After thinking further about yesterday's post, I realize I'm totally wrong to flag the iPhone's high price as a problem. In fact, now I'm wondering why Apple isn't charging an even higher price...
Why the sudden change of heart? It all has to do with the attributes of the likely customer base. We're talking about Apple loyalists mostly, especially the early adopters. If you're willing to spend $500 or $600 for one of these, what's the likelihood that you'd be willing to pay $700 or $800? Pretty darned high.
Yes, an even higher price would cut out some portion of the market at the beginning. I realize some fans are crazy enough break a piggy bank, skip a credit card payment, etc., to pull together the funds required, and that these same people might not be willing to spend another $200-$300. But they're probably the minority for the initial audience (first 6-9 months). Apple's cut of the additional $200-$300 on this would more than make up for the loss of those customers.
But that's only half the beauty of an even higher price... Six to nine months later, when the next generation iPhone hits the market, Apple can drastically reduce the price, making it look like an even better deal for the next wave of customers. Heck, at that point, the current $500/$600 price tag starts to look attractive. It's all relative.
Steve Jobs & Company is making a feeble attempt to avoid price gouging and make it look like they're pricing the iPhone in the same general neighborhood as other high-end phones. Why bother? The loyalists will pay almost any price, especially if it means they're first on their block to get it.