Did Apple Betray the Early Adopters in the iPhone’s Product Life Cycle? by Gene Heratori
In late June 2007, the early adopter rush to buy iPhones
resembled the frenzy of people dressed in wizard hats and
carrying broomsticks to buy the new Harry Potter book.
Only the consumers weren’t buying a tale of magic. Or were
they? At $600 a pop they were buying a status symbol and
the right to be among the first members of society to be
fully connected to the Internet in every way and at all times.
In the process, Apple sold two hundred and seventy
thousand iPhones and earned a cool $162 million in revenue
in only two days.
Then in early September 2007 Apple dropped the bomb.
After only two months, iPhone’s price was slashed by $200,
making it more accessible to the American public. Needless to say a lot of people were very angry and felt
betrayed by Apple. They let this be known by a flooding of emails to Apple’s CEO and chat room rants. But
why is the first wave of consumers now angry? More importantly, why did these people even pay a
whopping $600 for a phone in the first place?
Why did people pay $600 for an iPhone?
So why were two hundred and seventy thousand people willing to dish out $600 for a phone that, with
very few exceptions, is not necessary for the completion of their jobs? Is it that people are begging to be
ripped off? Are they just so stupid that they are fighting in line to throw their money out the window in
slack-jawed manner? Not really. Now let’s try to understand why. According to American economist E. Roy
Weintraub, neoclassical theory states that consumers are rational and look to maximize utility in their
purchases. This rule has one major exception. The purchase of an expensive and non-essential luxury
item, such as an iPhone, is what’s known as an “ostentatious purchase” that steers away from this theory
of a rational consumer looking for a bargain.
Now I started college back in the day at the turn of the millennium, with a double major in Marketing and
International Business. I must say that the first two days of iPhone marketing strategy followed the typical
starting point of the product lifecycle that was described in my Marketing 101 book. Ah yes, the memories
of my college campus and beer filled Spring nights are coming back. In other words, the iPhone is a
revolutionary product that hit the market at a typically very high price. Even all these years after college,
product life cycle theory proves to be valid through the example of the iPhone.
The people who buy any product at the first stage of a product lifecycle are called early adopters. Their
motivation for paying a high price for a product is to differentiate themselves from the rest of society.
Typically, early adopters seek personal validation through the purchases they make, rather than only
focusing on self-actualization through the other actions they commit. The iPhone takes the early adopter
concept to a whole new level. The volume of purchases made in the first two days after the introduction of
the iPhone was historical! Never before in the history of humanity has a luxury item sold so successfully in
so short a period of time. This is only natural, considering that the iPhone marked the next step towards
an ultimate connectedness and unlimited access to information through the World Wide Web. People
sought to elevate themselves among their peers in society through the iPhone, with the double rationale
that luxury items are prestige and information is power.
What was the real underlying cause of the early adopter’s anger over paying $200 too much for
an iPhone?
The Yahoo! News article that prompted me to write this sociological overview of the complete meshing of
mankind with the Internet through the iPhone suggested that the early adopters felt betrayed for paying
$600 instead of $400 for an iPhone. I disagree.
The Hierarchy of Needs developed by American psychologist Abraham Maslow, tells us that after the four
hunger, safety, belonging, and esteem needs, self-actualization is the highest order need that a human
being strives to fulfill. For many, being an early adopter of the iPhone was a way to feel satiated from this
need for self-actualization.
The $200 price cut only served to rip their status of early adopter away from them too soon. Looking more
closely, Apple did technically violate the traditional flow of the product lifecycle by introducing the price cut
in two months, instead of say, a year or two. Suddenly, the owners of iPhones stopped feeling like
members of society’s elite. Suddenly the dissemination of the iPhone to the public through lower pricing
made them feel empty inside rather than self-actualized. Suddenly they felt lonely because they were no
longer set apart, which is kind of ironic when you think about it. In short, they were abruptly torn from the
illusion that they were more successful, daring, and intelligent than the masses that constitute American
society. To add insult to injury, a new feeling or dread was thrust upon them. At first they felt the pride
that came with whipping out an iPhone in public. Then they felt that they looked like chumps who got
ripped off by $200 to all of their co-workers, family members, friends, and casual acquaintances to whom
they once bragged.
Apple announced that it would give $100 worth of store credit to those who paid the initial $600 sticker
price. There’s only one problem. They don’t want it! The early adopters of the iPhone weren’t irked
because they feel that they were ripped off $200. After all they had the money to spend in the first place.
They feel that they were denied their moment in the sun.
Where we stand as marketers and the ethical debate that the iPhone brings up
As an Internet advertiser by trade I sometimes, though rarely, appear unfashionable in certain artsy
circles, as if I were some type of sellout perpetuating capitalism. The example of the iPhone suggests that
marketers are capable of making the masses of consumers jump through hoops and forcing them into
becoming actors in a product lifecycle of macro-economic proportions, often without the consumers even
realizing what’s happening or why they’re doing the things they’re doing. A marketing professor did in fact
tell me once that marketing is simply conveying the message that people are not complete, that
something is NOT alright, that they are indeed lacking a self-actualizing trait that can only be fulfilled
through the purchase of a product.
On the other hand, this is how the economy is set up. Advertisements and sales allow people to put a roof
over their families and to feed their children. Without wide-scale sales and the advertisements that drive
them, companies would have less demand and jobs would plummet. Most of the artsy types who criticize
advertisers, the ones I met in any case, have rich parents to support their lackadaisical lifestyle. Without
the economic system driven by advertisements and sales, there would be a lot less rich parents, and
guess what, a lot of so called non-conformists would oddly find themselves working menial jobs instead of
talking Rodin and Hemmingway. As Will Hunting said, “How do you like them apples?”
Marketers play a pivotal role in this economy by determining pricing and advertising platforms of products
that are introduced to the market. Let’s get two things straight. To start, Apple had a very unusual and
illogical pricing campaign for its iPhone. There’s no denying that. Secondly, there is a reason behind the
product lifecycle. It’s not a coincidence that it appears as a trend for just about every innovation; it’s what
consumers expect and it reflects the way they think. When you mess with the flow of the product lifecycle,
as Apple very loudly did, you get a consumer uproar, once again, as Apple very loudly did. If the American
economy is to function in a healthy way that inspires long term consumer confidence and company
growth, then marketers must strive to work for the trust of the consumer. They must avoid perpetuating
the idea that pricing is random and that companies don’t have their act together though pricing campaigns
like the insane run of the iPhone.