Dumb Price Politics of iPhone

Stable prices are crucial in the Mobile Device business. For operators, retailers, distributors and ofcourse customers. A dyamic market and short lifecycles demand stable prices. What iPhone did with there prices is dumb and hurts them not only now but certainly in the future. I made some pictures to illustrate the effect. Every phone has an optimal lifecycle. Optimal meaning total turnover(margin) at it’s peak. To reach this optimal point you need innovators and early adopters to get in soon. Buy the product immediately when it is available. Unstable prices create delayed purchases: waiting when the next pricepoint is reached.

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3 Responses to Dumb Price Politics of iPhone

  1. TS says:

    Interesting theory indeed – this is something similar to the theory of deflation when everybody waits, because the day after everything will be cheaper. However I think Apple has a good strategy behind the price drop. The best explanation I saw till now was the one stating that they are making room for a new flagship model (probably 3G iPhone). Only time will tell 🙂

  2. Raimo says:

    Hi TS,

    cant believe that that is the case. First introduce the new model. Wait untill it is available.. See the sales consequences and then adjust the price.

    Companies change their prices when it starts to HURT.. Where does it hurt Apple now? Are sales slowing down? Is the Google phone better and cheaper?

  3. TS says:

    Slow companies change the price when it starts to hurt… Anyway I don’t want to seam like an Apple fanboy, actually I do not own any Apple stuff but nevertheless I believe Apple did a fantastic (marketing) job in the last few years to cause all this hype.

    And to answer your question: Yes sales are slowing down. In addition to that the new iPod touch is very similar to the iPhone, except for the phone part and will probably cannibalize the iPhone market anyway – even with lower prices for the iPhone.

    p.s.: nice discussion 😉

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