iPhone and Zune Receive Price Cuts, Are Companies Getting Desperate?

Recently, Apple has reduced the price of the iPhone from $599 for the 8 gigabyte version to $399 and has discontinued the 4 gigabyte version. Also, Microsoft has reduced the price of its Zune Mp3 player to $199 from $249 (30 gigabyte storage). It seems since Apple announced that they were redesigning the iPod with a new touchscreen version called the iTouch, and revising the iPod Nano with a bigger screen, Microsoft had to try and steal their thunder. Unfortunately for Microsoft, the Zune player is still an overpriced Mp3 player that can not do much else well. For $169, one can buy a Playstation portable (Which is bulkier), but is much better than a Zune, with Mp3 playback, Video storage, and Games (PSP native games, PSX games, and even older emulators.) or one can buy an iPod or iTouch which is more consumer friendly for video and audio playback.

It seems the iPhone having lackluster sales and being hacked by Russians (The kid in NJ who supposedly hacked the iPhone actually used a hack already created by Russians and then claimed the fame for himself) needed a price drop to entice more suckers to the abysmal AT&T network. The only thing that will save the iPhone in the long run is being able to join any supported carrier (Sorry Verizon customers, but Verizon uses a proprietary network protocol that isn't compatible), longer battery life and a better web browser. I feel bad for the few customers who actually bought the iPhone for themselves and now feel like suckers, but business is business.

Not too long ago Sony also made a price cut on its console gaming system the Playstation 3 from $599 for the 60 gigabyte version to $499 with 5 free Blu-Ray movies. They also discontinued their 20 gigabyte version and introduced a 80 gigabyte version. Microsoft then followed suit and reduced their console prices $20-$50 on each of their three models. It's normal for companies to reduce prices when they are inserting new inventory (SKUs) into the market, but lately it seems that a lot of empty hype was put into these items and now that the smoke cleared the companies are scrambling to reach their quarter sales projections or in the case of Microsoft with the XBOX 360, trying to crush the competition.

I have nothing against price cuts, but reducing a price of an item within less than a year of it coming out creates a lot of resentment for the company from the initial buyers. Instead of reducing the price, Apple should address the concerns of the current crop of iPhone users. The same goes for Microsoft with the Zune player. If a company fixes or adds features that customers want, people will pay the price for the item. Basic economics of supply and demand.