Tuesday, September 11, 2007

iPhone Die-hard's Non-sense

Sometimes people are just very funny.

Imagine this. Yesterday you bought chicken meat in your usual street vendor --you know, the mighty tukang sayur--, for, say, IDR 10,000. This morning, you find out that he sells similar chicken to your neighbor for IDR 4,000. Would you be enraged and ask him to pay the difference?

You might get a bit annoyed, but unless you are insane, you wouldn't ask for compensation. Moreover, you can not blame the tukang sayur for discriminating the price. He never forces you to buy his chicken meat, doesn't he?

Sounds terribly simple? Well, tell that to these outraged Apple buyers upon finding that Steve Jobs has reduced the iPhone price by USD 200 after two months of first sale.


  1. Now Rizal, here is a question for you: Why did Steve Jobs even bother to 'compensate'? Your tukang sayur definitely wouldn't right?

  2. because the tukang sayur is the nobody of nothing and the business is too small to be concerned.

  3. hey Vianf, don't insult tukang sayur. do you know that most tukang sayur has more fancy cellphones than me. insulting a tukang sayur = insulting me. so, t.k is never the nobody of nothing. and business is business, should always care about reputation.

    but you're also right, Arya Gaduh is misleading to put Steve Jobs in par with Tukang Sayur. Because Apple is buah, not sayur.

  4. Vianf:
    You are wrong there: Tukang sayur's business may be more important than tukang sayur than iPhone to Steve Jobs and Co. in relative terms. Cascades of lost customers will likely hurt tukang sayur more than those of lost iPhone buyers (or will it?).

    Don't blame me... It's Rizal's fault.

  5. I have been thinking this issue for quite sometime: on why Steve Jobs even bother to compensate those uproaring buyer.

    The theory goes that if you are a monopolist (Apple more or less is), you have a chance to reap consumer surplus (like what Apple just did).

    So perhaps, Steve just overrated the Macintoshian loyalty, hence his monopoly power. And he wanted to correct that. Although I am not sure on how many "exits", switching to Nokia or else, that actually those "voices" do.

    But, I think the more interesting query is on the consumer reaction. As Steven Levitt wrote:

    Prices are fundamental to economics, yet we don’t have good models as to why consumers respond differently to price changes depending on the reason for the change. That would be a great subject for budding young economists to tackle.

    Go Arya, go!

  6. mer, please get REAL in VALUE and look at the REALITY of the business. you can't compare the tukang sayur's business to Steve's.

    arya, likewise. don't try to justify with a biased economics measure of relativeness (which i don't really understand). just get real as there are businesses that are too small and too big, whatever your economics way of thinking.

  7. Rizal:
    Was Job's move strategic, or was it a (correction to a) blunder?

    Either way, it's all a story about monopoly power: If it's the former, your tukang sayur -- who operates in a competitive market -- doesn't have the luxury of planning a strategic move.

    On the other hand if (as it seems) a blunder (eg., in calculating the demand elasticity of the I-gotta-have-it-today consumers), your tukang sayur is also less likely to make that mistake because of the market.

    This, I think, explains why the iPhone consumers were (as they should be) more upset than a typical tukang sayur consumer: They felt cheated, perceiving Apple as taking "superprofit" off them.

    "Biased economic measure of relativeness" -- which means... what?

    It's not about the absolute size (nobody vs. 'somebody') but the market structure of the industry. A larger firm (in absolute terms) operating in a competitive setting is unlikely to compensate either for something like this.

  8. Arya, don't blame me... it's rizal's fault. he started with tukang sayur and apple, which is actually not sayur as mer told us.

    Anyway, it is normal in any competitive setting to reduce price folowing up a plan of increasing supply.

    Compensating past costumers is to make it fair for all costumers and it's okay as long as it doesn't screw the profit margin.