Apple Giving Back To Early iPhone Buyers

CEO Defends Price Cut; Offers $100 In Credit To Those Who Paid More

(CBS/AP)  Faced with a huge outcry from customers who bought the most advanced model of the iPhone before a $200 price cut, Apple Chief Executive Steve Jobs is offering to give a little bit back to early buyers.

"We have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store," Jobs wrote in an open letter posted on the Apple Web site.

Jobs acknowledged that Apple disappointed some of its customers by cutting the price of the iPhone's 8-gigabyte model and said he has received hundreds of e-mails complaining about the price cut.

"Our early customers trusted us, and we must live up to that trust with our actions in moments like these," Jobs wrote.

The letter says the details of the rebate are still being worked out and will be posted on Apple's Web site next week.

"Many loyal Apple customers who paid nearly $600 felt that that they had been punished for being an early adopter," said CBS News technology analyst Larry Magid. "By giving them $100 store credit, Jobs not only hopes to make them less angry, but Apple gets another benefit. It brings them back into an Apple store where perhaps they'll spend more than $100."

Apple's price cut of its iPhone and the new lineup of iPod players are expected to ring in healthy holiday sales, but Wall Street investors accustomed to Apple's meaty profit margins appear a bit disappointed.

Apple's stock, after falling 5 percent on the news of Wednesday's announcements, fell another 1.3 percent Thursday to close at $135.01, or $1.75 lower than Wednesday's close.

---

Click here for a company profile and track the stock price

---

Meanwhile, gadget enthusiasts who snapped up the ballyhooed iPhone before Wednesday are coping with a bitter aftertaste now that it is $200 cheaper within 10 weeks of its introduction.

The price cut, from $599 to $399 for the 8-gigabyte iPhone, immediately set off a debate on online tech forums between early adopters, who said paying a premium price came with the territory, and those who said they felt burned. The price reduction was too much too soon, some complained.

In a discussion on The Unofficial Apple Weblog site, the views were split evenly.

Many customers took the iPhone price cut in stride, however. Ryan Roth, who bought one for $599 on Friday after months of research, chalked up his purchase to "the worst timing ever."

"I realize this is not their problem: I agreed to the original price - it's my fault," said Roth, 32, of New York, who has been thinking about getting a cell phone for four years but held out until the last week.

Jobs defended Apple's price cut in his letter to customers.

"I am sure that we are making the correct decision to lower the price of the 8GB iPhone from $599 to $399, and that now is the right time to do it," he wrote. "It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone 'tent'."

But Jobs added that "the technology road is bumpy," and there will always be people who pay top dollar for the latest electronics but get angry later when the price drops.

According to Apple's return policy, anyone who purchased an iPhone within the past 14 days and has the receipt can get a full refund if they haven't opened the product. If they have opened it, they still can get a refund of the price difference.

The steep price cut less than three months after the iPhone's launch on June 29 - and the discontinuation of the 4-gigabyte iPhone, which sold for $499 - were surprising from Apple, which usually keeps prices steady while adding new features. It normally discounts products only when they age.

Analysts said quick discounts are typical for the cell phone industry, however. The world's best-selling cell phone, Motorola Razr, for instance, debuted at $499 but can now be bought for less than $100.

"This is about Apple learning how to become a cell phone retailer," said Jeff Kagan, an independent telecommunications industry analyst based in Atlanta. "All of a sudden it's in the cell phone business, and everyone is trying to figure out how to measure it, and we don't know yet."

Jobs said the company is on pace to sell 1 million iPhones in the United States by the end of September.

The newest iPod media players, also announced Wednesday, include a model called iPod Touch that incorporates the iPhone's touch-screen and adds the ability to wirelessly download songs directly from the new iTunes Wi-Fi Store. Also new are a version of the best-selling iPod, the Nano, that plays video and a larger capacity, 160-gigabyte version of the video iPod, newly dubbed the iPod Classic.

Apple also announced a partnership with Starbucks: Starting in October, the coffee chain's icon will light up on the Touch whenever a user nears a shop that has Wi-Fi access. Users can then download the song that's playing in that Starbucks shop or get a list of the 10 most recent songs played.

Apple executives said the revamped and expanded iPod line - in which the iPhone is recast as the top model - is the company's most robust lineup ever for the holiday season. In 2006, Apple sold a record 21 million iPod players during the holiday quarter, about 50 percent more than in the same period the year before.

Apple has now sold more than 110 million iPods since they debuted in 2001.

[star2154]

I agree with Lester188. It is in no way at all like a bait & switch. And I don''t understand why people are so upset about Apple cutting the price. Every company does it to every phone. Get a grip and grow up.

[jester188]

brianbwb..

bait and switch...

your an idiot... you don''t even know what the term means...

this is not even close... bait and switch is if you advertise something... go into the store and they don''t have it so they try to seel you on a higher price item....

this is simply... no one wanted the product excpet for the geeks who waited in line... so they dropped the price... to top it off apple was nice enough to offer money back to the little geeks who cried...

please if you are going to make comments at least know what things mean...

[missingamerica]

Is pretty funny...wanna die in Iraq, or buy an Ipod?

[brianbwb-2009]

$100 credit is nothing, they still have your money, and the price difference is actually $200.

Sounds like a variation of "bait and switch", there should be a criminal investigation. The concept of consumer protection, and the laws enforcing it have been increasingly ignored, or actively eliminated by the recent presidents since Reagan.

[nothappyatall]

""Many loyal Apple customers who paid nearly $600 felt that that they had been punished for being an early adopter,""

LOL they are pissed because the dumb sheeple they are waited 6 hours or 10 hours on line in the rain or all night for the stores to open so they could be FIRST to buy these overpriced $600 gadgets and the price is less now?

Well too bad, they should have been SMART consumers instead of morons- EVERYTHING like this comes down in price, let the sheeple buy the over priced stuff and deal with all the BUGS, then 6 months later when all the bugs are fixed on THEM, and prices drop, THEN you buy.

First time Ive ever heard complaints of prices DROPPING lol!!!!

[socrates392]

Posted by krenz4 at 07:07 PM : Sep 06, 2007

Why don''t you just report him? While your at it, why don''t you also report Lars008. She is guilty of the same pointless ranting as oakishpines. I doubt CBS will do anything though. They don''t seem to care. Post something racist, sexist, whatever, they just remove the post, but they never ban people.

[krenz4]

Someone should really, seriously track down this oakishpines guy, he sounds like a real fruit, He reminds me of the Unabomber in his day, with his rants about what, only he and God only knows!! There is a scarrrry raving quality to his writings that suggests someone who wants to talk, but who has no one to listen..frustrated, government hating, possible pedophile with an undecipherable "agenda".

[socrates392]

I''''m surprised apple is giving the $100.00 credit. No one deserves it.

Posted by pared1 at 06:36 PM : Sep 06, 2007

They have tp keep their pathetic fans happy. That company stays afloat by catering to a particular market of rich people who don''t know anything about electronics and slavishly buy Mac products to be cool. If these people feel ripped off, Apple might lose its brand slaves and that would spell curtains for the company.

Apple must maintain their monopoly on the production of electronic fashion accessories that have no real functionality. It is their only hope.

[krenz4]

Somebody,,,, if you are listening or watching,,, Please block oakishpines. This idiot has nothing to say... ever. I think he is practicing his typing speed, rather than contributing anything.That, or He is some loser that thinks he might have something to say but likes to hear himself type. HElP US!!!

[krenz4]

Somebody,,,, if you are listening or watching,,, Please block oakishpines. This idiot has nothing to say... ever. I think he is practicing his typing speed, rather than contributing anything.That, or He is some loser that thinks he might have something to say but likes to hear himself type. HElP US!!!

[pared1]

I have to agree with what some are saying. Everytime a new product comes out the price is jacked up. People who bought the phone had to know this and just had to be the first to get one.

I''m surprised apple is giving the $100.00 credit. No one deserves it.

[krenz4]

I have to laugh at the "angry IPhone buyers" They get what they deserve perhaps when they Just have to be the first to buy an untried and untested technology stand in line for days for it to launch and then pay a huge price for it. Now they want to complain? Give me a break! Maybe next time they wont be so anxious to be the first to show off their new toy. Maybe they will exercise some restraint and thoughtfulness to such a major purchase.

[tcoleman12]

I bet that many of the people that are whining about the $200 drop in price are the same people that are asking the government to bail their dumba$$es out of the stupid home loan they signed and cannot pay back.

People need to take responsibility for the decisions they make. Never buy a new car right after they change the model and electronics get cheaper the longer they are around.

[rochest]

has anyone complained about the size of the keys on the keyboard? I find it impossible to use these keys without accidently typing by hitting two keys at once unless I''m paying really close attention! drives me crazy!

[themurph2000]

I''m starting to think that oakisphines is that guy who keeps getting booted out of California (or is it Washington) for posting stuff on the ''net about being a pedophile.

[cyberdjs4]

HaHa.

Get an i-Clone.
http://www.popsci.com/popsci/technology/e7e48a137b144110vgnvcm1000004eecbccdrcrd.html
It works the way the iPhone should and its already cheaper than Apple''s joke.

[beautiful121]

I agree with everybody
What the he!! are you talking about oakishpines????
nothing to do with anything:(:(
bluh

[nsane4fab4]

Quote from oakishpines: '''' ... it isn''''t that little militant girls can''''t make a living by marrying and slaving civilian men, it is just that militant men have a thing for disciplining and choring little militant girls ... ''''
Does this make anyone else sick to their stomach? What does it have to do with I-phones?

[nsane4fab4]

Oakishpines talking about little girls again..naked ones this time..you sick pervert! Never about the subject..Anyway, technology is ever changing..You buy first or you wait. I wait...

[samael2014]

I have news for all you people who think holding out for the $200 buck price drop was worth the wait. You still have a 2 year contract with AT&T that''s going to make that look like chicken-feed. If you were looking for an I-phone to use just as a mp3 player, like some people in this forum suggest, you would be way better off purchasing one of the new 80GB I-pods for $249 dollars, which has virtually the same features as an I-phone, but without the cell phone. That''s probably why they dropped the price on the I-phone, because if you bought it without investing in the AT&T contract for that price, you would have been duped into buying an 8GB Ipod that''s just like the new 80GB Ipod for $249, with the exception that you wouldn''t have access to the AT&T edge network for internet access, you would need your own hi-fi. The price cut on the I-phone, wasn''t to dupe those who invested in this early on, it''s to make the I-phone a more attractive baseline purchase when compared with the new 80GB Ipod. Now that I''ve already bought into the AT&T contract, buying a second I-phone at this price seems like an even better investment. Maybe that was part of their strategy too.