Apple Inc. is paying a hefty price in lost market value and erosion of its image for not listening to its own engineer and others from a service provider who warned the design of the iPhone 4 could hurt signal reception.
Apple Inc. should have listened to its experts. It didn’t.
Now, the company is experiencing the limits of goodwill and the corrosive effects of public dissembling.
News reports indicate an Apple engineer and others at an unidentified service provider in 2009 warned the company of reception problems with the iPhone 4’s design.
I don’t know exactly what Apple did when the engineers voiced their concerns but obviously the company went ahead to build the iPhone 4 with the antenna embedded in the housing.
Now, Apple is facing complaints about dropped calls from customers and got a black eye from Consumer Reports magazine, which after conducting some controlled tests declined to endorse the Apple smartphone. In fact, Consumer Reports cautioned against buying the phone and suggested Apple pay for the fix, a rubber “bumper” that effectively shields the waning signals from degradation.
Apple didn’t handle the entire event right from the beginning. After making the first blunder of not listening to its engineers, the company muddled up the situation by offering explanations that even many of its most ardent fans could not believe.
One of Apple’s the-goat-ate-my-homework explanations included the befuddling “simple and surprising” fact that: “the formula we use to calculate how many bars of signal strength to display is totally wrong,” the company said in a statement.
Apple added: “Our formula, in many instances, mistakenly displays 2 more bars than it should for a given signal strength. For example, we sometimes display 4 bars when we should be displaying as few as 2 bars.”
Many frustrated iPhone buyers and AT&T customers thought that explanation was a load of hogwash. The real culprit, according to the Consumer Reports investigation was the iPhone 4’s antenna design. On Friday, July 16, Apple will presumably offer additional explanations.
What has this debacle cost the company? A bundle in market value and even more in lost goodwill. Apple formally released the iPhone 4 on June 24 and since then the company’s market capitalization has fallen more than $10 billion.
The shares rose to a record high in June ahead of the iPhone 4 release, propelling the company past Microsoft Corp., as the world’s most valuable technology company, but began declining after Apple customers reported problems with the antenna.
As at Thursday, July 15, Apple’s market value was $228.8 billion, down $17 billion from $244.8 billion on June 24 and well below the all time high of $253.88 billion from June 21.
What may prove even more costly to Apple is the goodwill it is losing and may further lose if it continues to ignore customer concerns or talk to its varied audiences in idiotic techno-jargons. At this point, a recall or an offer to give each iPhone 4 buyer the “bumper” could save the company a lot of unnecessary headache.
Apple has built a large following of fans that swear by the company and buy not only its products but also its publicly traded shares. On the other hand, the company also has a legion of consumers that abhors its business policies—such as the exclusive contract with AT&T as the sole seller of iPhones in the United States—and would like nothing but to see it fall flat on its face.
Apple can easily shake off the iPhone 4 problem. However, the controversy has already smeared the company’s carefully cultivated image as the world’s most innovative consumer electronic company. That’s an opening rivals will be keen to exploit.
All these could have been averted, simply by listening to an engineer already on Apple’s payroll.