The Ipod Touch is awesome :0 It’s too bad some lost $200 because they bought the iphone early

At least they get the $100 credit though.

The iPod touch should be pretty sweet, I’m going to get one. I can see why all the people are angry about the price cut, but that’s what you get for buying something when it first comes out.

Those were my thoughts too – if you buy something new, you can’t expect that you’re going to be offered the best possible price! While the drop in price happened rather quickly, it’s not that uncommon to do in the phone industry.

Hear me out. This is how Apple might have calculated this approach. Assume Apple decided $399 was a profit sweet spot for the iPhone before they even released it. By tacking on another $200 at the launch announcement in January, they got a lot of heat from the blogosphere and the tech punditry, but demand/hype for the thing remained in the stratosphere (perhaps to Apple’s surprise?). Had it not, Apple could have simply announced a new lower launch price in the weeks leading up to June 29. Bam, instant hype boost. But it turns out such a move was unnecessary. Tens of thousands of customers lined up outside Apple and AT&T stores all over the country, snatching up every iPhone they could when the doors were thrown open despite the $599 price. Suddenly you have a product with huge perceived (and real) demand that still commanded a very high price tag. And a $599 product that is flying off the shelves and being waved about gleefully by ecstatic mobs of buyers on TV news suddenly has a perceived value of $599 for millions of customers, including those who wouldn’t (or couldn’t) pay the $599 entry fee.

Now, two months later, you drastically slash the price $200, to your originally-decided price point of $399. Wow, only $399 for a product with a perceived value of $599??? What a deal! Waves of customers swarm the Apple Store once more snatching up these new “bargain-priced” iPhones for “only” $399. Talk about keeping the momentum going.

Now, of course, you are left with the serious problem of hundreds of thousands of irate Apple customers (like me) who feel burned by the too-much too-soon price cuts. Brand loyalty is not a commodity tossed aside with little regard. So what to do? Why, offer previous iPhone buyers a $100 credit at the Apple Store, of course! “Apple loves us!” the customers cry, and the company image rises even higher than before due to their good will and stellar customer service. And the $100 we suddenly have to spend at the Apple Store doesn’t really cost Apple $100 at all, yet boosts sales quantities (read: market share) going into the holiday buying season, and we customers are just grateful to Apple for letting us spend $100 more dollars at their store.

Well played, Mr. Jobs, well played.

Comment from Engadget explains it well.