Posted by Eric Starkman
Thursday, September 6, 2007
Like a writer who keeps random plot line ideas and bits of dialogue scribbled in a notebook kept by the side of the bed, I've kept the Daily News' infamous "Ford to City" headline in the back of my head, just waiting for the right opportunity to rip it off. Thanks to Apple CEO Steve Jobs latest orchestrations, the moment finally arrived.
The technology impresario announced yesterday that Apple would slash the price of its iPhone by some 33%, but denied that lower-than-expected sales were the reason. As he told the New York Times: "It's very clear we have a breakthrough product on our hands, but it's also clear that many can afford it, some can't. We'd like to make it affordable to even more folks going into this holiday season."
So exactly when did Apple become a philanthropic organization for the tech gadget-deprived?
I don't know about you, but if I was one of the Apple diehards who camped out overnight a mere 10 weeks ago just for the privilege of coughing up $600 the next morning to get their mitts on an iPhone, I'd be pretty ticked off right now. And I'd go into orbit after reading Jobs' dismissive comment to USA Today about the brand-worshipping customers who paid full price: "That's technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that's what happens in technology."
Can you imagine the fallout if, let's say, BMW suddenly slashed the cost of its highly popular 3-Series cars by more than 30% just weeks after they were introduced? Or if Rolex slashed the prices of its watches by 30%? The brands would be forever damaged. But the traditional rules of branding and PR don't seem to apply to Steve Jobs, and his fire sale discounting of the iPhone is only the latest example.
Take Apple's exclusive partnership with AT&T. The telecom company has one of the slowest wireless networks around and a solid reputation for bad customer service. Apple offers superior technology, and while its customer support has deteriorated somewhat, it's still way better than its competitors. The pairing of the two companies is as mismatched as Armani entering an exclusive distribution agreement with Sears.
Then there is the iPhone's inconvenient replacement battery requirement which, with the exception of the New York Times' Joe Nocera, has been largely ignored by the mainstream media. Like all cell phones, this one's battery will eventually need to be replaced (Apple says the original one will last 200-400 charges, approximately 12-14 months). The kicker is that is must be sent back to Apple, however, leaving people without their beloved iPhone's for an estimated 10 days. I'm hardly a heavy cell phone user, but being without my phone for just one day would cause me some angst -- and mine doesn't have all the fancy bells and whistles that the iPhone does! A couple of lawsuits have already been filed regarding Apple's battery replacement policy, but they have received scant media attention.
The cost to replace the battery will be approximately $100, or roughly one quarter the cost of the newly discounted iPhone. My guess is that Jobs will have the next generation model out within a year and he's banking that a good number of iPhone owners will decide they'll get better value for their money by replacing the whole phone with the latest version instead of just getting a new battery.
Eric Starkman is President of Starkman & Associates, a full service public and investor relations firm based in New York City. Prior to a career in PR, he was a journalist with several major newspapers in the U.S. and Canada. The firm has a strong crisis communications practice, having worked with numerous organizations and high-profile individuals to manage and mitigate the reputational damage of real and perceived communications crises.