"He who will, therefore, carefully examine the actions of this man will find him a most valiant lion and a most cunning fox." -- Niccolo Machiavelli, The Prince
In light of the brouhaha that has emerged in the wake of Apple's (Nasdaq: AAPL) iPhone price cut, you can view Steve Jobs one of two ways. Either he's a deer caught in the headlights of consumer outrage, or he's a calculating, Machiavellian manipulator of his minions. Either he misjudged the ire of the early adopters, or he shrewdly cultivated the free publicity the price cut engendered as the holiday selling season approaches.
I tend to picture Jobs as the embodiment of the principles espoused in Niccolo Machiavelli's The Prince. He simply cannot be naive enough to think such a swift, sudden price cut wouldn't draw early buyers' ire. He could not have misjudged the backlash such a move would create. Instead, I think it's a cunning move crafted to keep the iPhone the market's must-have product.
While the early adopters helped drive the initial sales, speculation has suggested that those sales subsequently began to slow. (The company announced today that it had sold 1 million iPhones in just 74 days.) Jobs says he didn't need the price cut to meet the company's iPhone sales projections, and frankly, I believe him.
"Coming now to the other qualities mentioned above, I say that every prince ought to desire to be considered clement and not cruel." -The Prince, chapter 17
By bestowing $100 Apple Store gift cards upon previous buyers, Jobs is playing the part of the benevolent dictator, appeasing the early adopters whom he cruelly made pay more for their iPhones. On one hand, it mollifies those who were most upset, while on the other, it's hardly going to negate the huge margins Apple realized from those early sales. It's a win-win situation for Apple, generating more good press and making Jobs seem beneficent.
Not everyone will redeem those gift cards, though they could potentially apply to almost 1 million iPhone customers. Many companies rely upon "breakage," the unused credits consumers have obtained from store credit and such, to realize additional profits. Even if cards are cashed in, they'll still generate more money for Apple. How many Apple products really sell for $100 or less?
Jobs will be driving people into his stores, since the credits are only good for Apple products, and he'll end up selling more iPods, iMacs, software, and accessories in the process. Even consumers who bought their phones at AT&T will only be able to redeem the gift cards at Apple stores. It's a calculated move that Machiavelli's Prince would recognize immediately.
"And well-ordered states and wise princes have taken every care not to drive the nobles to desperation, and to keep the people satisfied and contented, for this is one of the most important objects a prince can have." -- The Prince, Chapter 19
Don't believe for a minute that Jobs actually wants to move the iPhone to the masses, as he writes in his mea culpa email. Were that the case, the iPhone would be available from Verizon (NYSE: VZ), Sprint Nextel (NYSE: S), and Deutsche Telekom's (NYSE: DT) T-Mobile service. Its exclusive availability through AT&T (NYSE: T) shows that Jobs' strategy was never about getting as many people as possible "in the iPhone 'tent.'" It was always about profits, and about moving iPhone sales. There's nothing necessarily wrong with that, but don't kid yourself into thinking that Jobs' moves are all about assuaging angry customers.
"For this reason many consider that a wise prince, when he has the opportunity, ought with craft to foster some animosity against himself, so that, having crushed it, his renown may rise higher." -- The Prince, chapter 20
We'll probably never know whether this was a Machiavellian plan to create publicity and drive sales. Jobs is unquestionably a design and marketing genius, and many Apple fans are doubtlessly feeling more generous toward him in the wake of this possibly self-made hubbub. But there seems to this Fool little doubt that when all is said and done, Niccolo would be very proud of Steve. As Machiavelli noted:
"Entrepreneurs are simply those who understand that there is little difference between obstacle and opportunity and are able to turn both to their advantage."
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