Question

In: Economics

n July 2007, Apple released the iPhone at a price of $599. Only two months later,...

n July 2007, Apple released the iPhone at a price of $599. Only two months later, the company dropped the price by 33% to $399. The early iPhone customers were angry about the sudden drop in price and felt they had overpaid for the product. See the letter below that Steve Jobs wrote to these customers. not surprisingly, members of the news media received the message and shared it with the general public.

INSTRUCTIONS: Write a clear and concise assessment of whether or not you think this is an effective business communication. Provide support for your answer. Organize your response into a clear introduction, body, and conclusion. Use the appropriate format for business writing.

***

Letter from Steve Jobs

To All iPhone Customers:

I have received hundreds of emails from iPhone customers who are upset about Apple dropping the price of the iPhone by $200 two months after it went on sale. After reading every one of these emails, I have some observations and conclusions.

First, I am sure that we are making the correct decision to lower the price of the 8GB iPhone from $599 to $399, and that now is the right time to do it. iPhone is a breakthrough product, and we have the chance to "go for it" this holiday season. iPhone is so far ahead of the competition, and now it will be affordable by even more customers. It benefits both Apple and every iPhone user to get as many new customers as possible in the iPhone "tent." We strongly believe the $399 price will help us do just that this holiday season.

Second, being in technology for 30+ years I can attest to the fact that the technology road is bumpy. There is always change and improvement, and there is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever. This is life in the technology lane. If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon. The good news is that if you buy products from companies that support them well, like Apple tries to do, you will receive years of useful and satisfying service from them even as newer models are introduced.

Third, even though we are making the right decision to lower the price of iPhone, and even though the technology road is bumpy, we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these.

Therefore, we have decided to offer every iPhone customer who purchased an iPhone from either Apple or AT&T, and who is not receiving a rebate or any other consideration, a $100 store credit towards the purchase of any product at an Apple Retail Store or the Apple Online Store. Details are still being worked out and will be posted on Apple's website next week. Stay tuned. We want to do the right thing for our valued iPhone customers.

We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple.

Steve Jobs

Apple CEO

Solutions

Expert Solution


Related Solutions

When Apple introduced the iPod in 2001, the iPhone in 2007 and the iPad in 2010,...
When Apple introduced the iPod in 2001, the iPhone in 2007 and the iPad in 2010, it substantially innovated respectively the multimedia player, the smartphone and the tablet industry. Consider the demand for an innovative Apple product y as D(p) = 1000 – p, and a cost function of c(y)=200∙y. At first consider Apple having a monopoly in this market. What is the inverse demand curve p(y)? With profits being π = p(y)∙y – c(y), what is the profit maximizing...
3) On July 21, of 2007 the final book of the Harry Potter series was released....
3) On July 21, of 2007 the final book of the Harry Potter series was released. But, only the hardback book was available. Several weeks later, the paperback version was made available. Can you explain this based on price discrimination? Write a paragraph explaining your logic. 4) Consumers of the Harry Potter books (at some point) had a choice between hardback and paperback. The hardback books were around $19.95 and the paperback books were around $8.25. Is this price discrimination,...
Problem VI A-B: Apple used to produce two different versions of the Iphone, Iphone 5s and...
Problem VI A-B: Apple used to produce two different versions of the Iphone, Iphone 5s and Iphone 5c. Assume the cost of production is zero. There are two types of consumers on the market, knowledgeable consumers and kids. Knowledgeable consumers value the Iphone 5s at $220 for its superior technology and the Iphone 5c at only $120. Kids don’t know that much about technology and they like colors a lot so their valuations are $110 for the Iphone 5s and...
12) ? (Most recent 12? months) Dell 2007 Apple 2007 Net Income? ($ millions) ?$3,572 ?$3,130...
12) ? (Most recent 12? months) Dell 2007 Apple 2007 Net Income? ($ millions) ?$3,572 ?$3,130 Shares outstanding? (millions) ?2,300 869.16 Earnings per share? ($) ?$1.55 ?$3.60 Price per share? (8/1/07) ?$27.76 ?$133.64 ? Price-to-earnings ratio? (PE ratio) 17.91 37.11 Book value of common equity? ($ millions) ?$4,129 ?$9,984 Book value per share? ($) ?$1.80 ?$11.49 ? Market-to-book ratio 15.42 11.63 ?(Analyzing market values using financial? ratios) On August? 1, 2007 the Dell Computer? Corporation's stock closed trading at $27.76...
Problem VI C-D: Apple used to produce two different versions of the Iphone, Iphone 5s and...
Problem VI C-D: Apple used to produce two different versions of the Iphone, Iphone 5s and Iphone 5c. Assume the cost of production is zero. There are two types of consumers on the market, knowledgeable consumers and kids. Knowledgeable consumers value the Iphone 5s at $220 for its superior technology and the Iphone 5c at only $120. Kids don’t know that much about technology and they like colors a lot so their valuations are $110 for the Iphone 5s and...
In July 2007, Scholastic Publishing released Harry Potter and the Deathly Hallows at a suggested retail...
In July 2007, Scholastic Publishing released Harry Potter and the Deathly Hallows at a suggested retail price of $34.99 and was rumored to be selling the book to retailers at a wholesale price of $18.99.  Costco and Walmart offered the book for $18.18 and $17.87, respectively.  Amazon was more aggressive offering the book at $17.99 and a $5 gift certificate and free shipping.   What do you think is the strategy of these firms in offering this book as such a reduced price?
It is several months later. XYZ's drug ViraGard has been approved not only for Singapore and...
It is several months later. XYZ's drug ViraGard has been approved not only for Singapore and Vietnam, but also for most of the Pacific Rim. We are now in production, but we need a solid a distribution plan. Management wants us to consider two different strategies: one for more developed economies like Singapore or South Korea; and another for developing economies like Vietnam or the Philippines. Select one developed economy and one developing economy in the Pacific Rim, choose an...
Apple is considering marketing one of two new smartphones for the coming holiday season: iPhone 8...
Apple is considering marketing one of two new smartphones for the coming holiday season: iPhone 8 and iPhone X. Estimated profits in total USD under high, medium, and low demand are as follows: iPhone X High Medium Low Profit $3,200,000,000 $2,500,000,000 $1,750,000,000 Probability 0.225 0.5 0.275 There is concern that profitability will be affected by a Google's introduction of the Pixel 2 smartphone viewed as similar to the iPhone 8. Estimated profits in total USD with and without competition are...
You buy 100 shares of Apple common stock at a price of $55.75. One quarter later,...
You buy 100 shares of Apple common stock at a price of $55.75. One quarter later, you collect a dividend of $1.51 per share and sell your stock for $66.38 per share. What is the rate of return on your investment? (You may ignore commissions and taxes.) Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol. If the return is negative, then include a...
You buy 100 shares of Apple common stock at a price of $60.98. One quarter later,...
You buy 100 shares of Apple common stock at a price of $60.98. One quarter later, you collect a dividend of $1.73 per share and sell your stock for $67.44 per share. What is the rate of return on your investment? (You may ignore commissions and taxes.) Do not round at intermediate steps in your calculation. Express your answer in percent. Round to two decimal places. Do not type the % symbol. If the return is negative, then include a...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT