Destroying Trust with the iPhone

Did Steve Jobs make a historic blunder?

When asked about cutting the cost of the iPhone $200 (from $599 to $399), Steve Jobs offered up the rather lame excuse:

"In a letter on the company's Web site, Jobs acknowledged that Apple disappointed some of its customers and said he had received hundreds of e-mails complaining about the price cut.

Jobs added that "the technology road is bumpy," and there will always be people who pay top dollar for the latest electronics but get angry later when the price drops.

"This is life in the technology lane," Jobs said in the letter Thursday."


Mr. Jobs is playing with fire here: his customer's trust. Apple Computer has done a significant amount of work in the past decade to win it's small but vital marketshare from Microsoft.

Playing with your customer's trust might be the surest way to tank Apple. By dropping the price so soon after the much heralded iPhone roll-out, Steve Jobs is risking:

1. Highly dissatisfied customers ... who will be that much more reluctant to return.
2. Having new customers delaying their Apple purchases in hopes of even further price cuts.
3. Negative media buzz putting off customers who were riding the fence.
4. ... and so much more.

Bottom Line: Cutting the price of the iPhone this close to the release date was a dangerous strategy that will more likely HURT than help Apple's bottom line.

Even if you're not in the business of providing the latest technology, every leader should make certain that their business processes are not alienating more customers than they attract.