When Apple decided to drop the price tag of the iPhone by $200, a lot of people wondered what Steve Jobs was “smoking.” After all, if a product is truly successful, you’d expect them to milk the profits from their new gadget for as long as possible before chasing after maximum volume.

But Apple is anything but predictable. While it’s true that new wireless phones frequently drop in price over the run of a specific model, having it happen in a mere 10 weeks would seem surprising. Indeed, Wall Street pounced on this development as evidence of a possible fire sale, that the iPhone wasn’t selling near as many units as Apple predicted, so they had to reduce the price sooner than expected.

Apple’s stock price took a small bath as a result, but does that make any sense at all?

Steve Jobs, for example, proclaimed last week that Apple was still on track to move one million iPhones before the end of the quarter, on September 30. But they have, as of Monday, already reached that milestone, according to a company press release. Third party sales reports for July indicated the iPhone was an unexpectedly top seller in the smart phone category, and on a par with the other hot-seller among “feature” phones, the LG Chocolate, which is sold through Verizon Wireless.

Story continued in this week’s Tech Night Owl Newsletter.

Guest Editorial by David Biedny

Editor’s Note: David Biedny is a leading digital effects, graphics and multimedia expert. His writing, educational efforts, multimedia and special effects work have enjoyed global exposure. He is considered by many longtime industry players to be one of the technical and creative pioneers of personal computer-based multimedia.

Sometimes you have to wonder how companies like Apple make decisions about product configurations and designs. Take the iPod Touch — we all knew a new type of video iPod was on the way, it was only a matter of time and that time finally arrived.

Even though I really can’t financially justify buying a new iPod right now (my third generation, customized and expanded iPod seems to not be able to hold a charge anymore, three batteries later), I was all ready to dig out a worn credit card and give Apple more of my money. But after seeing the iPod Touch, I stuck the credit card back in my pocket. It’s all about the memory.

I’m fully aware that physical devices are subject to the immutable laws of the physical world. If you want a big, bright screen packaged in a small enclosure, and hope to have it be able to be powered on more than an hour, something has to give, and in the case of the iPod Touch, that something ended up being the hard drive. It’s not exactly shocking news — but it really, truly didn’t have to turn out this way. How many of you were looking for something to play all of those movies you’ve downloaded from the Web, or ripped from your DVD collection? How many CDs do you own — in my case, the number is just south of around 4000 — and have put in storage, now that all of them are living inside of iTunes, filling up that external 300 gig hard drive?

I know I’m not alone here, and when I factor in the thousands of images in my digital photography collection, the animations I’ve created over the last couple of decades and the demo reel of all of my visual effects work, it’s just not going to be able to live inside of the constraints of 16 gigabytes. Apple does the impossible, convinces EMI to up the sample rate of their music on iTunes, and then makes it more difficult to get all that shiny, luscious content on our cool new widescreen iPod? I can’t fit all of the episodes of Max Headroom on the Touch, and that’s a crying shame. Let’s not even mention the complete 14-DVD Monty Python box set sitting on my shelf. Can’t Touch it.

Look at that 160 gig iPod Classic (Apple, is this the best your marketing folks could conjure up?), and imagine that drive in a thicker Touch case, with a bigger battery, same screen and interface. THAT is the device I so very much hoped that Apple would deliver, the portable media center that I’ve dreamed of for years.

I would be willing to compromise on the “eight millimeter thin,” and have all my important media live on a “20 millimeter THICK” device that was not a concession to design. I would have laid out $500 for that iPod Studio device without hesitation, and without complaining about the lack of Bluetooth or an integrated camera (leave those for the iPod Studio Pro). And I know that I’m not the only one who feels this way.

And along those lines, now that there is only the 8GB iPhone, tell me, Apple, would it kill you to add an SD card slot to the thing?

We feel that this would be a reasonable thing for Apple to do, in light of fact that the 4GB iPhone is history; that is, unless you can locate one of the few remaining units in the closeout racks, carrying a special $299 price tag.

If you agree with this sentiment, we would request that you visit our online petition, designed to inform Apple about our collective thoughts and feelings regarding this idea. Click here to get involved.

Let Apple know that we feel strongly about this issue. And do also let us know your viewpoints in our Comments section.

I feel your pain. Understand that I don’t own an iPhone, and I’ve been going back and forth for weeks as to whether I really need one. After all, I only use my wireless phone to make and receive calls, and seldom expand the contact list beyond my immediate family and friends.

Indeed, even though I have a 60GB iPod, and not nearly enough music to fill its expansive capacity, I don’t really travel with it all that much. In my car, I have a 6-CD changer, which is usually occupied, plus satellite radio. At home, I can listen to what I want using the Bose sound system attached to my Mac, or to my home theater system.

Playing a portable sound system, with ear buds? Well, these days, I only use standard headphones when doing our two radio shows, and otherwise, I prefer naked ears. I take along a Bose noise-canceling headset so I can get a little shuteye on the plane. Otherwise, frankly, I just never became accustomed to spending my spare time immersed in sound with my ears covered.

But that’s just me.

So if I did buy an iPhone, it would be used as a phone and general portable Internet connection device. The iPod component would go largely unused. At $599, the iPhone made less sense to me, but at $399, it becomes somewhat more compelling. That is, of course, if I really want to move over to the AT&T network, and I still have some qualms about that.

However, I want to consider the poor individual who just shelled out full price for the 8GB iPhone, or bought the 4GB version, without considering the need for extra storage — or maybe because you just wanted to purchase the less-expensive version.

Now that Steve Jobs has cut the price by $200, can you go back to Apple and AT&T and demand a rebate? It’s certainly worth the effort, although this had to be expected at some point in time. Call it the early-adopter tax that one pays to be first on the block with a new gadget from any technology company. In saying that, it has been reported that you will probably be eligible for a rebate for up to 14 days prior to the date of the actual price reduction.

Then again, even if I had expected an iPhone price reduction from Apple, I didn’t anticipate that it would come so quickly, or amount to $200. I might have expected $100, but it’s fair to say that Apple needed to pull a surprise on us. I should also point out that their stock price took a hit, because some analysts seem to feel the price cut was not inspired by success and greed, but the result of a falling off in demand for the device. After learning that the iPhone topped all other smart phones in July, that doesn’t seem likely, but who ever said Wall Street was particularly sane?

As for the rest of Apple’s announcements: The “phatty” iPod nano is just a natural outgrowth of that product line. Ditto for the iPod classic with larger hard drives, particularly in light of the fact that Microsoft cut $50 from the price of the 30GB Zune, which seems even more paltry in light of what that extra money buys you from Apple.

Indeed, the iPod touch wasn’t terribly surprising either. It doesn’t take much imagination or special creative powers to remove the telephone circuitry and camera, make the case thinner and provide most of the remaining features with a tad more Flash storage.

I suppose one might regard the partnership with Starbucks as a neat development, particularly if you use their Wi-Fi hotspots or partake of their beverages and pastries. Having a Wi-Fi version of iTunes also demonstrates to Microsoft the real possibilities of wireless connectivity on a portable digital player.

It’s such a logical, predictable progression, you have to wonder why Microsoft couldn’t figure it out, and confined the Zune’s Wi-Fi feature to that pathetic “squirting” process. Right now, in fact, I regard the Zune’s price reduction as little more than a desperate effort to move a failed product. It’s not something that I would regard as particularly helpful. Right! People might remind me that the iPhone’s price also went down, so maybe I’m being a hypocrite.

The other issue that lies in the background is the skirmish between Apple and NBC/Universal. Already NBC has taken its TV shows to Amazon, which excludes tens of millions of Mac users, unless you use Boot Camp or the Parallels or VMWare Fusion virtual machines to run Windows. That, too me, is downright stupid, and it demonstrates just how far that the entertainment industry is out of touch.

Of course, maybe it’s just a power play. But I don’t think brinkmanship is going to have much of an impact on Steve Jobs, particularly since NBC still remains a lesser TV network compared to the competition that does have product on iTunes.

In the end, NBC will probably cave. For now, though, most people don’t buy TV shows, particularly when your cable TV, satellite provider or genuine TiVO DVR box will conveniently record your favorites for a one-time fee or modest monthly charge. And how long do you really want to keep those shows anyway, right?

Will they ever learn? Don’t bet on it.

The other day, from out of nowhere, comes the first beta of the new open source version of that famed email application, Eudora. In case you tuned in late, the publisher, Qualcomm, best known for for building cell phone chips these days, has given up on this venerable application. The project has been handed off to Mozilla, as part of their Thunderbird project.

Code-named, Penelope, the first beta of Eudora, version 8.0b1, has shipped, and all I can say is that it may be lots of things, but Eudora doesn’t seem to be a part of that list. That is, unless they expect us to believe that substituting a few toolbar icons and perhaps changing a few features somehow amounts to something significant.

My initial exposure to the beta was uneventful. I barely read the release notes, preferring to experience everything at first hand, then see where it has been and where it’s going.

As with other Mozilla apps, there’s no installation process involved on a Mac. The application ships as a disk image file, and you just open (mount) the image, and drag Eudora to the Applications folder. After that, you double-click the newly-installed application to get it rolling.

In passing, I read an article the other day from someone praising the “portable” version of Thunderbird for Windows to the skies. You see, under Windows, a standard installation will toss files into places that are neither consistent, nor fully addressed by the Add/Remove Control Panel. Not a pretty picture, particularly when you end up with stray files in the Windows Registry, where all sorts of mischief can occur. The special version of Thunderbird puts everything in a single folder, sort of like we’ve had with many Mac applications over the years.

To my surprise, the very first thing I noticed after the initial launch of Eudora was that every single element of my Thunderbird 2.x settings had been carried forward. In fact, the mail viewing screen, other than the distinctive Eudora icons, looked precisely the same as the regular version of Thunderbird.

I realize that Penelope is at beta one and there may be other interface changes along the way, and perhaps some of them would bring Eudora closer to the application you all know and love. For now, it’s Eudora in name and icon only, and I feel quite disappointed that this was the best offering Mozilla’s programmers could provide after months and months of work. Maybe some of these people used to work for Microsoft? No, that might be an insult, but only if they inherited Microsoft’s peculiar methods of pushing software out the door.

As far as this faux Eudora is concerned, it inherits the good things about Thunderbird, which include speedy performance and a rich array of settings to customize your email experience.

Now I want to be perfectly fair about this. I was never enamored of Eudora in its original form, but I appreciate the fact that a lot of you prefer it to all other email clients, and have used it for years. Having an application survive under new management and perhaps gain some modernization along the way ought to be a positive development.

On the other hand, Eudora 8.0b1 unfortunately inherits some flaws from Thunderbird that drive me crazy. You see, I prefer to view my messages from the top down, meaning that they start with the newest messages and go backwards down the list to the oldest messages. However, when you delete a message, the cursor moves up and not down.

Why did they do that?

The other problem is more serious, at least for my particular way of working. With Apple Mail and Entourage, when I want to reply to a message, I would select a portion of the text to quote in my answer, and that’s what’s displayed in the new message window.

With Thunderbird, and the bogus Eudora, it’s all or nothing. Whether you select one word or all, the entire message is quoted, so you are forced to manually delete the contents you don’t want to use in your answer.

It may well be that my particular objections, and they are minor, but nonetheless show-stoppers to me, won’t affect a lot of you. You may prefer the way Thunderbird manages your messages, and adapting Eudora to fit into the same mold may be a good thing.

But I would also hope that Mozilla would work towards incorporating more of the traditional Eudora look and feel in future versions of the program. As a beta one, it is perhaps at the middle of its development cycle. Maybe things will change for the better over time. I surely hope so.

Meantime, yet another possibility has come to light. A company called Infinity Data Systems has announced that they intend to develop a true successor to Eudora, with a beta promised by the end of the year. So stay tuned. This is one story that has yet to be fully written.