A Fool Looks Back

As expected, Apple 's (Nasdaq: AAPL) media event on Wednesday birthed several new products. Most of the iPod lines got a fresh upgrade, like pudgy, video-enabled nanos. However, the two jaw-dropping moments at the event were Jobs' announcement that iPhone prices were being slashed by a third of their original $599 price, and his unveiling of the iPod touch.

The price cut was enough to send Apple shares tumbling, despite the upbeat product introductions. Between the margin hit and the implication that Apple needs lower prices to move its products, the stock slid down by 5%. The $200 price cut also upset iPhone pioneers, like our own Kristin Graham, who camped out to get her unit when they came fresh off the line in June.

Apple came through with a $100 credit for existing iPhone users on Thursday, but by then, the damage was done.

I don't buy the brouhaha, though. The public wasn't supposed to jump on the iPhone right away. One of the worst things about cell phones is that carriers subsidize expensive handsets by tying subscribers to multiyear contracts. The iPhone's initial adoption rate is supposed to be measured over a cycle of two years, not three months.

Still, others were concerned that the iPod touch -- essentially an iPhone without the phone -- would eat into the iPhone market. It's a silly notion. "I think the iPod touch will be a gateway drug for eventual iPhone users," I wrote. As consumers become more familiar with the interface, the iPhone will be the only cell phone they want.

Quick hits
A few more of the market's stories, in brief:

now be available through Amazon.com 's (Nasdaq: AMZN) Unbox service. Not that there's anything wrong with that, as former NBC star Jerry Seinfeld would say.
Yahoo! (Nasdaq: YHOO) announced that it would spend $300 million to acquire BlueLithium. No, this isn't some new trippy designer drug for clubland kids. It's one of the world's largest online advertising networks, giving Yahoo! more ammo as it battles its three biggest competitors: Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT), and its own ghost.
eBay (Nasdaq: EBAY) slashed listing fees at its German auction site. It's eBay's second-largest market, but are price cuts the solution? Just because we're talking about a country where things that end in "wurst" are best doesn't make it Opposite Day for margins.

Until next week, I remain,
Rick Munarriz

© 2007 Universal Press Syndicate.