By most accounts, Apple's iPhone has been a sales success, although not as big a hit as the company was hoping for. That, many venture, is the reason behind Apple's decision to cut the price on the iPhone from $599 to $399.
"You have to speculate that even though Steve said it would sell one million units at the end of the month, it's not as fast as he would like," said Van Baker, an analyst at Gartner Inc., told Dow Jones. "I'm not surprised by the price cut, but I'm surprised by the magnitude."
Trip Chowdhry, an analyst at Global Equities Research, said, "Consumers had been priced out of the iPhone. At the old price levels, they couldn't hit their targets."
AT&T, which is the exclusive cellular carrier for the iPhone, expressed support for Apple's action. "We're very pleased with the customer response from the iPhone before," said Michael Coe, a spokesperson for the company. "We expect this new pricing will be even more popular."
Gene Munster, an analyst at Piper Jaffray, said the move being made by Apple is being misinterpreted. He said, "Investors think something is wrong with demand, but we felt even before the price cut that Apple was going to make or even exceed its targets. In the short term, it will cost them some profits, but there's an even better tradeoff."
Some believe that a consumer backlash is coming against Apple from those who ponied up the $599 to buy the iPhone at its original price.
"It (price cut) will absolutely help sales - but at what cost?," Tim Beyers, an analyst at The Motley Fool, told The Associated Press. "People who bought the iPhone weeks or months ago must really be annoyed, and with good reason they might think twice about being the first to buy future Apple products. This smacks a little of desperation, and it's very unlike Apple."??
Tom Zack is one of those unhappy Apple customers. He said, "I for one am not happy. I will never buy an Apple product when it is brand new."
Discussion Question: What do you expect to come out of Apple's steep price cut on the iPhone?