Apple Monopolist, Copycat and a Bully Claim US Media

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Are Apple’s days numbered as an iconic IT company and are the technology media that was responsible for building the image of Apple about to turn on it like they did with Microsoft?

This week, the USA technology magazine PC World wrote, “Ten years ago, Microsoft was the company everyone loved to hate. The most vociferous Microsoft haters slammed the company for being a greedy industry bully that used its monopolistic, clunky, copycat operating system to force software on users and coerce partners into unfair licensing deals.

Don’t look now, but the role of the industry’s biggest bully is increasingly played by Apple, not Microsoft. Here’s a look at how Apple has shoved Microsoft aside as the company with the worst reputation as a monopolist, copycat and a bully.”

Magazine writer Mike Elgan from Computerworld goes onto say, “People love iPods (including me; my family of four has purchased 12 iPods in the past few years). But iPods come bundled with iTunes. Want to buy music from Apple? Guess what? You must install iTunes. Want an Apple cell phone from Yep! ITunes is required even if you want only to make phone calls. Want to buy ringtones for your Apple phone? ITunes.

 

“Apple not only “bundles” iTunes with multiple products, it forces you to use it. At least with Internet Explorer, you could always just download a competitor and ignore IE.

“And for all those loyal Apple supporters who dived in and purchased an iPhone in the USA recently Apple ripped them off too by a massive $200. in a remarkable concession, Steven Jobs acknowledged that the company had abused its core customers’ trust and extended a $100 store credit to the early iPhone buyers in an effort to pacify them. This was after he announced a price cut of $200 which in essence means that Apple has ripped them off a cool $100.”

The Herald Tribune in the USA wrote In June the Apple faithful  were calling it the “God Phone”. But last week it had become the phone from Satan.

People who had rushed to buy the Apple iPhone over the last two months suddenly and embarrassingly found that they had overpaid by $200 for the year’s most coveted gadget.

 

Apple, has made few missteps over the last decade, but it angered many of its most loyal customers by dropping the price of its iPhone to $400 from $600 only two months after it first went on sale. 

“Our early customers trusted us, and we must live up to that trust with our actions in moments like these,” Jobs wrote in a letter posted to Apple’s Web site.

The rebate, at least, was enough to mollify some early iPhone customers like Kevin Tofel, a blogger who wrote “I just felt so used as a consumer,” he said. “They hyped up the iPhone for six months and built up our expectations, and then they grabbed our extra $200 and ran.”

Jobs defended the price cut as the right thing to do and, referring to his 30-year history in the high-tech business, lectured his readers about the risks and rewards of buying into a fast-changing and volatile market for consumer technology products. “This is life in the technology lane,” he wrote.

While the iPhone price cut follows the general pattern of falling prices, quickly knocking a third off the price of a high-profile product is unusual for any consumer electronics company, let alone Apple.

The price of consumer electronics is always going down due to intense competition and the steady decrease of the cost of electronic parts. The pricing is largely determined by Moore’s Law, the observation made by Intel’s co-founder Gordon Moore that the number of transistors on a silicon chip doubles roughly every 18 months. Because this rate of change is described by an exponential curve, it dictates not only that prices fall, but also that they fall at an increasing rate.

For example, the average price of a 42-inch high-definition television has declined to $1,999 from $2,800 so far this year, an 18 percent drop, according to the research firm iSuppli. Analysts said they expected a 25 percent drop for the year, but it has been more in years past.

Mobile phones tend to be more prone to price declines because the pace of product introductions is faster than for televisions or DVD players. Motorola, for instance, introduced the ultrathin Razr phone. Six months later, Motorola realized it had a hit on its hands and dropped the price in an effort to aim at more mainstream buyers.

Ken Dulaney, a vice president at Gartner Research, said that in general starting high and dropping the price slowly was a smart strategy. By starting the price high, manufacturers can gauge early demand and reap greater profit from early adopters who are willing to pay any amount to be the first with a particular device. “It’s probably a formula taught in business school,” Dulaney said.

That must have been what Apple was counting on. But the size and speed of the price cut alienated some of Apple’s most loyal supporters.

“I feel totally screwed,” wrote one iPhone owner on the Unofficial Apple Weblog site. “My love affair with Apple is officially over.”

Jobs said the cuts were precipitated by a desire to build demand aggressively for the product in the coming holiday shopping season. Analysts, however, wondered if it was indicative of sagging demand for the expensive phone.

 

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