Apple, Inc.: Pricing the iPhone (A)

Abstract

On September 5, 2007, Apple, Inc.’s Steve Jobs announced a 33% price decrease in his company’s newest gadget, the iPhone. The announcement came only ten weeks after the phone’s initial introduction in late June. Billed as a revolutionary product that would change the mobile communications industry, the iPhone retailed at $599 in Apple and AT&T Wireless stores throughout the country. Unfortunately, the initiative set off a wave of backlash as early iPhone adopters flooded internet chatrooms and sent scathing emails to company executives exclaiming their distaste for the company’s actions. Analysts and investors shared similar concerns as Apple’s stock price dropped 6.1% on the date of the announcement amidst fears that the price reduction was fueled by weakening demand for the company’s newest “blockbuster” product. Going forward, Steve Jobs and his executive management team must develop a strategy that will effectively respond to consumer complaints and simultaneously suppress investor concerns.