Apple iPhone Price Drop: A Sign Of Weakness

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Apple (AAPL) bulls like the folks at Piper Jaffray can say whatever they want. The AAPL plan to drop the price on the iPhone by $200 to $399 is a stunning sign of weakness. The old plan of losing money on every unit and making it up on volume has never worked.

AAPL CEO Steve Jobs said that "We’ve clearly got a breakthrough product, and we want to make it affordable for even more customers as we enter this holiday season."  It is better than a lump of coal in the stocking. But, Apple is talking about selling 10 million iPhones by the end of 2008. Giving up $200 on each one when the company should not have to looks like a mighty big haircut.

Cutting prices. A sign of weakness. Almost no one on Wall St. thinks otherwise.

Douglas A. McIntyre