When Fanboys Revolt

Fanboy or Fanboi is a term used to describe someone who is utterly devoted to a single subject or hobby, often to the point where it is considered an obsession. The term originated in comic book circles, to describe someone who was socially insecure and used comics as a shield from interaction, hence the disparaging connotations. Fanboys are often experts on minor details regarding their hobbies, and they take these details extremely seriously. ...
Add to that definition one who is utterly devoted to a certain brand name or product. Like Apple.

This week, Apple's Steve Jobs announced the price of iPhones would be slashed from $599 to $399, only weeks after the introduction of the immensely anticipated and lauded roll out.

The early adopters weren't happy.

The price cut - and the phaseout of the 4-gigabyte iPhone, which retailed for $499 - came less than 10 weeks after the two products hit the market June 29 and angered some early iPhone users, who were startled to have their prized gadgets plummet in value.
Initially, Jobs wasn't very sympathetic with the outcry from the early iPhone purchasers. However, it seems after some reflection he softened his tone, and moved to appease the Apple/iPhone base.

Immediately after the cuts were announced Wednesday, Jobs' tone was less conciliatory. He tartly rebuffed criticism about whether some of Apple's most die-hard fans would be miffed by the company's latest actions. IPhone owners who bought their device that morning, he said an interview with USA Today, "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."

Jobs then apparently had a change of heart. The company is making the right decision by lowering the iPhone price, he said in his letter, but needs to "do the right thing for our valued iPhone customers."

"(W)e need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price," he said. "Our early customers trusted us, and we must live up to that trust with our actions in moments like these."

This price slash immediately worried investors, believing that Apple was not meeting sales goals for the new product. They took out their worry on Apple's stock price.

Investors were also rattled by the news, sending Apple's shares down a total of more than 6 percent over the past two days, a drop that has wiped out about $8 billion in shareholder wealth.

Some worry that Apple is cutting the price to make up for waning demand, a concern Apple countered by saying the device is now affordable to more people and has the potential to be a blowout seller this holiday season.

Apple has said it's on track to sell 1 million iPhones by the end of the current quarter.

Apple's stock, after falling 5 percent on the news of Wednesday's announcements, fell another 1.3 percent Thursday to close at $135.01, or $1.75 lower than Wednesday's close.

When I read this story, it just cracked me up. Apple makes a business and marketing decision. First by pricing the product at $599 for the initial introduction, when mobs of buyers were salivating to be the first to have this new Apple product and would do almost anything to get one. Then as sales level off and Apple looked to future sales and the holiday shopping season reduces the price to appeal to the judicious technology buyer.

Then the uproar from the fanboys and early adopters and Jobs backpedals and moves to appease them. Okay, that's a business decision also.Look, early adopters always get the price shaft, especially on new technology and uber products. This happens with Apple products all the time. Apple has a hugely loyal and enthusiastic base of fans. Apple knows that and takes full advantage of it when rolling out cutting edge products.

Early adopters play an important role in our economy. When early adopters pay premium prices for new technology and products, it provides an incentive for the manufacturer to continue offering the product. As the product cycle matures and more people purchase the product the price comes down, allowing more and more people to enjoy the product.

A prime example of this phenomenon is big screen plasma and hi-def televisions. Just imagine what an early adopter three years ago thinks when they see the significantly lower prices today than what they paid.

Were it not for the early adopters paying that price premium, some of the products we enjoy now may have never stayed around long enough for the price to drop to a level that all of us regular consumers are willing to pay.

As for me, I hope the early adopters never change. And the next time, Jobs needs to wait longer to slash prices so he doesn't have to give back money people have already paid to the company.