Tuesday, September 11, 2007

Cheapness eats-up the buck

The title is a free translation from Greek of a popular saying about the law of supply and demand. The lower the price the more consumers will empty their pockets to buy the goodies. I thought of that when I saw this article:

"After a week of negative customer reaction to the surprise cut in the price of its iPhone, Apple Inc. said it reached its goal of selling one million of the devices almost three weeks ahead of schedule.

Apple, of Cupertino, California, said it sold the one millionth iPhone Sunday, 74 days after the device was released in the U.S. June 29.

Chief Executive Steve Jobs contrasted the iPhone's rapid sales with the adoption of the iPod, Apple's hugely popular digital music player, which Mr. Jobs said took two years to reach the one-million sales mark.

The announcement came after a rough week for Apple. On Sept. 5, Mr. Jobs cut the price on the eight-gigabyte version of the iPhone by $200 to $399. The company also lowered the price on the 4GB version by $200, but said it will only sell that device while supplies last.

The unexpected price cut spooked investors, who feared it was a sign that iPhone sales were behind expectations. Apple's shares fell more than 5% that day.

Mr. Jobs later said the company would give a $100 Apple store credit to customers who paid full price and weren't already covered by an Apple rebate.

Apple didn't immediately return calls for comment about whether the price cut spurred iPhone sales last week."

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