Apple Update: iPhone Price Drop Shocker

The day of Steve Job's much anticipated press conference began with ebullience that carried through most of his presentation. Apple stock had gained 17.5% in the past two weeks, and the release of the Vanity Fair New Establishment list showed Jobs to be second in clout only to Rupert Murdoch and a mere 33 places ahead of Starbucks honcho Howard Schultz, who is seemingly morphing from caffeine purveyor to music mogul and would join him onstage to announce a partnership whereby you can access iTunes wirelessly in Schultz's ubiquitous, WiFi-equipped Starbucks.

But then came the announcement that the 8-gig iPhones that had caused avid first adopters to queue overnight and gratefully shell out $599 would now sell for $200 less. As Apple stock took a five percent hit, analysts puzzled it out (some saying it's probably a move to keep the new, browsing-capable iTouch from cannibalizing iPhone sales this holiday buying season, and don't cry for Jobs and what's probably a short-lived bump in the marketing strategy) as Jobs explained things to the Wall Street Journal.

Meanwhile, NBC Universal's decision to exit their content-providing partnership with Apple was generating mostly negative spin for the conglomerate while Apple looked like Robin Hood.

The iPhone had busted out of the gate to quickly outpace all other smart phones. Now the 4-gig version will go away, and Jobs, seen here introducing it in January for its June release, will ride out the gamble that the 8-gig model can keep gaining ground at its newly reduced price. If it does, the pressure on entertainment companies to keep providing Apple their content will only be increased--and vice versa if it falters.
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