Apple placates irate iPhone owners with rebate

Apple Chief Executive Steve Jobs has offered a $100 store credit to early buyers of the iPhone, seeking to calm customers angry over an unexpected and steep price cut.

Apple placates irate iPhone owners with rebate

Apple slashed the price of its $600 iPhone model to $400 on Wednesday, saying it wanted to make the device more affordable.

“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,” Jobs says in a letter posted on Apple’s website.

The offer applies to people who bought iPhones at Apple or AT&T stores. AT&T is the exclusive service provider for the iPhone in the US. The news comes just a day after PC Pro exclusively the company was offering free upgrades to iPod buyers.

Apple shares fell for a second day on concerns about iPhone profit margins because of the price cut and rebates.

Apple has not disclosed how many iPhones it has sold since its launch in late June, but has said it sold 270,000 iPhones in the first two days and expects to sell 1 million units by the end of September.

Although Apple faces potential costs of tens of millions of dollars if most qualifying customers take the company up on the offer, that will still be a drop in the bucket compared to the $818 million in net profit it made last quarter.

“From a Wall Street perspective it will be mostly ignored, people will say, ‘Hey, Apple did a goodwill gesture, they are taking good care of their customers,” says Shaw Wu, an analyst with American Technology Research.

Apple has a policy to refund the difference to customers who bought a product within 14 days of a price drop.

Websites and forums were quickly inundated with messages from irate iPhone buyers, some of whom felt that they had been punished for their early support. Jobs says he had received hundreds of e-mails from upset customers.

“Our early customers trusted us, and we must live up to that trust with our actions in moments like these,” Jobs claims.

Darren Chervitz, a money manager with Jacob Internet Fund, says he is concerned about the underlying damage the rapid price cut may have caused to Apple’s most loyal fan base. “You cannot do that without doing damage to your brand and to future launches,” Chervitz claims. “The early adopters are a big part of Apple’s fan base. They want to cultivate it and not think they bought too early.”

Jobs’ full statement can be read here.

Click here for full details of Apple’s new iPod range.

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