Here's why.

There are a few driving factors behind price drops on technology products. Here are some:

• Component prices: either the component suppliers decrease the price as the volume rises, or they are squeezed by large companies like Apple to decrease component prices as they themselves cost-reduce the components over time (again, driven by the factors listed here)
• Reduced capital costs: as volumes rise, capital expenditure on equipment is amortized over a larger number of units, hence bringing down the overall cost.
• Improved manufacturing efficiency: better machines, faster processes, faster testing and quality assurance etc.
• Improved logistics: cheaper manufacturing location geographically, cheaper shipping methods, cheaper packaging

These are only a sample of what's at work in pricing. Sometimes companies just enjoy the savings from the above factors as pure profit, without reducing the end price of the product. Eventually though, they lower the price due to either competition, or because a new generation of products with better features is released.

So what happend with Apple here?

First, let's look at history. On the iPod and related products (classic, Nano, or Shuffle), Apple maintained the price advertised at launch until a newer version was announced - which usually replaced the old product, but provided similar functionality for a reduced price. For example, selling the 20GB iPod for the price of the 15GB when the 4th gen iPod was announced. Or like today, where the 80GB iPod Classic costs the same as the 30GB did yesterday.

No problem with that. The rationale for reducing the price is clear. As a consumer, I know this is coming.

But that's not what happened with the iPhone. No new iPhone was released, which would normally bring about such a huge price drop (like $400 down to $250 for the 80GB iPod). And remember the factors behind price drops I mentioned earlier? There is almost no way any of them have kicked-in in the 60 days since the original launch.

Heck, let's assume that ALL of them kicked-in in the past 60 days. None of them, individually or collectively, can account for a 33% price drop. No way.

I would challenge (not rhetorically, actually) someone else to produce evidence of another consumer product that has dropped in price so much and so fast.

So why should I accept such blatant gouging by Apple? Such greed and disloyalty? I won't. I am pissed, and in my opinion, rightfully so.


Apple screwed me out of $200.