Apple offers apology to early iPhone buyers after price drop

Apple CEO Steve Jobs on Thursday apologized and offered store credit to iPhone customers after his company dropped the price of the smartphone by $200 US just two months after it went on sale.

In an open letter on Apple's website, Jobs said the company would offer a $100 US store credit at the company's retail and online stores to every iPhone customer.

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

The apology and rebate came after Jobs said he received hundreds of letters from customers upset at having purchased the mobile device for $599 US only to see the price drop to $399 US this week.

The price cut of the eight-gigabyte phone and the phase-out of the four-gigabyte phone came less than 10 weeks after the two products went on sale in the United States on June 29. Apple has not announced when or if the iPhone will be available in Canada.

Analysts said Jobs made a mistake in undervaluing the Apple loyalists who had lined up in anticipation of being among the first to use the iPhone.

"In the course of a day, he probably got an earful and a better sense of the extent of the discontent on the part of these very, very loyal customers," said Charles Golvin, an analyst with Forrester Research.

"On second and third thought, he realized these were probably the customers you most want to make sure are satisfied and retain a very positive impression about Apple overall, not just the iPhone."

But Jobs defended the company's motives for lowering the price, saying the price drop was part of a larger push to attract customers in anticipation of the holiday season.

And while he acknowledged "we need to do a better job taking care of our early iPhone customers as we aggressively go after new ones," he said the pace of technology will always mean some people pay top dollar to get a product first.

"This is life in the technology lane," he wrote. "If you always wait for the next price cut or to buy the new improved model, you'll never buy any technology product because there is always something better and less expensive on the horizon."

The company said it is on pace to sell one million iPhones by the end of the current quarter.