“Tough cheese, suckers — er, customers”

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Translation of Steve Jobs’s message to customers who bought an Apple iPhone for $599 last Wednesday morning and discovered that by the time they got it home Apple had slashed the price by $200.

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.

Later: There’s been such a hoo-hah that Jobs has posted an Open Letter to iPhone users on the Apple site saying that

we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple’s website next week. Stay tuned.

Later still: Bob Cringely has an interesting take on it all:

This week’s iPhone pricing story, in which Apple punished its most loyal users by dropping the price of an 8-gig iPhone from $599 to $399 less than three months after the product’s introduction, is classic Steve Jobs. It wasn’t an accident. It wasn’t a thoughtless mistake. It was a calculated and tightly scripted exercise in marketing and ego gratification. In the mind of Steve Jobs the entire incident had no downside, none at all, which is yet another reason why he is not like you or me.

Let’s deconstruct the incident. Apple announced a variety of new and kinda-new iPods dominated by the iPod Touch (iPhone minus the phone) and an iPod Nano with video (great for watching miniseries). At the very end of the presentation, Jobs announced the iPhone price cut. Why did he wait until the very end? Because he knew the news would be disruptive and might have obscured his presentation of the new products. He KNEW there was going to be controversy. So much for the “Steve is simply out of touch with the world” theory.

So why did he do it? Why did he cut the price? I have no inside information here, but it seems pretty obvious to me: Apple introduced the iPhone at $599 to milk the early adopters and somewhat limit demand then dropped the price to $399 (the REAL price) to stimulate demand now that the product is a critical success and relatively bug-free. At least 500,000 iPhones went out at the old price, which means Apple made $100 million in extra profit.

Had nobody complained, Apple would have left it at that. But Jobs expected complaints and had an answer waiting — the $100 Apple store credit. This was no knee-jerk reaction, either. It was already there just waiting if needed. Apple keeps an undeserved $50 million and customers get $50 million back. Or do they? Some customers will never use their store credit. Those who do use it will nearly all buy something that costs more than $100. And, most importantly, those who bought their iPhones at an AT&T store will have to make what might be their first of many visits to an Apple Store. That is alone worth the $50 per customer this escapade will eventually cost Apple, taking into account unused credits and Apple Store wholesale costs.

So Apple still comes out $75 million ahead, which is important to Steve Jobs.

It’s aSmallworld

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Well, well. An exclusive social networking site. It’s aSmallWorld.net.

We have imposed certain criteria in order to keep the network exclusive. To join, you need to be invited by a trusted member.

If you have not received an invitation, you can ask your friends to invite you. If you have no friends who are members yet, please be patient.

I don’t know about you, but it evokes the Groucho Marx response in me.

I only found out about it because there was a piece in the New York Times.

End of the ‘two-shot’?

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Hooray! Peter Preston spotted it.

You do a little news interview and, when it’s over, you then do a ‘two-shot’. The interviewee mouths a few silent nothings. The interviewer nods in mock interest (and total boredom). The camera rolls for a couple of minutes in case slivers of this weary mime are visually needed to leaven the chat.

Fakery? Channel Five News has announced it is ditching the device, with Sky only a second behind. It’s either a stirring victory for truth and honesty – or (nod-nod-wink-wink) a splendidly cynical chance to get rid of a television reporter’s most demeaning, least favourite chores.

Wonder if the BBC will follow suit?

The Porsche and the lawnmower

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This morning’s Observer column…

It’s an odd way to start a revolution, to put it mildly. The iPhone is a lovely piece of kit – in effect, a sleek, powerful personal computer running an industrial-grade operating system. It has the capability to be a really disruptive device in an industry that badly needs disruption. But it comes shackled to an unpopular, low-tech mobile network. So acquiring one is like buying a Porsche engine and fitting it to your lawnmower. People figured out quickly that you could cancel AT&T’s internet service to get its browser to work only via wi-fi; but you couldn’t use it on any other mobile phone/data network. (And still had to pay the 18-month AT&T subscription.) This was not a fundamental technical limitation of the device, but a technological shackle designed by Apple to drive business to AT&T…

The blame game

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From today’s New York Times

WASHINGTON, Aug. 31 — President Bush, appearing confident about sustaining support for his Iraq strategy, met at the Pentagon on Friday with the uniformed leaders of the nation’s armed services and then pointedly accused the war’s opponents of politicizing the debate over what to do next.

“The stakes in Iraq are too high and the consequences too grave for our security here at home to allow politics to harm the mission of our men and women in uniform,” Mr. Bush said in a statement after his meeting with the chiefs of the Army, Navy, Air Force and Marines in a briefing room known as the Tank.

The meeting, which lasted an hour and a half, was among the president’s last Iraq strategy sessions before he leaves for Australia to meet with leaders of Asian and Pacific nations. It came on the eve of a string of reports and hearings that, starting next week, could determine the course of the remaining 16 months of Mr. Bush’s presidency.

Beginning on Tuesday, when Congress returns from its August recess, lawmakers are prepared to debate what to do in Iraq in daily hearings that will culminate on Sept. 10 and Sept. 11 with appearances by the ambassador to Iraq, Ryan C. Crocker, and the military commander there, Gen. David H. Petraeus.

Congress has mandated a progress report from the White House before Sept. 15, and Mr. Bush chided lawmakers for calling for a change in policy before hearing the views of the two men who are, as administration officials repeatedly point out, “on the ground in Iraq.”

What’s happening is that Bush & Co are preparing to blame the Democrats for undermining the Iraq venture just when it appeared that it might have turned the corner.

The outlines of the argument are beginning to emerge. Here are the headlines:

  • There is some evidence that the ‘surge’ has worked in Baghdad; and
  • If US forces were given more time and resources, there is a chance that some kind of workable country would have emerged from the mess; but
  • The lily-livered Democrats killed off that possibility, and therefore
  • It was the Democrats who ‘let our boys down’.

    One of the problems we outsiders have is that it’s almost impossible to reach any informed judgement about the current overall position in Iraq. Of course the media reports are bad, but I don’t trust them because we know that Western media cannot operate in 99 per cent of the country.

    For that reason, I found the recent report by Michael E. O’Hanlon and Kenneth M. Pollack of the Brookings Institution very interesting. Here’s their ‘overall assessment’:

    There is a great deal going well in Iraq but, unfortunately, also a great deal going badly. Points of view often heard in Washington, that the war is already lost on the one hand, or bound to be won if we are adequately patient on the other, seem at odds with conditions on the battlefield and throughout the country.

    The greatest progress has been made in providing security to the Iraqi people in those areas currently under direct U.S. military supervision—namely, Baghdad, its outlying areas to north and south (the “Belts”), al-Anbar province in the West, and Ninawah and Salah ad-Din in the North. Overall, we felt that progress in security was actually greater than what we had expected given how recently the increase in troops as well as the change in U.S. and Iraqi strategy and tactics under General David Petraeus had occurred.

    We assessed that national, macro-level economic progress remained marginal, but there was some considerable local economic progress, typically correlated with the presence of a fully-staffed provincial reconstruction team (PRT) or such a team embedded within a military unit (EPRT). We saw effectively no signs of progress in the high-level political discussions meant to effect national reconciliation.

    Current U.S. strategy envisions the provision of greater security making possible local economic and political progress (of which we saw some modest but noteworthy evidence) and strategic-level national reconciliation or accommodation (of which we saw no evidence). Our observations suggest that the Coalition is making progress in accordance with this strategy—although it is very early in the process, there are still very significant hurdles to overcome, and there is no evidence that can prove that this strategy is destined to succeed. Nevertheless, especially given the difficulties of finding a viable alternative strategy (a “Plan B”) for Iraq that would safeguard U.S. interests, we conclude that the progress made so far argues for giving the surge and its attendant military and political strategies more time. However, we caution that the U.S. is not yet irrevocably headed for success in Iraq, so the Administration and the Congress should remain vigilant. The change in course in Iraq has produced enough success to warrant supporting its continuation at least through the remainder of 2007, but progress should be continuously reassessed, especially beginning again in early 2008.

    • Hmmm… Note the way the Brookings guys try to have it both ways. On the one hand,

    “given the difficulties of finding a viable alternative strategy (a “Plan B”) for Iraq that would safeguard U.S. interests, we conclude that the progress made so far argues for giving the surge and its attendant military and political strategies more time.

    [Translation: it’s worth persevering. Indeed we have no option but to persevere.]

    But,

    However, we caution that the U.S. is not yet irrevocably headed for success in Iraq, so the Administration and the Congress should remain vigilant.

    [Translation: we never said it was a sure thing, so don’t blame us for not portraying the downside.]

    Don’t you just love that phrase “the U.S. is not yet irrevocably headed for success in Iraq”?

    Quote of the Day

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    Sometimes I think God put video content guys on the planet to make the music guys look progressive and visionary.

    Analyst Michael Gartenberg, commenting on NBC’s decision to take its stuff away from Apple because Steve Jobs wouldn’t agree to sell their video content at $4.99 a pop (compared to existing price of $1.99)