Apple executives have hinted that an early price drop for the $500-and-up iPad may be in the works. A Credit Suisse analyst who reportedly met with Apple executives learned that Apple may slash the price of the iPad if demand for the new device is low.
For eager iPad early adopters that could turn out to be a big iBummer, but then again, the news of an iPad price drop should not be coming as a shock. Most technology companies have a history of screwing over their first batch of customers with price cuts and early upgrades, and Apple is no exception. In fact, Apple was behind one of the most famous early adopter scandals of all time.
So before you go spending your money on the first edition of the iPad, let’s take a quick look back at just a few times when early adopters were left out in the cold by buying technology products before anyone else.
Before the iPad price cut rumor, there was the infamous price drop on the original iPhone. The original Jesus phone launched to critical and popular acclaim in the summer of 2007, with a 4GB model for $500 and an 8GB model for $600. Sales were strong with customers standing in line for hours to get their hands on the device, and iPhones were quickly sold out across the U.S. But by September Apple decided it wanted to sell more devices, so the company dropped the price of the 8GB iPhone by $200 and discontinued the 4GB model altogether.
The end result was that not only did some customers pay more money to get the iPhone, but those initial customers who bought the 4GB iPhone paid a premium for a piece of technology that became obsolete just three months after purchasing it.
“When someone tells you that what you just bought from them isn’t really worth the price you paid and they don’t even offer it anymore, you felt cheated,” one dissatisfied iPhone customer told PC World shortly after Apple announced the iPhone price drop in 2007.
To make up for it, Apple offered a $100 credit to eligible iPhone early adopters, which went a long way to quell customer outrage. However, at least one lawsuit was filed against Apple as a result of the company’s abnormally quick price cut.
Anyone who’s old enough to remember the VHS-Betamax format wars knew the HD DVD versus Blu-ray format war wasn’t going to be pretty for early adopters. By early 2008, Blu-ray had won and HD DVD customers were left holding the bag, but it wasn’t all fun and giggles for Blu-ray users either. You see HD DVD players came with some great features like picture-in-picture, storage capacity and an Internet connection. But those features didn’t hit Blu-ray players until 2007 and 2008 with the minimum Blu-ray disc requirements and BD Live, Blu-ray’s Internet connected features.
And guess what happened? Most of those early Blu-ray units couldn’t be upgraded to the new software. Well, there was one device that would accept the upgrade: Sony’s PlayStation 3. But anyone who bought a Pioneer, Samsung, or Panasonic device before then, while still able to play Blu-ray discs, was left out of the BD Live party. And just to add salt to the wound, Beta News reported that BD Live developers had this to say about Blu-ray 1.0 adopters: “They knew what they were getting into.” Ouch.
Tivo Down Under
Australian Tivo early adopters got a rude awakening after Tivo’s 2008 introduction to the Land Down Under. When Tivo first launched in Australia it had a limited hard drive and networking features and you couldn’t skip over ads, according to Australian PC Authority. The device cost $700 Australian dollars (AUD), plus you needed to get an $80 AUD Wi-Fi adapter, and at the time Tivo promised Australian users they would be able to purchase an upgrade in the coming months for “tens of dollars.” The coming upgrade was supposed to allow you to archive recordings, and access music, videos and photos from computers in your home network.
When the upgrade finally did come it cost a whopping $199, meaning early Tivo adopters paid close to $1000 AUD for their device.
Wal-Mart Music Downloads
Wal-Mart launched its music download service in 2004, and like most digital downloads during that time the music came with DRM copy protection. By 2008, Wal-Mart decided to drop DRM, but all those customers who had been loyally buying up DRM-filled music loaded were told that after October 9, 2008 Wal-Mart was shutting down its DRM servers that made it possible for you to transfer your music between devices. So consumers had a choice: burn all your purchased music onto a CD or eventually lose it. Of course, Wal-Mart wasn’t the only company to shaft early adopters of digital music; Microsoft did it with its PlaysForSure (now that’s irony) licensing servers, and Yahoo did with its Unlimited Music Store. Apple in 2007 dropped DRM from its iTunes music store, but you can still hold on to your music to this day and Apple will also let you upgrade your DRM music to DRM-free for a nominal fee.
Kindle 2 and DX
Some people probably thought they were being so smart by waiting for the second iteration of the Kindle to come out before jumping into the e-reader gadget game. When the Kindle 2 was first introduced in February, it seemed like the right time to purchase. The second Kindle had new features like annotation and adjustable text sizes, as well a slimmer profile and better physical controls. It looked like the perfect time to buy until three months later when Amazon announced the larger-sized Kindle DX. Some Kindle 2 early adopters felt betrayed, and were upset that the company didn’t even mention the Kindle DX was coming. I wonder how they felt in July, just five months after the Kindle 2 was launched, when Amazon knocked $60 off the price of the Kindle 2. I guess early adopters of the Kindle 2 just couldn’t catch a break in 2009.
So unless you’re an absolute technology nut, and understand the risks going in, it just doesn’t pay to be part of that first crowd of gadget buyers. And this time with so many rumors about an iPad price drop, and a clear history of price drops with the iPhone, it will be hard to feel sorry for early adopters if the iPad has a super cheap price tag by the summer.
Connect with Ian on Twitter (@ianpaul).