30th
Focusing on Price and Missing the Point
In a piece of mediocre commentary (hat tip: John Gruber), Michael Rosenwald of the Washington Post attempts to put the low low purchase price of the upcoming iPhone 3G into perspective.
He works hard to explain how and why $200 seems so shockingly cheap compared to the previous $400 and original $600 price tags. (Behavioral economists apparently say that it is because $200 is, in fact, much less money than $400… and it’s way less than $600.) Nice work, Michael, that’s super enlightening.
Unfortunately, the man skips right over the actual issue. Says Mr. Rosenwald,
Of course, it will cost me an extra $10 a month in AT&T service fees, thus wiping out any gains, real or psychological, over the two-year contract period. [University of Chicago Economist Richard Thaler] said we tend to “underweight” these costs because they are off in the future. “There will be people who crunch the numbers, but the people who fall in love with the phone right away won’t,” he said.
I’m not saying this isn’t true — everything we’ve been reading says that it is exactly true. I’m just saying, Apple makes good products. And Apple is known for selling those products based purely on their quality — c.f., Apple’s iPhone ads. The message isn’t “this is how sexy you will be if you buy this phone”, it’s not “this is how smooth you will be if you buy this phone”, and it’s not “this is how many friends you will have if you buy this phone”; the message is, “check out this amazing phone.”
Apple should not be fooling people into buying the iPhone 3G — it’s beneath them.
