In recognition of the enormous giant middle finger that Apple displayed to folks who paid $599 for their iPhones, only to have the price of the desirable device cut by $200 two months later, Apple is giving early iPhone buyers $100 in Apple store (online and brick-and-mortar) credit. In an open letter from Steve Jobs posted on Apple’s website, the CEO said “we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price,” in explaining the decision.
The $100 bucks could go a long way to salve the wounds of Apple’s biggest fans, i.e. those who bought the iPhone early (I’m one of them.) The unexpected price cut, while no doubt the right decision for Apple’s pursuit of stepped-up holiday sales, was a true slap in the face of iPhone fans everywhere. It was a penalty, of sorts, for buying the devices early.
Even better than the $100 is an apology from Steve Jobs for the thoughtless move. “We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple,” he wrote.
Although not as good as the full $200 savings that new iPhone buyers will get, the $100 store credit, not to mention the apology (saying “I’m sorry” goes such a long way) should help salve a lot of hurt feelings.
Update: This move isn’t an expensive proposition for Apple, although it could slice up to 18% off the revenues Apple has generated from the iPhone so far. Assuming that Apple has sold around 875,000 iPhones to date (the company claims it is on track to sell one million by the end of September), at an average price of, say, $550 (factoring in some sales of the 4 GB model at $495), then Apple’s iPhone revenue so far is around $481.25 million. The $100 for each of the 875,000 iPhone buyers equates into a total of $87,500,000, or around 18% of sales.
Of course, Apple is giving “store credit,” and that could have something of a counterbalancing boost to revenues. Get people into the store and they’ll spend, maybe a lot more than the $100 credit. Another countervailing benefit to Apple: the $100 reflects retail dollars. Apple’s wholesale cost could be far less.
Posted by Cynthia Brumfield at 4:00 PM | Print | Comments (0)
In a curious ex parte filing, the Department of Justice has cautioned the FCC against adopting any form of net neutrality regulations. DOJ says that there is a paucity of evidence to warrant such regulations and that they could, moreover, actually deter and delay investment and innovation.
If broadband providers were to charge third-party content and application providers fees for priority service, that could, in some circumstances, actually enhance consumer welfare, Justice argues. Differentiating service levels and pricing could be an efficient way of allocating scarce resources, much the way the U.S. Postal Service charges different fees depending on the speed of delivery.
If anti-competitive issues do arise, DOJ will take steps to address the problems. The Department will continue to monitor developments and take enforcement action, if necessary.
What’s curious about the filing is that, first, it’s an ex parte, or late, submission in the FCC’s Inquiry on Broadband Practices, most commonly known as the FCC’s net neutrality proceeding. DOJ could have filed comments along with the rest of the world by July 16, the deadline for all submissions, but it didn’t. Why DOJ waited until now is an interesting, probably unanswerable question.
Secondly, the Justice Department issued a press release to announce the ex parte filing, which just seems…a little weird, given the nature of the filing. It feels almost like a PR move, or a public political positioning, and is not in keeping with the kind of dry, legalistic press releases DOJ usually issues (“Fujicolor Processing Pleads Guilty to Environmental Crime,” “Missouri Federal Court Permanently Bars Woman From Tax Return Preparation,” “Landmark Settlement Aims to Clean Up Raw Sewage Discharges in Allegheny County”).
So, the DOJ is arguably playing politics, not unsurprising in Washington, but not the usual behavior of the normally staid Antitrust Division of the Justice Department. The document, too, doesn’t read like the usual antitrust analysis. There is little dispassionate weighing of the arguments or rigorous analysis of the facts (a lot of facts are presented regarding how the Internet is flourishing without net neutrality but no real weighing of the arguments and data).
It’s possible that the inherently free-market thinkers that typically populate the antitrust division find the imposition of regulations in the absence of any evidence of market harm so loathsome that DOJ feels it necessary to skip all the tedious intellectual back-and-forth. That’s understandable, but somewhat disappointing.
No matter what DOJ’s motive is, public interest groups have jumped on the filing to counter the the department’s arguments. Even if there is no evidence of wrongdoing in the absence of regulations, the broadband service market is not competitive and therefore the DOJ missed the boat, the Open Internet Coalition said in a statement.
This lack of competition and consumer choice for broadband access is the reason why the Open Internet Coalition supports preemptive safeguards to ensure that cable and telephone companies do not destroy the Internet as we know it.Posted by Cynthia Brumfield at 3:01 PM | Print | Comments (0)
Take note of the name of the latest Internet video-to-TV start-up and you’d better do it fast: Vudu. Because it soon will join the junk-heap of add-on set-top based TV technology failures such as MovieBeam and Akimbo. But you’d never know it by reading David Pogue’s column today, which discusses the new offering.
Vudu is a service that offers Internet access to 5,000 movies, delivered to the TV set via a $400 set-top box. Although Pogue and other reviewers of the new device sprinkle their write-ups with skepticism, they still play it straight, acting as if it’s a possibility that consumers will fork over $400 for yet another set-top box to layer on top of the already-frustrating jumble of electronics sitting atop TV sets today, including but not limited to digital cable or satellite set-tops, DVRs, gaming consoles and emerging new appliances such as Apple TV or the SlingBox.
Won’t happen. The Vudu is DOA, no matter how good the picture quality, or how large Vudu’s catalog of rentable films becomes. Very few predictions in the media and Internet world can be made this bluntly, but any TV-based business that is predicated on yet another set-top simply won’t fly.
It would be one thing if Vudu served an unmet need. But, Vudu’s doom is all the more guaranteed because all Vudu delivers is movies, or as Pogue notes
If you had to make a master list of all the world’s problems, “limited access to movies” probably wouldn’t appear until Page 273,996.
Consumers have access to hundreds of thousands of films via DVD rental, cable premium channels, on-demand services and pay-per-view. On top of this, gaming platform giants Microsoft, and soon Sony, will offer movies-for-download via their already installed video gaming consoles. Moreover, from iTunes to Walmart to Amazon.com, in-home movie access is suddenly everywhere.
Who in the world is going to rush out and plunk down $400 for an additional set-top, the most hated device in the home, when all they can get is arguably higher quality display of rented (and purchased) films? Particularly given that the movies cost just about what you’d pay for DVD rentals or on-demand access: $.99 to $3.99 for rentals (and $4.99 to $19.99 for purchase). Or As Rafat Ali smartly notes in his headline about the Vudu, the “idiots” are in the box.
USA Today’s Edward Baig also sums it nicely when he writes “it’s hard to justify the price of admission when there are so many other ways to catch a flick at home.”
Posted by Cynthia Brumfield at 9:16 AM | Print | Comments (1)
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