Apple Offers $100 Credit to Angry iPhone Owners

Steve Jobs said something unusual Thursday: Sorry.

After an Internet tidal wave of criticism from iPhone owners followed Wednesday's surprise price cut of this summer's must-have gadget, the Apple CEO posted a letter on the company Web site announcing a $100 credit for every customer who felt cheated.

"We want to do the right thing for our valued iPhone customers," he wrote. "We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple."

• Click here to read the text of the letter.

The credits will be good toward anything in an Apple online or retail store.

Not eligible are customers who bought iPhones in the past two weeks. They can get the $200 price difference from the store where they bought their phones.

The 8-gigabyte iPhone, once $599, was cut to $399 Wednesday. The 4-gigabyte model, formerly $499, was discontinued, and remaining units will sell for $299 until stocks are gone.

The iPhone first went on sale June 29, less than 10 weeks ago, to long lines and huge media attention.

The 33 percent cut means early adopters paid a premium of at least $20 for every week they could say they had the much-ballyhooed cell phone/media player/Web surfer.

"The technology road is bumpy," said Jobs in his letter Thursday. "There is always someone who bought a product before a particular cutoff date and misses the new price or the new operating system or the new whatever."

But, he conceded, "we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price. Our early customers trusted us, and we must live up to that trust with our actions in moments like these."

More details about the $100 credits would be posted on the Apple Web site next week, Jobs promised.

• Click here for's Personal Technology Center.

Jobs tossed off the news of the price cuts almost as an aside during his unveiling Wednesday of Apple's completely revamped iPod line, including a very iPhone-like iPod Touch, at the Moscone West exhibition center in San Francisco.

IPhone owners, to put it mildly, were immediately ticked off.

"I feel like I just got punched in the face," said one commenter Wednesday on the MacRumors blog. "Fanboy tax indeed."

Wall Street seemed to feel the same way. Apple's stock, after falling 5 percent on the news of Wednesday's announcements, fell another 1.3 percent Thursday to close at $135.01, or $1.75 lower than Wednesday's close.

"People who bought the iPhone weeks or months ago ... might think twice about being the first to buy future Apple products," said Tim Beyers, an analyst at The Motley Fool research and investment group. "[The price cut] smacks a little of desperation, and it's very unlike Apple."

Jobs said Wednesday that Apple was on pace to sell 1 million iPhones in the United States by the end of September. The drastic price cut made that number even more attainable.

Analysts said quick discounts are typical for the cell-phone industry, if not the computer industry. The world's best-selling cell phone, the Motorola Razr, for instance, debuted at $499 but now can be had for less than $100.

"This is about Apple learning how to become a cell-phone retailer," said Jeff Kagan, an independent telecommunications industry analyst based in Atlanta. "All of a sudden it's in the cell-phone business, and everyone is trying to figure out how to measure it, and we don't know yet."

That didn't do much to alleviate the chagrin of iPhone buyers, however.

"I realize this is not their problem: I agreed to the original price — it's my fault," said 32-year-old Ryan Roth of New York, who plunked down $599 for his iPhone — his first cell phone ever — mere hours before Jobs' speech Thursday. "It just kinda sucks."

Also sinking in was the realization that many of the most impressive features of the iPhone — the finger-activated touchscreen, the full-fledged Web browser, automatic screen-orientation and brightness adjustment — were now also available on the iPod Touch.

"The iPhone isn't Apple's golden child, the iPod is. Even Steve said that the iPhone is the third priority after the iPod," said another Engadget poster. "The iPod touch is THE touch screen device. The multi touch thing was initially destined for the iPod but Apple are very smart."

Of course, on the Internet, there was no shortage of schadenfreude to go around.

"Suck it up — you wanted to be the coolest kid on the block and you were for a few weeks," gloated one poster to the Gizmodo tech blog. "Isn't that worth at least $200?"

Another saw the practical aspects of the price cut.

"Maybe I'll get an iPhone and an iPod Classic," said the wise guy, "for about the same price people paid for the iPhone two days ago."

The Associated Press contributed to this report.