But the gonzo cuts can have negative results after the initial frenzy. First, it makes chumps out of the customers who made the product a hit—and profitable at full price—in the first place. Early adopters who paid through the nose for the new iPhone, were iPissed when they realized that their technologically less-forward neighbors could get the exact same product for one-third less a few weeks later. In response to an avalanche of angry e-mails, Jobs responded that he really cut the price in order to help all those who paid $599 for it. "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." How would you feel if you bought a condo in a Hovnanian development last month, only to find that your new neighbor paid significantly less for the exact same floor plan? [More]

Labels: economy