iRage
Washington Post columnist Eugene Robinson writes that Apple's decision last week to reduce the price of its iPhone would have him "hopping mad" if he had bought one when they first came out earlier this summer.
Robinson writes: "The sky-high price was supposed to guarantee a decent period of exclusivity. For a time, if you bought an iPhone, you were supposed to be the envy of your friends." He adds, "The aura of supercool should have lasted longer than a couple of months."
Robinson seems furious at Apple for making its product more affordable. Such outrage over lower prices baffles me, but economist Steven D. Levitt1 attempts to explain it. Sure, Levitt writes, it is only natural for a product to get cheaper over time as the cost of making it falls and the product itself is no longer new and in high demand. But Levitt says "consumers hate it when companies follow practices that look like they are designed to maximize profits."
Jeez, isn't maximizing profits the entire point of the company's existence to begin with? What consumer doesn't know that?
1As I've discussed, Levitt spells his name the wrong way but makes many provocative arguments.
4 comments:
This still seems like the definitive explanation. No idea if Bob Cringley spells his name correctly. Probably not, from the looks of the thing.
Let's see, after 1 day of whining about being "betrayed" by people who bought the product and had two months of "sent from my iPhone" cachet, Apple gave those customers a $100 credit. That works out to something like 16.5% of the original purchase price. Wouldn't it be great if we could all apply this to our purchases?
"Waaah! You hurt my feelings by marking down the price on this car model. Tell me I'm special and give me 16.5% of the sticker price back."
This would be even better for mortgages.
I'm actually just getting around to reading Freakonomics now.
I'm not sure making profit is the *only* thing companies care about, but yes, Apple has a legal obligation to make money for their shareholders. Sometimes, that flies in the face of what you might otherwise want to do.
The calculation is to figure out how bad you will piss off your current customers, the "cool" early adopters.
I say screw those geeks (mostly b/c I couldn't be one of them).
"Politics"?
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