral underpinning of their claim. They knew that prices for new mobil phones are falling all the time.
Posted by: SteffenH at Sep 10, 2007 5:20:28 AM
I think that the people who bought the very first Iphones should have realized that the price would eventually drop as it does with every product that comes on the market. Take for example the Ps2 when it came out was 300 dollars and now you can get one for $150. They released the PS3 and the priced dropped on the PS2 so you are inclined to assume that a company such as apple is already developing something newer and better than the Iphone. I never wanted an Iphone because I already have an Ipod and a good cell phone. Apple did the smart thing from and economics stand as well. They knew that people would flock to buy the Iphone because it was a new product and they hyped it up really well. After the product had been on the market for a couple of months they reduced the price and are selling more now and the people who bought the first Iphones are getting angry because they can't use the "haha I have and Iphone and you don't" anymore because it is now cheaper so more people have them.
Posted by: Josh at Sep 10, 2007 12:31:19 PM
I don't get the outrage.
A) The whiners are doing just that...and they're doing it because it works. My wife makes a habit of asking for a credit when she's purchased something just before it goes on sale. The stores often oblige. They realize that with easy returns policies she could just return the thing while she's there and then repurchase, and they'd rather not annoy her in any case.
B) In this case, the whining works to Apple's advantage since the credit they're handing out is just likely to generate additional sales. Just more price discrimination dressed up as an apology.
Posted by: Bernard Guerrero at Sep 10, 2007 5:32:04 PM
First of all, you are an idiot for buying any sort of new technology when it is first introduced to the consumers. Are you two years old? Every year, either around December or June there is some new and amazing technological gadget that comes out. Is it ever cheap, is it ever avaliable to all that want it? No, it is not. There is a reason for this, the reason being that the developers know that there is always going to be that must have consumer who will pay anything to be the only one on the block with a gadget. Well all I can say is you are a dumbass. If you had just waited a few months and not have been a greedy bastard, the must have demand for the product would go down, more supplies would be made and the price is going to go down. So quit your bitching and complaining.
Posted by: Stephen at Sep 10, 2007 10:48:52 PM
Look, Steven D. Levitt of 'Freakonomics' put it best in his article about this:
"What economists (and Apple too, I guess) ignore is that consumers hate it when companies follow practices that look like they are designed to maximize profits. You won’t find it in economic models, but consumers care about the reason a firm chooses the price it chooses. If a firm raises prices because something happens to make it more expensive to supply the good (e.g. oil prices rise, so the price of airline tickets goes up), consumers are accepting.
If a firm raises prices because they cannot make enough of the product to satisfy demand (e.g. like they should have done with the Wii), consumers are likewise understanding. But when prices are raised and lowered strictly with the goal of extracting the most possible from consumers, people get upset. Apple’s price cut looks like one driven purely by a desire to maximize profit, which is why everyone is so mad. "
http://freakonomics.blogs.nytimes.com/2007/09/10/should-apple-burn-its-economics-textbooks/#more-1851
Posted by: Sonny at Sep 11, 2007 3:45:46 AM
Tyler, your post was one funny bit.
Even funnier was how seriously people take this iPhone stuff. Lucky for me we don't even have them in Australia yet.
Posted by: Bob Meade at Sep 11, 2007 7:48:38 AM
It just occured to me that the reason for Apple's reduction of the price of the iphone was to make it closer to the price of the ipod touch. Who wants to go around having their ipod touch mistaken for an iphone when the price difference is just $100? The reduced price makes the iphone more attractive, and the reduced price difference now nudges the market for the ipod touch towards the iphone. Since that price is above marginal cost, it makes sense.
Except for the backlash.
And the rebate.
Stupid Apple.
Posted by: almrr at Sep 15, 2007 11:02:22 AM
