Remember the halcyon days of summer 2007, when people camped outside Apple stores in order to be the first one on their block with the iPhone? It was a simpler time, when USA Today offered videos on iPhone "buying strategies," and people like Evan Herman, 28, were scouting out stores for the best crowd, saying "half the fun is the experience of the line."
Alas, as actual apples ripen on the trees and autumn descends, those days are gone. Last week, Apple dropped the price of the iPhone by $200, to $399. The early adopters who had been enjoying the frisson of exclusivity (and perhaps the attentions of the opposite sex) every time they pulled their iPhones from their pockets were suddenly aghast: "I just felt so used as a consumer. They hyped up the iPhone for six months and built up our expectations, and then they grabbed our extra $200 and ran."
Initially, Apple stood firm, offering consumers a shrug and the cold comfort of "that's technology." But CEO Steve Jobs soon caved and offered $100 vouchers to earlier purchasers, though his statement wasn't terribly apologetic. There's "always someone who bought a product before a particular cutoff dates and misses the new price of the new operating system or the new whatever," he said.
"This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon." He could have been even more succinct. "This is life" would have done just fine.
Apple was trafficking in very basic economics. The practice of offering different sets of buyers different prices is called price discrimination, and all the cool kids are doing it. And some, like Apple, have taken a lot of flack for it.
The classic example of price discrimination gone awry is the great Coke vending machine scandal of a few years back. Some pointy-head at HQ had the idea the price of a can of Coke from a vending machine should fluctuate with the temperature. Thermometer-equipped vending machines would allow the company to charge more for an icy Coke on a hot day at the beach, and less when the weather was cool and pleasant.
The outrage of the Coke-drinking public knew no bounds, and neither did Pepsi's glee. Coca-Cola was forced to deny that it ever seriously considered the proposal.
Meanwhile, how did all these infuriated soda guzzlers with an overdeveloped sense of justice get to those hot beaches in the first place? They bought tickets from airline companies setting their pricing using exactly the same model.
So what's the difference? Why do people cheerfully accept price discrimination when it comes to airline tickets, and become Internet activists when faced with the same phenomenon in vending machines and iPhones?
To say that someone was discriminating was once a compliment. It meant he was a man of taste, the sort of person who could see fine gradations in value and parse the good from the bad.
In later years, discrimination became a dirty word-inverted from it its original sense to mean someone who separated people into unfair and irrelevant categories and the treated some of them badly for no good reason at all.
Maybe that's why the idea of "price discrimination" is so alarming in this day and age. Perhaps those early iPhone purchasers feel themselves discriminated against-trapped by a form of latter day technological Jim Crow.
A few people are probably just acting in a rationally self-interested way: If you could whine a little and get a 100 dollars back on, say, your TV or a ridiculous designer handbag, you'd do it, right?
But most of the people who were whining seemed to feel genuinely wronged: "I feel totally screwed," they say. "My love affair with Apple is officially over." Unlike airline tickets, Cokes and iPhones are easily perceived as identical products, even under different demand situations. And as long as you're not clear on how the underlying economics works, it's easy to feel like you took a bath.