Apple iPhone debacle makes the case against early adopters

The recent price cut by Apple has many folks scratching their heads and their loyal customers aka the early adopters are just plain furious. Marketers of new and innovative products love early adopters. Early adopters make all the difference between a great product launch and a dud. They are the ones lining up outside your store at midnight before the launch, they are the ones willing to take a risk on your newbie product, they are the ones who encourage rest of the risk-averse population to follow and most importantly, this group is willing to pay a hefty premium for your product.

However, the reason early adopters are willing to be guinea pigs for any new product launch is to get that guarantee of exclusivity, to be the #1, to be ahead of everyone else, for bragging rights…And let’s face it, you can’t brag about something everyone else can get and ..(adding insult to injury) at practically half the price.

According to MSNBC,

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.

I don’t think anyone fundamentally disagrees with the price reduction aspect of it. Anyone with half-a-brain knows that everything and I mean everything goes on sale eventually, that’s just the reality of the marketplace. But what ticked most folks off is how quickly and how badly the price cut was done. It’s bad enough to drastically cut the price but to announce the price-cut so soon after the launch, is akin to shouting from roof-tops how the early-adopters were played for suckers. 

“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.”

Although it has been trying to make good by offering $100 store coupon to folks who bought it , one (justifiably) irate customer on the Apple discussion board says,

Not good enough. How about those of us who were stupid enough to buy 2 iPhones AND all of the accessories that were needed. What good does a Store Coupon do us?

While some others think it’s a good move by Steve Jobs,

I am glad to see that Mr. Jobs made the right decision. I can live with $100.00 in store credit. I bought 2 phones so I guess that $200.00. Thanks Steve you have renewed the faith.

There’s no doubt, Apple messed up royally and it will pay the price for years to come in lost profitability from wary early-adopters and loss of ‘buzz’ around new product launches. I don’t think the lessons from this debacle are lost on Steve Jobs. Going back to the (exclusivity-focused) brand strategy they have used succesfully for their non-cellular products would definitely be a step in the right direction.


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