When Apple announced that there will be no more 4GB iPhone model and that the 8Gb model would see a $200 price cut, the reaction was a small pang. Even people who don't actually own an iPhone imagine what it must be like to suddenly realize that you spent a third of a device's cost to be an early adopter. But there are deeper undertones here and Apple's move was clearly not just about a price cut.

Price drops on mobile phones are an all too common occurrence and early adopter chagrin, while definitely understandable is quite moot. Had this been any other cell phone, there would not have been this much of a reaction, the reason why people are this angry with Apple is simply because Apple does not have a habit of lowering price points. Instead, their strategy usually involves new models with better features at the same price points. But with the iPhone, things were different and why this was the case is important. For one thing, Apple clearly stated that the 4GB model was a very poor seller. People interested in buying an iPhone preferred paying extra for the bigger storage. As such, lowering the price on both models by $100, which would have been easy to deal with for the early adopters, would have had little impact. The entry model with 4GB would have sold just as bad and dropping that altogether would have stirred up just as much talk as Apple would have been accused of forcing customers into buying the more expensive model. As such, dealing away with the unpopular model and dramatically lowering the price for the 8GB model solved both problems. Apple has done this sort of thing in the past, but usually, when that happened, there was a new model to fill up the price point of the previous one… such as a 16 or 32 GB model with 3G and maybe GPS. That would have been a lot easier to swallow, but it didn't happen and the question is why.

Apple is set to release the iPhone in Europe and Japan soon and there has already been much speculation about a 3G model for these areas where the networks would support the much higher data transfer rates. In light of the recent price drop, it would make perfect sense for a 3G, higher storage model to step in and fill the higher price point, but Apple did not unveil it at the special event. The only logical reason is that the company is keeping the model under wraps to unveil along with the announcement for the iPhone launch in Europe, since this would be its main market due to the widespread adoption of 3G technology.

There is obviously a hole in Apple's product line where the high-end iPhone should be, but there are other factors keeping the company from making a splash with it.