Real Time Communications Industry News

TMCNet:  Pain and pleasure on tech's cutting edge: IPhone's early adopters ride out price cut

[September 07, 2007]

Pain and pleasure on tech's cutting edge: IPhone's early adopters ride out price cut

By MAY WONG AP Technology Writer
The Associated Press

They're the guinea pigs willing to pay top dollar for cutting-edge gizmos, whether the gadgets are half-baked, potentially doomed or harbingers of a revolution.

The customers who bought Apple (News - Alert) Inc.'s new iPhone know the pain and the pleasure. They're early adopters. And in many cases, the group can play a pivotal role in a product's fate.

Early adopters know the prices of tech products usually fall over time. But Apple, which historically has enjoyed premium pricing on account of its brand and innovation, angered even some of its most loyal customers by lopping $200 off the $599 iPhone (News - Alert), a 33 percent reduction, less than 10 weeks after the gizmo went on sale June 29.


In response to hundreds of complaints, Apple Chief Executive Steve Jobs (News - Alert) issued an apology on Thursday and offered every iPhone user a $100 credit for Apple stores.

But for many, money is not and never was an issue. They were after the gratification of knowing they were among the first owners of something that is cool and, for those who agreed with Apple, revolutionary.

"If they told me at the outset the iPhone would be $200 cheaper the next day, I would have thought about it for a second -- and still bought it," said Andrew Brin, a 47-year-old addiction therapist in Los Angeles. "It was $600 and that was the price I was willing to pay for it."

The hullabaloo arose over Apple's price-slashing only because it came a few months sooner than expected, said Fareena Sultan, an associate professor of marketing at Northeastern University.

Enjoying that period of being among the first -- before the price drops and the product reaches the masses -- is part of the pleasure, Brin and others say. And in much of the tech world, the usual expectation is that six months will pass before there's a major price cut and a year before a next generation of the product -- usually an improved version -- appears.

The looks of envy and attraction are an elixir.

"It's better than a dog, if you want to meet people," Brin said of his iPhone.

Jack Shamama of San Francisco, who was among the thousands nationwide who lined up for iPhones on the day they first went on sale, said he got some smug text messages and phone calls from friends on Wednesday after Apple announced the price cut.

But Shamama is taking the price cut in stride, saying such cuts come along with being an early adopter.

Gadgets -- and food -- are the 33-year-old online marketing consultant's splurges.

"It's the equivalent of having that season's handbag," said Shamama, who goes through cell phones as quickly as some people do shoes, comfortably shelling out hundreds of dollars per handset every six to eight months.

He's got a collector's item in one of the first Palm Pilots. And, even though he didn't even want one at first, he felt compelled to buy a Nintendo Wii game system last November -- paying a friend of a friend $400 to get the $250 machine -- after he heard how scarce they were.

Shamama bought the BlackBerry (News - Alert) Pearl -- another trendy smart phone -- only months before the iPhone was unveiled.

"My biggest fear with any product is that it's going to become obsolete, and that isn't what happened this time," Shamama said.

Yet even the risk of being saddled with soon-to-be useless or discontinued products doesn't spook early adopters.

"Even if it works one day, it's worth it," said Paul Clark of Seattle, owner of Walkthrough Media, a virtual tour provider for real estate agents.

Nick Sheth, 32, said many of his purchases quickly become obsolete. His electronics collection includes the original Philips (News - Alert) Pocket PC ("obsolete like the day after I bought it"), the first-generation Hewlett-Packard CD recorder for the PC ("at least half of the CDs I burned were no good, and the next generation completely corrected that issue and was at least twice as fast") and countless '90s-era digital cameras.

The San Francisco technophile, who bought the $599 iPhone three days after it went on sale, doesn't regret the purchase. Sheth, director of sales and business development at Like.com, a search engine for retail shoppers, summarizes his consumerism as "a mix of vanity and function."

"Sometimes you buy things like the iPhone that don't live up to their promise but are worth at least a couple of really good cocktail party conversations. Mind you, really good cocktail party conversations are very important in life," Sheth said. "And sometimes you get something like the Palm V that's worth every penny, even if nobody notices."

Marketing experts say the class of early adopters -- roughly 1 percent or 2 percent of the consumer market -- play critical roles. Their word of mouth -- either praising or blasting a product -- can make or break a product.

"If they said the product is not cool or not worth the money, then other people -- who are even more risk averse -- will wait or not want to buy it," Sultan said.

___

Associated Press Technology Writer Rachel Konrad contributed to this report.

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