Apple Delights, Infuriates With New iPods And iPhone Price Mods

One of the interesting features that wasn’t discussed, but would naturally flow from the OS X/Safari underpinnings that iPod Touch shares with iPhone, is the ability to receive http streams. Add to it the variety of hacks that are already available for the line of iPhone products and it becomes obvious that the new iPod Touch is destined to become a portable computer of sorts for those who want ultraportability.

Oh, 4GB iPhone, We Hardly Knew Ya
On the iPhone front, which was covered at the end of Jobs’ presentation (after the market had already reacted negatively) the deletion of the 4GB iPhone and the new price of the 8GB iPhone got the most attention. The price drop on the 8GB iPhone, from $599 to $399—or well below the price of last week’s new 4GB iPhone or refurbed 8GB prices—has many iPhone users calling foul and calling their credit card companies, Apple, AT&T, and anyone else they can think of to get a price match for the new reduced price.

[Editor's note: After this story went live, Apple posted an "Open Letter to iPhone Owners from Steve Jobs" announcing that iPhone owners who bought their phones from Apple or AT&T and aren't receiving rebates or "other considerations" would receive a $100 credit that can be used at Apple's online or retail stores.]

Jobs’ reasoning for the drop in price was to allow users in the holiday season to enjoy the device at a lower price, but that’s led to speculation from the likes of Salon, Engadget, and other online blogs that points to a potential dumping of the 2.5G version of the device that AT&T uses ahead of the roll out of the 3G version that will be required in Europe, which Salon notes may drive the price back up again. All this speculation comes closely on the heels of a recent iSuppli report that says the iPhone outsold every other smart phone and almost every other type of mobile device in the U.S. market for the month of July, grabbing almost 1.8 percent of the U.S. consumer mobile-handset market. iSuppli expects 4.5 million iPhones will ship in 2007.

"While iSuppli has not collected historical information on this topic," the research report noted, "it's likely that the speed of the iPhone's rise to competitive dominance in its segment is unprecedented in the history of the mobile-handset market."

One of Apple’s strategies may be to acknowledge with the price break that its phones were overpriced. One can also conjecture, though, that it’s also a way to tighten the screws on its competition: With all the iPhone like phones in the pipeline that were attraced to and are shooting for the premium price that Apple’s iPhone commanded, the company’s modification of its strategy to a lower-priced 8GB version means the competition now has to shave its margins or rework the products to be able to compete.

In any event, like the product line that IdaRose Sylvester mentions above, the pricing is also getting messy. Without a 16GB iPhone to replace the higher-end $599 price at which Apple had been selling the 8GB, consumers who want flash-based iPod functionality now have to decide between an 8GB iPhone and a 16GB iPod Touch at the exact same $399 price. The apples-to-apples comparison may confuse more customers than it benefits, and Apple may soon have to reinstate a lower-priced 4GB iPhone or move to a higher-priced 16GB iPhone to keep its messaging as clear as the sound from its little white earbuds.