You're All On Pins And Needles Waiting To Hear About My New Ipod

So I left my iPod on a plane about a month ago, and I was about to replace it when I got wind that a new product line would be coming out today. As you may know, they released what amounts to an iPhone without the phone part, with a touchscreen, wi-fi, 16 gigs of storage for audio, video and photos, etc., for about $200 less than what they were selling the iPhone for. Thinking this is a great deal, I jumped on it, only to find out minutes later that they also cut the iPhone price by $200, which is just beyond bizarre. Apparently, people at the product launch thought so too:

The decision to cut the price of its most expensive iPhone to $399 from $599 - and phase out an entry-level iPhone that had sold for $499 - was clearly a shocker. Barron's tech writer Eric Savitz, who was in SF for Apple's product announcement, said "this was a move that no one in the room expected; people were truly stunned; and I mean jaw-dropping, mouths agape, stopped in their tracks stunned. The news almost erased all the good feeling in the room from the day’s various product announcements, and replaced it with a sense of shock. You’d think a dementor had flown into the room." Why all the fuss? Well, how would you feel if you had spent hours, even days, waiting in line for a $599 iPhone just two months ago - and now find that it's being priced at $399?

Apparently the stock dropped on this news too. If I had an iPhone I'd be pissed. From what I heard, the phone was the worst thing about the iPhone; the plan is locked in to AT&T, the service is scattershot at best, and the plans are costly. Getting all of the features I wanted without having to deal with the phone is like the best of all possible worlds, and I kicked in for the extra memory to get 16 gigs (I only used about 10-12 gigs of my old 20Gb iPod; seriously, does anyone even KNOW 40,000 songs for the 160Gb model they released today?).

Maybe if they opened up the device to competition from other cellular networks, it wouldn't be seen as too expensive considering it doesn't work well. Making the device open would allow more people to keep their service and transfer it over, and would make the phone more attractive to those who like their plans. But Apple was stubborn, fell in line with the typical way things are done in the cell phone industry when they had the juice to be bold, and now they're paying the price in a big way.

Technology is like information; it wants to be free.

UPDATE: This is not the publicity any company desires:

Steve Jobs' casual announcement today that Apple (AAPL) was cutting the price of the 8GB iPhone by $200 is not going over well among customers who paid $599 for theirs. In fact, it has sparked an outright rebellion in the Apple support forums, where discussion threads filled with hate mail are piling up faster than Apple can delete them.

"The more the day goes by, the more furious I become," writes VSiskos in "1 Million People Slapped In The Face Today," one of the forums still standing.

"I CANNOT BELIEVE THIS!" adds graphicalliber425. " Somewhere in my heart I'm hoping, Apple's going to offer all of us an extended return policy, or a brand new iPod nano right?"

Under's Apple's standard return policy, customers who bought a product within 14 days of a price reduction can ask to be reimbursed the difference, and some Apple stores have reportedly done the same for iPhones purchased earlier than that. But those random acts of flexibility seem only to have further inflamed the wounded feelings of those who weren't extended the same courtesy.

"They told me to shove it," wrote tulanejosjh. "14 days or nothing."

"Same here," added jmolina1313. "The guy treated me like I was on drugs!"

Apple had to know that people would be furious about this. They obviously calculated that they would rather take that hit (and the loss of perhaps fifty million dollars in revenue, if a just a quarter of iPhone purchasers turn theirs in) than try to sell a lame product. They must be cursing AT&T something fierce right now.