Tech Industry

I paid $600 for my iPhone. Am I a sucker?

Is someone who paid $600 for an iPhone now being sold for $400 a sucker? Not really--the price reduction just happened a little sooner than expected.

My editors here at have been poking fun at me for being the first reporter in the newsroom to buy an iPhone--and having no end of trouble getting AT&T to activate the blasted thing followed by paying one-third more than someone would if they went shopping today.

In fact, they thought it would be a hoot for me to write about the perils of early adoption. One editor gleefully told me a moment ago that he had bought a refurbished 8GB iPhone for $350 after today's price drop. Call it institutionalized schadenfreude, with a readbehind from the copy desk.

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So, sure, I'm not delighted about paying $600 for a phone that's being sold for $400 just over two months later. And, as much as I like my iPhone, I doubt that I got $200 worth over the value my old beater phone would have provided during that time.

I'm not alone. One iPhone-related blog said "it looks like Apple doesn't care about early adopters who just paid $600+ no more than 2 months ago." Another estimated, with depressing precision, that the iPhone Early Adopter Tax was $3 a day. Macenstein is "thoroughly pissed" and wants a $100 iTunes gift card (a perfectly reasonable thing for Apple to do, by the way, but more on this later).

Apple's forums are flooded with complaints and scattered reports that store credit or partial refunds are being granted. There's also talk of using a credit card company's price-protection guarantee to seek a refund of the difference, and price protection from Apple or AT&T if you bought it in the last few weeks.

But should people be all that peeved? Not really. It's no secret that computer prices tend to fall: The PlayStation 3 got $100 cheaper this summer, and the Motorola RAZR V3 was originally $500 with a service agreement. Now it's just $50. All of us iPhoniacs knew the price would fall by a third or so.

The only surprise was how soon. I had expected a revised iPhone in January (maybe with a video camera and 3G) to be accompanied by a price cut of around $200.

So am I truly harmed? Nope. I and my fellow early adopters obviously thought that the 8 GB iPhone was more valuable to us than $600 in the bank, or we wouldn't have coughed up the cash. I'd be facing that $200 loss if I wanted to sell my iPhone today, true, but I'm not planning on it. So it's more akin to an unrealized loss, and probably no harm at all if I sell it in a year; Apple merely made my iPhone worth a few hundred dollars less a few months earlier than I expected.

The real harm could be to Apple. Customer expectations are important. Apple adored the publicity that it received when announcing astonishingly high initial iPhone sales. If Apple customers come to expect price cuts after 60 days, early sales of the the Next Must Have Gadget will be anything but stellar.

If Apple needed to reduce the price because of market pressure or to meet its sales goals, that's perfectly understandable, of course. But the reason it should show flexibility in terms of rebates or gift certificates is not simply my unrealized, earlier-than-expected loss: it's to preserve Apple's own bottom line in the future.