The 'net is abuzz with discussions about the dramatic price cuts announced yesterday by Apple. The price of the pricey iPhone was cut by $200, and Apple also introduced an new iPod, called the iPod Touch, which is an iPhone without the phone function.
Much of the discussion on the price drop has focused on some kind of marketing problem that Apple may have, and this largely negative article on CNet is a good example of the usual "Apple is in trouble" drum beating by technology writers. For some reason, an awful lot of tech writers love to predict the imminent demise of Apple, even though the company has been hugely successful for many years now.
What has not been talked about much is something that Steve Jobs mentioned briefly during the product announcement--current iPhone owners are getting new features and functions on their iPhones.
To really understand where Apple is going with the iPhone and the iPod, you have to look closely at how Apple is managing support for iPhone users. When was the last time your cellphone got a software upgrade and new features? Never, for most of us. Cellphones have been marketed as disposable; it works for both cellular providers and cellphone manufacturers. To get new features on a cellphone, customers are forced into upgrading service contracts and/or buying a new phone. Everyone wins except the user.
Apple is headed in a different direction with the iPhone. Instead of forcing customers to replace their iPhone with a new model to get new features, Apple is going to provide its iPhone customers with easy and virtually automatic software upgrades that add new features to existing phones.
Over time, this strategy will change the entire cellular industry in the U.S. so that it is better aligned with the rest of the world, where consumers can buy any phone they want and use it with any cellular provider they want. Apple is going to break the unhealthy monopoly in place in the cellular industry, and we will all be the winners.