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Credit Apple for Giving Credit

Steve Jobs hopes to calm customers who paid full price for the now-$200-cheaper iPhone.

Even the smartest marketing guru can drop the ball.


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CEO Steve Jobs has earned his reputation as a marketing genius.But he started out by getting this one so badly wrong.

Jobs went into full damage control Thursday, agreeing to hand out a $100 Apple Stores credit to each person who bought an iPhone before the price was slashed. The move came just hours after Jobs was dismissing complaints and implying that the customers wouldn't get a penny.

"We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price," he admitted in an open letter to customers posted on the Apple Web site. "Our early customers trusted us, and we must live up to that trust with our actions in moments like these."

It was the right move -- and made not a moment too soon.

"We want to do the right thing for our valued iPhone customers," he added. "We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of Apple."

Jobs acknowledged that he had made the change after receiving "hundreds" of angry emails and reading "every one."

(Hundreds of angry emails from Apple fanatics? Hey Steve, now you know how Bill Gates feels when he logs on every morning!)

The refund was a dramatic reversal from the stance Jobs took just a few hours earlier, when he dismissively told

USA Today

: "That's technology."

In case you missed it, Jobs sparked fury among Apple fans on Wednesday when he suddenly slashed the price of the iPhone by $200. The dramatic move outraged all those who had rushed the buy the product for $599 when it was launched barely two months ago.

"iHosed, iScrewed, iBetrayed!" screamed the message from one bitter customer on Apple's Web site yesterday. "I honestly still can't believe this. ... I have never felt so violated by a company," wrote another.

Around the Web, the blogs and chat rooms that normally buzz with Apple triumphalism are instead buzzing with outrage. "Apple has made me look like a fool..." "I was taken for $200..." "I feel totally cheated..." "Apple has knowingly dumped all over the very people who helped spread the word on this thing..."

And the ultimate insult to Jobs: "You're acting like


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The blunder wasn't typical of Jobs, who has built a cult following and carefully crafted Apple's anti-corporate, customer-friendly image.

He compounded the error by appearing dismissive in an

interview that appeared in

USA Today

Thursday morning, after the price cut was announced.

"What do you say to customers who just bought a new iPhone for $599?" he was asked, "Sorry?"

"That's technology," Jobs responded. "If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well, that's what happens in technology."

It's not what you expect a billionaire to say to his customers when they feel cheated.

Jobs' subsequent rebate offer is likely to calm the storm. The company may even come out of the snafu ahead in terms of publicity, though it will presumably have to take a charge against quarterly earnings for the customer credits.

One final thought: The real mark of a genius isn't that they don't make mistakes -- it's how they recover when they do.

In keeping with TSC's editorial policy, Brett Arends doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Arends takes a critical look inside mutual funds and the personal finance industry in a twice-weekly column that ranges from investment advice for the general reader to the industry's latest scoop. Prior to joining in 2006, he worked for more than two years at the Boston Herald, where he revived the paper's well-known 'On State Street' finance column and was part of a team that won two SABEW awards in 2005. He had previously written for the Daily Telegraph and Daily Mail newspapers in London, the magazine Private Eye, and for Global Agenda, the official magazine of the World Economic Summit in Davos, Switzerland. Arends has also written a book on sports 'futures' betting.