When Bad PR Happens to Good Economics

iPhone whiners got more than they deserved.

Katherine Mangu-Ward | September 14, 2007

(Page 2 of 2)

Who has pushed me over the edge? 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!

Economist Ronald Coase asks us to consider the case of a railroad that owns all of the land along its right of way. At first, the railroad will offer the land at a high price, and sell (say) half of it to people who urgently want the land. The next year, it will sell more of the land at lower prices, increasing its overall profits and making land available to people who were willing to wait out the initial sale in the hopes of getting a better deal. Everyone who wants land gets it, some people just pay more for the privilege of getting it sooner. Sound familiar?

Sure, it's good economics—even if it's bad PR, Apple did manage to sell 1 million iPhones in 74 days-but is it fair? Is it just? To find out, we need look no farther than question posed by rubber bracelets everywhere: WWJD? Not What Would Jobs Do?, of course, since we already know: he'd give in to the whiners and offer $100 credits good for Apple products in the future.

The parable of the workers in the vineyard is the Bible's final word on this point, and takes a much harder line than Steve Jobs. Jesus tells the story of a group of workers looking for employment. A few are hired in the morning for one denarius. As the day drags on, more and more workers were hired, with the last batch brought to the field only at the eleventh hour. Then it comes time to cash out:

The workers who were hired about the eleventh hour came and each received a denarius. So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. When they received it, they began to grumble against the landowner. 'These men who were hired last worked only one hour,' they said, 'and you have made them equal to us who have borne the burden of the work and the heat of the day.'

"But he answered one of them, 'Friend, I am not being unfair to you. Didn't you agree to work for a denarius? Take your pay and go. I want to give the man who was hired last the same as I gave you. Don't I have the right to do what I want with my own money?"

As one writer put it: "if you're still upset about ‘paying too much' for your iPhone, take it up with the man upstairs."

Or maybe this is all just an extraordinarily elaborate PR strategy after all. Consider a customer we'll call "Katherine." She would never wait in line for a gadget. She's just not quite geeky/status-seeky enough. And she doesn't track consumer electronics prices, nor does she browse in Best Buy or the Apple store for fun. But thanks to the hullabaloo about the price drop, she now knows that Apple phones are "cheap." Hard to imagine the fact would have penetrated her consciousness so quickly or so thoroughly as it has without a controversy to reinforce the message.

Perhaps Steve Jobs did have the parable of the workers in the vineyard in mind after all. After all, the tale wraps up with that famous phrase, certainly applicable to iPhone prices today: "So the last will be first, and the first will be last."

Katherine Mangu-Ward is an associate editor for reason.

Comments

excimer|9.14.07 @ 3:15PM|#

There was a pretty good parody of the iPhone price drop on bbspot this week.

As someone who still can't afford an iPhone, I have little sympathy.

|9.14.07 @ 3:20PM|#

For once I pretty much agree with KMW. People were willing to pay a premium to have the first iPhone on their block. Surely they knew that the price would eventually fall.

On the other hand (and there's always another hand), perhaps the original iPhone customers felt as though the extra $200 they paid should have guaranteed them more time as "exclusive" owners than what they got. Whether or not that's valid depends on your opinion, but Apple lowering the price so quickly might cost them early buyers in the long run.

Mr. Spock|9.14.07 @ 3:25PM|#

I am not a big techie. I have only had a cell for a couple of years. I don't feel sorry for any of these people.

|9.14.07 @ 3:31PM|#

I've had a cell for three months and would like nothing more than to throw it out of my car window. My sympathy for people who don't find their phone/PDA/MP3 player/coffee maker/toenail clipper shiny enough anymore is minimal.

Plus, Katherine's completely right; every electronic device ever has launched at a high price which then dropped when sales fell off. Did anybody think the iPhone would cost $500 for a 4 gig model forever?

|9.14.07 @ 3:33PM|#

Whining about the price drop could be perceived as a price negotiating strategy.

Note that Jobs only gave the whiners a $100 credit toward purchases of other Apple products. Anyone want to hazard a guess whether these early adopters will "overpay" more than $100 on their next purchase, too, thus turning this apparent rebate into a profit center for Apple?

Anyone anti-capitalist whining about CEO compensation should, at the very least, shut up about Jobs' compensation, because he's clearly earning it.

|9.14.07 @ 3:34PM|#

2009:

"Today Apple introduces the iDevice. Cool people will be using iDevice. Trendy people will be using iDevice. Hip swinging faux intellectuals will be using iDevice. And it's only $899!

But it won't be available in stores. Not even the employee stores. No one gets the iDevice! You guys whined over the iPhone, and we gave out rebates. We learned out lesson. Today the price of the iDevice is $899. But no one gets one for three months,. Come back in December during the Christmas rush, and see if we've decided to drop the price to $699, or are going to wait until February for the $499 announcement. You guys can go use the ugly chocolate colored knockoffs for all I care."

|9.14.07 @ 3:36PM|#

I remember paying about $2,000 for an Apple computer that had about 4MB of RAM, way back when. It you compared to what you can buy now, it might (to the economics-impaired) seem like a ripoff, but back then it was worth it.

Episiarch|9.14.07 @ 3:39PM|#

I'm waiting for Apple to introduce the iPose, which will just be a large shiny plastic Apple symbol that you wear around your neck Flavor-Flav style.

Apple makes some good products and some shitty ones, but holy shit the smug pretension from the Apple devotees is like walking into a slaughterhouse in the summer.

|9.14.07 @ 3:41PM|#

Oh yeah, well I remember paying about $2k for an Apple computer that had about 64KB of RAM and Apple Basic hard-coded in the ROM.

|9.14.07 @ 3:42PM|#

The workers who were hired about the eleventh hour came and each received a denarius. So when those came who were hired first, they expected to receive more. But each one of them also received a denarius. When they received it, they began to grumble against the landowner. 'These men who were hired last worked only one hour,' they said, 'and you have made them equal to us who have borne the burden of the work and the heat of the day.'

"But he answered one of them, 'Friend, I am not being unfair to you. Didn't you agree to work for a denarius? Take your pay and go. I want to give the man who was hired last the same as I gave you. Don't I have the right to do what I want with my own money?"


I suppose the landowner does have the right to do what he wants with his own money, but he should probably rethink this policy as next time he's going to have a hard time finding workers willing to come in at the beginning of the day. I sure wouldn't.

|9.14.07 @ 3:43PM|#

"but holy shit the smug pretension from the Apple devotees is like walking into a slaughterhouse in the summer"

Episiarch--

You could just call 'em a bunch of phonies!

|9.14.07 @ 3:47PM|#

It's not that they mind paying so much for their phone. Now that they're cheaper, more people will buy them. They expected to stay ahead of the Jones' for a few more months.

|9.14.07 @ 3:50PM|#

Katherine proves that she is not a good study of Apple's economics. Many iPhone buyers were pretty confident that Apple would not lower their prices on the iPhones. Apple has little history of that practice. They simply introduce a new product. I expected the iPhone price would drop when they introduced the iPhone 2.0.

Angel|9.14.07 @ 3:51PM|#

Dan T

Im sure Jesus appreciates your recommendation for a re-write of the parable.

|9.14.07 @ 3:51PM|#

I more graduated price reduction over a few months would have accomplished the same goal, more or less, without generating all the flack.

Someone in Apple marketing has got some 'splaining to do.

|9.14.07 @ 3:52PM|#

Ooops... I meant "A more graduated..." not "I".

And no, it really wasn't me!!!

Bill Pope|9.14.07 @ 3:55PM|#

I have little sympathy for status-conscious early adapters. Anyone knows there's continous downward pressure on the prices of all things electronic. These well-heeled whiners just got a shorter period of exclusivity than they hoped for.

|9.14.07 @ 3:55PM|#

Katherine: No offense, but I'll take my econ 101 lessons from other (not divinely inspired) sources. Wink, wink.

|9.14.07 @ 3:58PM|#

Plus, Katherine's completely right; every electronic device ever has launched at a high price which then dropped when sales fell off.

True, of course, but not 33% in one day after only 10 weeks. That's a bit much. I enjoy mocking the pained cries and lamentations of fanboys as much as anyone but let's at least be honest. I can point and laugh while still accepting that they have an ever so slightly valid point.

|9.14.07 @ 4:02PM|#

They're whiners, through and through. They wanted to be first in the trend. They got what they wanted. If the iPhone was really what they were after, they would have waited until the lineups went down and any glitches in the device had been found and corrected. But they wanted to be "first".

Let them eat bytes.

|9.14.07 @ 4:09PM|#

They have no point, Matt. They don't have an "ever so slightly valid" wet turd.

These early adopters were high-fiving each other walking out of the Apple Stores when they bought the damn thing. Now they want to act like they were screwed? They're angry at themselves for being idiots. How many years now have we seen this pricing trend in electronics? Even people with no savvy in economics justify it as paying for R&D. How many people paid over $500 for a Betacord VCR? A decent DVD player is less than $30 today. Where is my "dumb-ass consumer" rebate for my 1985 purchase of a Betacord so I could watch Ghostbusters over and over again? And if Apple starts issuing refund credits to cover impulse buys of new technology, how can their market strategy continue to make a single cent? People aren't just buying technology with that company, they're buying membership in a club. They have those smug commercials where the young hip Mac Dude is so much savvier than the portly Republican looking Windoze schmuck. Hell, one of the biggest online retailers of Mac paraphernalia is called Club Mac.

Seriously, STFU, whiners!

carrick|9.14.07 @ 4:11PM|#

Dan has graduated from Troll to Satan's Minion ;-)

|9.14.07 @ 4:12PM|#

Dan T

Im sure Jesus appreciates your recommendation for a re-write of the parable.

In fact, you could take it a step farther and say that the workers were in fact ripped off because they had imperfect knowledge regarding the market rate for labor. They worked under the impression it was one denarius per day when in actuality it was one denarius per hour.

Imperfect information is one of the classic problems of the free market.

|9.14.07 @ 4:14PM|#

Just to be clear: is a "whiner" anybody with a complaint that you don't agree with?

Anonymo the Anonymous|9.14.07 @ 4:17PM|#

In fact, you could take it a step farther and say that the workers were in fact ripped off because they had imperfect knowledge regarding the market rate for labor.

Imagine Jesus' surprise when Dan T. shows up on his lawn to demonstrate the Parable of the Giant Inflatable Rat.

carrick|9.14.07 @ 4:22PM|#

In fact, you could take it a step farther and say that the workers were in fact ripped off because they had imperfect knowledge regarding the market rate for labor

Depends on many circumstances. If the produce must be picked that day, then the value of new labor may increase as the day progresses. So a contract to sell labor in the morning will have a different value than a contract to sell labor late in the day. I'm sure that many people will argue that this is not fair.

However, if the picking had gone well and the produce was all picked lunch, then the value of labor in the afternoon would be zero. Then we would need to feel so terribly sorry for those poor souls who got nothing because life's circumstances prohibited them from showing up in the morning. In this case we would have to take money away from the other laborers and redistribute it more equitably right?

Progressives are never happy, regardless of the outcome of market results.

Nobody iMportant|9.14.07 @ 4:22PM|#

sixstring | September 14, 2007, 3:43pm
"but holy shit the smug pretension from the Apple devotees is like walking into a slaughterhouse in the summer"
Episiarch--
You could just call 'em a bunch of phonies!

Don't you mean iPhonies?

Episiarch|9.14.07 @ 4:26PM|#

They have those smug commercials where the young hip Mac Dude is so much savvier than the portly Republican looking Windoze schmuck.

Those are the best. Macs are specifically designed to keep the user away from the internal workings of the OS. Most of the time when a program fails, they just suppress the error, or the machine locks up. The idea that a Mac user is saavier than a knowledgeable Windows (or even more so, Linux) user is laughable.

But it's all about image, which makes it even funnier, because these hip and oh-so-smart Mac users know jack shit, but Jobs has convinced them they do. He is a master salesman, there is no doubt.

|9.14.07 @ 4:29PM|#

"Imagine Jesus' surprise when Dan T. shows up on his lawn to demonstrate the Parable of the Giant Inflatable Rat."

That's funny on so many levels! Jesus said let the little trolls come unto me!!

|9.14.07 @ 4:29PM|#

Depends on many circumstances. If the produce must be picked that day, then the value of new labor may increase as the day progresses. So a contract to sell labor in the morning will have a different value than a contract to sell labor late in the day. I'm sure that many people will argue that this is not fair.

If this scenario is true, then we could reasonably assume that it's fair that the guy who picked from 7-8 PM could be paid more than the guy who picked from 8-9 AM.

But in this case, some workers picked from 8 AM to 8 PM and yet got paid exactly the same as someone who only worked from 7-8 PM.

Surely if the all-day workers had known that they could have only worked one hour for the same gross pay, they would have done it. So at the very least the landowner willfully mislead the all-day workers as to the value of an hour's worth of work.

It's really kind of odd that Jesus would be in favor of this, come to think of it.

|9.14.07 @ 4:33PM|#

The Apple cult amuses me, especially when they gnash their teeth and cry out to the Jobsonian god to whom they kneel in self-abasement.

I have much more respect for the Linuxians.

|9.14.07 @ 4:35PM|#

So, Dan, what's your take on the prodigal son?

|9.14.07 @ 4:37PM|#

Coming from someone with both a PC and a Mac, Macs are easier to use. Lots more cool software for PCs.

I wonder if the debate between users of the two platforms mirrors the debate (maybe in the 50s?) between people who tinker with their cars versus people who just want the car to start and get them to where they want to go.

robc|9.14.07 @ 4:38PM|#

It's really kind of odd that Jesus would be in favor of this, come to think of it.

Not at all, As you quoted above:

Don't I have the right to do what I want with my own money?

Jesus is supporting some of the same basic fundamental rights that many of us libertarians support.

On a related note, my favorite parable is the Parable of the Investment Broker (usually called the Parable of the Talents, but thats not what it is about, IMNSHO). Basic premise: double my money or face eternal damnation.

carrick|9.14.07 @ 4:39PM|#

If this scenario is true, then we could reasonably assume that it's fair that the guy who picked from 7-8 PM could be paid more than the guy who picked from 8-9 AM.

You can be really dense Dan. I said the value of the contract can change throughout the day. This means a contract to work all day for 1D is just as valid as a contract executed 8 hours later to work 1 hour for 1D.

The laborers that made contracts in the morning do not have legitimate rights to renegotiate their contracts at the end of the day after they see what other laborers got.

Surely if the all-day workers had known that they could have only worked one hour for the same gross pay, they would have done it.

They couldn't have known whether a contract executed 8 hours later would be worth more or less than the contract they entered into at the beginning of the day -- anymore than you can know whether to buy a stock now or tomorrow.

|9.14.07 @ 4:39PM|#

Apple has actively promoted the image that they are not only technologically superior to everyone else but morally as well. Apple users tend to be rabid in their support of their products. Apple has done nothing immoral in lowering the price, that happens to all electronics. But in handling it the way they did they risk tarnishing their image in the eyes of the true believers. A $100 in store credit will cost them very little, many people won't even get it or use it but it may help smooth the feathers of their core users.

|9.14.07 @ 4:42PM|#

"But it's all about image, which makes it even funnier, because these hip and oh-so-smart Mac users know jack shit, but Jobs has convinced them they do. He is a master salesman, there is no doubt."

Umm sorry, no.

Macs have been the favorite among power users or as Tim O'rielly puts it "Alpha Geeks" for sometime. Just because they are well designed and can be easy to use does not mean they are not powerful and used by serious computer users. Running Unix under the hood with the option of running Windows, Linux or OS X is pretty darn impressive and not for the novice.

Episiarch|9.14.07 @ 4:47PM|#

Macs have been the favorite among power users or as Tim O'rielly puts it "Alpha Geeks" for sometime.

Really? What Apple fanzine did you read that in? Any system can boot multiple OS's as long as the OS is designed for the CPU's instruction set.

"Alpha Geeks" is hilarious. Yes, of course the smartest geeks use Macs--it couldn't be any other way, because the smartest people buy Macs because Macs are for the smartest people! Or something like that.

|9.14.07 @ 4:48PM|#

As the saying goes (apply it here to the iPhone): "the best time to buy a computer is tomorrow".

|9.14.07 @ 4:54PM|#

I have much more respect for the Linuxians.

But the Klingons scare the crap out of me.

|9.14.07 @ 4:55PM|#

On a related note, my favorite parable is the Parable of the Investment Broker (usually called the Parable of the Talents, but thats not what it is about, IMNSHO).

Well, bear in mind that a Talent was a Roman unit of money. If it had taken place in the modern day it would be called The Parable Of The Dollars.

robc|9.14.07 @ 4:58PM|#

NotThatDavid,

Im well aware of that. I still think the parable is about the investment broker, not the money.

|9.14.07 @ 4:59PM|#

"Oh yeah, well I remember paying about $2k for an Apple computer that had about 64KB of RAM and Apple Basic hard-coded in the ROM."

Me too. Only, I had to walk five miles in the snow, uphill both ways, to buy mine.

|9.14.07 @ 5:01PM|#

But it has as much to do with the person who didn't invest it as the one who did. So it could be The Parable Of Two People With Money, Of Whom One Became An Investment Banker While The Other Buried His Cash In The Ground Like A Schmuck, but that doesn't roll off the tongue.

robc|9.14.07 @ 5:06PM|#

NotThatDavid,

In that case, it would be THREE people with money, since 2 invested properly.

|9.14.07 @ 5:10PM|#

""Alpha Geeks" is hilarious. Yes, of course the smartest geeks use Macs--it couldn't be any other way, because the smartest people buy Macs because Macs are for the smartest people! Or something like that."

Lets see.. the guys that run..

Slash.dot (http://slashdot.org/) use mac laptops...

So do they guys who run...

ARS (http://arstechnica.com/index.ars)

And one of the leading technological Guru's says that "Alpha Geeks" are using macs... (http://www.oreilly.com/)

I suggest you use google to check any of these credentials...

They all know more about computers than you and none are Mac "Fanboys"

So yes, I don't believe you know what you are talking about.

robc|9.14.07 @ 5:11PM|#

For those of you wondering what NotThatDavid and I are talking about - Matthew 25:14-30

14"Again, it will be like a man going on a journey, who called his servants and entrusted his property to them. 15To one he gave five talents[a] of money, to another two talents, and to another one talent, each according to his ability. Then he went on his journey. 16The man who had received the five talents went at once and put his money to work and gained five more. 17So also, the one with the two talents gained two more. 18But the man who had received the one talent went off, dug a hole in the ground and hid his master's money.

19"After a long time the master of those servants returned and settled accounts with them. 20The man who had received the five talents brought the other five. 'Master,' he said, 'you entrusted me with five talents. See, I have gained five more.'

21"His master replied, 'Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master's happiness!'

22"The man with the two talents also came. 'Master,' he said, 'you entrusted me with two talents; see, I have gained two more.'

23"His master replied, 'Well done, good and faithful servant! You have been faithful with a few things; I will put you in charge of many things. Come and share your master's happiness!'

24"Then the man who had received the one talent came. 'Master,' he said, 'I knew that you are a hard man, harvesting where you have not sown and gathering where you have not scattered seed. 25So I was afraid and went out and hid your talent in the ground. See, here is what belongs to you.'

26"His master replied, 'You wicked, lazy servant! So you knew that I harvest where I have not sown and gather where I have not scattered seed? 27Well then, you should have put my money on deposit with the bankers, so that when I returned I would have received it back with interest.

28" 'Take the talent from him and give it to the one who has the ten talents. 29For everyone who has will be given more, and he will have an abundance. Whoever does not have, even what he has will be taken from him. 30And throw that worthless servant outside, into the darkness, where there will be weeping and gnashing of teeth.'

|9.14.07 @ 5:15PM|#

Marginal utility, Dan. Marginal utility.

Episiarch|9.14.07 @ 5:21PM|#

They all know more about computers than you and none are Mac "Fanboys"

Really? You point me to two websites run by...Mac fanboys (ars and slash have entire Apple sections on their sites--but no Windows sections), and then the front page of O'Rielly but not the specific article.

Good job showing me up by pointing to some guys who run prepackaged forum software.

Mm-kay.

robc|9.14.07 @ 5:21PM|#

How many times has the best player in a sport signed a multi-year contract making him the richest player ever in his sport, only to be way down the list a few years later even though he is still the best player?

robc|9.14.07 @ 5:23PM|#

Im pretty sure slashdot runs on linux. Some of their editors may use mac laptops, but tell me what their SERVER runs and I will tell you what alpha geeks really use.

Paul|9.14.07 @ 5:34PM|#

I've saved a lot of money (and headaches) over the years by buying technology too late.

|9.14.07 @ 5:35PM|#

Imagine how the people who bought a Betamax VCR felt.Woops!

|9.14.07 @ 5:35PM|#

"Really? You point me to two websites run by...Mac fanboys (ars and slash have entire Apple sections on their sites--but no Windows sections"

LOL...

Thats because they added Apple sections in the last couple of years (about the time Tim O'rielly made his point, actually)... both sites where originally entirely windows oriented... hence no windows sections. They only added apple sections to try and be fair.

If you think those are fanboy sites then you are so outside the technology loop that its not worth pursuing.

"Good job showing me up by pointing to some guys who run prepackaged forum software."

Ask your technologically inclined friends if they have ever heard about those sites and if they are Apple apologists.Or you can attend any of the major computer conferences where the founders sit on panels discussing technology.

robc|9.14.07 @ 5:44PM|#

Gully,

slashdot windows oriented? Maybe anti-windows oriented. If anything, it is linux oriented.

Matt|9.14.07 @ 5:48PM|#

Everything you said is right, 42, but it doesn't alter my point. That $30 DVD player was $200 five years ago, not yesterday. If you bought your $500 VCR the day it came out then it wasn't $350 just the next month. The natural trend of electronics is down, yes, but it takes time; it's gradual. Apple lopped the head off their price in less than three months.

iPhone geeks watched their beloved corporation, led with benevolence and grace by the technological Dalai Lama himself... take them for granted. They were played for schmucks and hustled out of $200 by Apple banking on their goofy fandom to rake in some quick cash. They DID get screwed and that's precisely why the whole thing is so funny. Serves them right for lining up to buy a god damned cell phone.

|9.14.07 @ 5:49PM|#

@Episiarch

sigh.... its 2007 and we are still having OS religious wars and there is still trolls like you around. Fact is Mac OS X is a variant of unix which is a favorite of the tech geek crowd. If MacOS didn't run on top of unix it would not be the favorite of the geek tech crowd. Even if the hardware was better.

And I found the comment about Windows users being more savvy because they see the wonderful error message hilarious (yes the blue screen is soooo helpful). The majority of users of Windows are equally as stupid as the majority of users of Mac OS X. As for everyone else - they either like putzing around with Windows, linux, MacOSX, or for those out there BSD or Solaris. Does it really matter?

|9.14.07 @ 6:10PM|#

Mr. Spock | September 14, 2007, 3:25pm | #

I am not a big techie.

No -- you're a big Trekkie!

I have only had a cell for a couple of years.

But you've had that "communicator" -- basically the same thing -- for decades.

I don't feel sorry for any of these people.

That's because you feel no emotions, you pointy-eared Vulcan! But the next time you have an attack of the pon-farr, don't come crying to us for sympathy!

Toledo Whore|9.14.07 @ 6:11PM|#

Fuck the Apple bashers. They make elegant devices that just work. If you don't like it, go hide in your basement with your broken Vista beige box and broken clunky cell phones and STFU.

Unless you are a Linux user continually raging that no one sells Ogg compatable music. in that case, God help you.

Windows Lovers Can Blow Me|9.14.07 @ 6:21PM|#

>>> Does it really matter?

When everyone follows Microsoft's lead and stops caring about product quality and ease of use? Yeah, it fucking matters.

When MS can knock competing browsers out of the market for years, and stagnate the development of the WWW? Yeah, it matters.

The tech landscape is basically a sea of poorly designed hardware running poorly designed soft/firmware. And many people don't even consider alternatives because they've been so brainwashed by people who bash anything not Microsoft, and the latter do it for free, making them COMPLETE AND UTTER losers.

I was trying to troublrshoot my XP box this week. I only own it because my employer will only let Windows boxen log in due to "security reasons". (Yeah, I know... our IT folks are uber fuckheads who aren't fooling anyone). I was trying to identify a specific EXE file in a whole group, but couldn't because underneath it all Windows apps still have the SAME FUCKING 8.3 FILENAME STRUCTURE LEFTOVER FROM DOS!

So, yeah, it matters, and the effects are LONG TERM! We're STILL digging out from the DOS abomination that Gates defrauded the world with.

The dominant OS is a pile of dog shit that has been a massive anchor on the personal computer industry for years.

Episiarch|9.14.07 @ 6:26PM|#

Well, finally, I drew out the Windows haters. Took long enough. How are we supposed to have a flamewar without the crazies?

|9.14.07 @ 6:34PM|#

A windows user
A lonely scream
The blue screen of death.

|9.14.07 @ 7:02PM|#

Maybe the people who are pissed at Apple felt that they were paying for exclusivity--not just that they wanted to be seen as having the iphone first but having the cash to spend $600 on a telephone in the first place. Any luxury manufacturer, from Mercedes to LV, who dropped prices by 33% on their most exclusive items would infuriate its customers. In any event, the purchasers were denied information--they didn't know how quickly and how deeply El Stevo was going to cut prices, and he did.

Furthermore, if markets were really "perfect," as Katie suggests, no one would be mad.

|9.14.07 @ 7:05PM|#

Why would anyone pay $300 for a phone?

|9.14.07 @ 8:35PM|#

I use and administer Windows, Mac and Linux desktops. Having troubleshot problems, researched and recommended software, held users hands, etc, I am not a big fan of the Mac.

The good thing about the Mac is that it is a variant of BSD Unix. The bad thing about it is that the user interface really, really sucks: Hard to customize, error messages hidden behind walls, etc. Oh, and the hardware is, in my mind way, overpriced. In many ways you get less bang for your buck than even using windows, which is saying alot.

I don't make fun of Mac lovers or Windows lovers. However, using Kubuntu Linux with Windows running on a virtual machine as needed (My customers overwhelmingly buy custom windows apps from me rather than Linux ones), I am pretty satisfied.

bill|9.14.07 @ 9:02PM|#

As Kathy Griffin said "Suck it, Jesus!"

K.|9.14.07 @ 9:13PM|#

Nobody was forced to buy a iPhone, and each person who did believe at the time that it was worth their money. No sympathy for the whiners.

|9.14.07 @ 9:15PM|#

Why would anyone pay $300 for a phone?

If you have to ask that question, you wouldn't understand.

Monkey RobbL|9.14.07 @ 11:09PM|#

"Anyone anti-capitalist whining about CEO compensation should, at the very least, shut up about Jobs' compensation, because he's clearly earning it."

Particularly since Jobs's salary is only $1 per year:

http://en.wikipedia.org/wiki/Steve_Jobs#Return_to_Apple

Apple has definitely done this before, although not with a product as hyped-up as iPhone, and not so quickly after the product's initial release. I remember three or four years ago they were selling 23" displays during the holiday season for $2500, and then a few weeks later dropped the price to around $1300. No front-page news on that one. And price drops have often accompanied new iPod introductions. It's all part of the game. People say they're pissed at Apple, but I think a lot of people are really just pissed at themselves for not having enough patience to wait out the "cool" curve and get the product at a reasonable price.

Side note: Windows sucks.

|9.15.07 @ 12:42AM|#

I don't really have a dog in the fight of Mac vs Windows.

I run windows in order to play games on my pc. Haven't had a blue screen in 5 years of running Win XP.

Some alpha geeks may use Macs because of the Unix running underneath, but almost all Mac users I have met are graphic design types who are afraid of computers.

|9.15.07 @ 1:53AM|#

Oh joy! An OS flamewar on Reason. Here's my two cents...

Until pretty recently I was a serious geek working in London. I didn't do desktop support as a rule but was forced on occasion to deal with end users if they were important.

Mac users: mostly artistic, creative types who can't troubleshoot their way out of a paper bag with the odd ubergeek thrown in for good measure. Verdict: definitely fun to go down the pub with.

Windows users: too broad to stereotype but rarely very clued in.

Linux users: bad complexions, poor social skills, think PHP is a proper topic at the pub.

Me, I'm a cheap bastard and a geek so I run Linux, but at least I know that C++ is not a good topic when chatting up a bird.

Brent|9.15.07 @ 2:34AM|#

There's no "good" economics in here whatsoever. Even the price discrimination link in the article points this out: "price discriminations generally are lawful, particularly if they reflect the different costs of dealing with different buyers."
There's certainly not costs as significantly different as the price drop would suggest. This is Apple taking advantage of peoples faith in the free market and the idea that price is an adequate proxy for quality. The people that have been so loyal to them too. They don't have any idea what the phone is actually worth but they trusted Apple to be at least somewhat fair. This is behavioral economics maybe but its taking advantage of the lack of a free market and perfect information. Same with the Coke example.

That being said I don't understand what people thought was so special about them that they warranted such a high price.

Franklin Harris|9.15.07 @ 4:07AM|#

As one writer put it: "if you're still upset about 'paying too much' for your iPhone, take it up with the man upstairs."

Yep. That was me. And let me tell you, my invocation of Jesus' parable of the vineyard sure raised eyebrows among my fellow editors, given that I am a notorious heathen.

|9.15.07 @ 5:16AM|#

It's really kind of odd that Jesus would be in favor of this, come to think of it.

Dan T., in the parable of the vineyard, Jesus was saying that everyone who converts gets to Heaven, whether they did so early on or waited until the end of their life. It wasn't primarily intended to be an economics lesson on marginal utility, but rather a way to explain the point about going to Heaven in a way that uneducated peasants could understand.

|9.15.07 @ 9:43AM|#

maybe i'm just cynical, but i bet jobs had the price reduction planned well before they even released the iphone - they knew a certain segment of the market would buy the iphone as soon as it came out, no matter what the price. then a price cut lures in everyone else who wanted to buy one but couldn't afford it. then, a $100 credit is like a loss leader coupon to get people into a grocery store (the store knows the shoppers will buy more than they came in for). soon enough everyone will forget about this "scandal" and apple's sales will be through the roof.

|9.15.07 @ 9:47AM|#

Why hasn't anyone suggested a government bailout of the iPhone victims? It wouldn't cost Apple, the iPhone owners would get their money back, everybody wins!

|9.15.07 @ 9:49AM|#

"Oh yeah, well I remember paying about $2k for an Apple computer that had about 64KB of RAM and Apple Basic hard-coded in the ROM."

Me too. Only, I had to walk five miles in the snow, uphill both ways, to buy mine.

Luxury. I had to do all that, and then save up 3 years to get electricity.

robc|9.15.07 @ 10:18AM|#

prolefeed,

You made a mistake that I think gets made far too often in the church. You are stressing the symbolic meaning in the parable (which is absolutely what you said it is) at the expense of the straight forward meaning.

I think Jesus was talking both about salvation and marginal utility (and property rights). The parables have many layers, all the layers have lessons for us.

To exclude the marginal utility lesson because the "primary" lesson is about salvation is simplistic and insulting.

Monkey RobbL|9.15.07 @ 12:53PM|#

Andre,

I don't know why that's being cynical, it's simply giving Apple credit for good business sense. Maybe more credit than they deserve, IMO, but that doesn't strike me as cynical.

|9.15.07 @ 2:00PM|#

Well, it bears pointing out that Apple has also damaged the resale value to owners of iPhones. Which, it bears pointing out, are prone to upgrade frequently, meaning resale value is very important to them.

I wonder how much the sale price of iPhones on E-Bay has fallen?

Upon checking, used iPhones are still selling for $470+... Why!?!?

|9.15.07 @ 3:21PM|#

I'm with prolefeed on this. The whiney shmucks are going to drop $69 on a "mighty (expensive) mouse" and the rest, along with an additional$48 drop for the coolest $25 keyboard on the planet. Yes, Mr. Jobs is caving... all the way to the bank while he pacifies the masses for about 6 bucks.

crm114|9.15.07 @ 3:57PM|#

Why shouldn't these people complain? It is in their narrow self interest; they feel cheated, so they complain, so Apple gives them a $100 credit. Seems like a bunch of rational actors to me...

Daniel|9.15.07 @ 4:26PM|#

This is why capitalism is great. It encourages innovation, which means old technology gets pushed out the window and other people who otherwise couldn't afford this shit can get it. Suck it, socialists, wherever you are in this world. Suck the giant dildo of microeconomics.

People asking why they'd pay that much for a phone: self-interest, coercion, and enough money to do so. Nobody else is selling iPhones, other than Apple. In a market of iPhones (not phones, remember patent/copyright laws: nobody else can sell iPhones), Apple has a monopoly. It's the "cutting edge" of technology, I think. Those iPhone techies got the phone assuming it would stay at that range for a long time to come, and they got it having enough money to do it. It's a gamble. Every investment is a gamble.

If it was less that day, people would have sold that shit on eBay, the equalizer of supply and demand, for $600. Why aren't the people who bought a PS3 on eBay for $1,000 bitching? They wanted it first, and it ended up sucking a lot anyway. If Sony were smart, they would have kept to to the demand of the PS3.

Or, this could be a marketing ploy. PR. Whatever. I don't know that crap. Marketing and business sucks. It's the exact opposite of economics, which I admit is flawed relatively. See, the problem with economics is that it is a systematic approach that assumes absolute rationality; marketing, on the other hand, assumes everyone is an idiot (down to the marketer).

A real (not rational) economic|9.15.07 @ 5:10PM|#

No -- economics assumes the minimal set of factors to make predictions. In econ101 you talk mostly about supply, demand and price. Later you might get into both explicit and implicit factors. The big implicit factor here is that expectation of the price cut was much more in the future. And APPLE ITSELF encouraged this concept with its marketing and limited supplies.

What people at Apple forgot is that they positioned a luxury good and sold it as such. You don't then go out and undercut your product value.

Every aspect of the current nonsense is perfectly predictable from creating an expectation in the market and then actually shafting the consumer on the implicit side of the agreement.

Essentially, there is a subset of early adopters who would have been perfectly happy to have a 6 week wait if it meant $200 less. Apple made it look like such an event was far in the future and shafted the consumer's time preference value.

Apple deserved the black eye.

This analysis of course, shows that it has nothing to do with Bad PR for Good Economics. In fact, what happened was Bad PR for Bad Economics subtitle Just Desserts for Apple!

|9.15.07 @ 9:28PM|#

robc -- The marginal utility lesson is a good thing. Both levels of understanding in the parable of the vineyard are worthwhile (we'll ignore the rabid athiests who'll tear me a new one for saying that, yeah?), but the folks here were completely ignoring the primary lesson, so I thought I'd bring it up.

Don't know how that is "simplistic and insulting", but I'll turn the other cheek and assume you misinterpreted my intention.

We all good now? Time to hug some bunnies and look at rainbows? ;)

|9.15.07 @ 10:49PM|#

I can understand why these people are upset. They paid good money to yak on an exclusive piece of equipment. Apple went and sold that exclusivity out from under them. Was there fraud? No. Will these dedicated appleistas buy a PC or Creative MP3 player in the future? Probably not. But, c'mon, wouldn't you be pissed off if you were the type of person whose identity was wrapped up in flashy consumer electronics?

|9.15.07 @ 11:16PM|#

Apple had a product for sale at a specific price, and people who wanted it paid that price. It was a voluntary transaction on both sides. End of story.

robc|9.16.07 @ 1:00AM|#

prolefeed,

I think we are in agreement, I just was disagreeing with some of your language.

The simplistic part was assuming the salvation message was the primary message. Was the target audience of the parable 1st century jewish peasants or 21st century H&R readers?

I dont feel comfortable calling either one the primary audience so I wont say that the marginal utility isnt the primary meaning.

The insulting was in reference to you implying that uneducated peasants wouldnt understand marginal utility. But, after rereading, you didnt imply that, in fact you imply they would understand it and would therefore apply the symbolism to the salvation issue. So I take that back.

|9.16.07 @ 2:23AM|#

I was an early iPhone adoptor - I had no regrets after the price drop, before even the rebate... After all at the time I thought the phone was worth $600 (and based on the use I have been able to make of it, I still do).

Job's $100 discount can be seen as being a bit weak, but what he was really heading off was not anger from current buyers but a potential drawdown in sales for new iPods. After all, some people might have delayed fearing a similar price drop after Christmas... this way they can see that even if such a thing happens, Apple might well meet them half way in a refund even if they are out of the return period.

That breaks up the problem you have with the field owner in the parable, which is how many workers came the next day, or the next year? You have a right to pay them what you want but they also have a right to withhold labor, or otherwise sabatoge future efforts in an act of revenge (the modern day equivilent being forum whining about Apple being unfair to consumers).

jhn|9.16.07 @ 5:28PM|#

I think you guys are forgetting what seems like a fairly obvious point.

How you value something-- what you think it's worth-- is in part based on its price. If something is priced high, you assume it's for a reason. So you might become willing to buy the item. I don't think to myself, "Hmm, shoes are only worth five dollars to me," and then go to the store and buy nothing. I base the dollar amount I value something in part on what the going rate for that item already is.

So to say that iPhone buyers "voluntarily" bought an iPhone is true to a point.. except that now, it seems that one of the pieces of information they were working from was fraudulent.

ps: My contribution to the flamewar. The three smartest computer science professors at my school all use Mac laptops. One professor runs Windows; the rest Linux or BSD. At every computer and technology policy conference I go to, Macs at least equal PCs in number. All smart computer nerds might not use Macs... but a far larger percentage of them do than the population at large.

|9.16.07 @ 6:06PM|#

One of my friends was looking into the iPhone. Decided against it, not so much because of the iPhone price, but because of the phone service price.

Place this all in the standard lesson of "don't buy anything that's labeled with a dot zero at the end of it."