Steve Jobs was only half right. There is no “antennagate” but “Applegate” will consume more of the Apple Inc. chairman and CEO’s time in future.
I must admit to being a long-term fan of Apple. I bought my first personal computer, a Macintosh PowerBook 145B in 1993. The computer was two inches thick and the trackball was bigger than a moose’s eyeball but I happily lugged it around on numerous reporting assignments before retiring it in 1996.
I still have the PowerBook 145B. It doesn’t work but it will find a place in a nursing home if I ever retire into one.
Many Apple Inc. customers are that passionate about the company’s products. The passion has only intensified in the last years as Apple introduced the iPod, the iPhone and the iPad.
Anyone who thinks the controversy surrounding Apple’s iPhone 4 antenna problem was only because of dropped calls has not paid any attentions to the negative direction of the company’s public persona despite the outstanding success of its products.
That Apple is a wildly successful company is obvious to anyone with a pulse and some interest in technology products. Yet, Apple is undermining its own interest with actions that are irritating fans and further enraging those who dislike some of its business practices. The iPhone 4 antenna issue falls in this category.
There is a strong and growing perception in the consumer electronic market that Apple believes it can thumb its corporate nose at anyone, including customers, suppliers and even telecommunication service providers.
The signal problem reported by some iPhone 4 users amounts literally to a minor irritant as my colleague Dylan McGrath pointed out in his report “Apple ‘not perfect,’ but ‘antennagate’ overblown.
However, Apple allowed the situation to get out of hand with clumsy explanations and an arrogant disregard for customers that turned a simple problem into a crisis.
This was inevitable. Apple has operated in recent years as if it is not a public enterprise, shutting out customers and shareholders from issues other businesses would have openly discussed, including the delicate topic of chairman and CEO Jobs’ health.
Any other company would have handled the antenna problem differently and promptly, perhaps through the extreme action of a product recall or by giving customers the “bumper” cover that it knew would stop the signal degradation and dropped calls some had complained about.
Instead, Apple did what it’s done in the past. It allowed all kinds of speculations to develop in the market about the source and depth of a problem the company now says affected less than one percent of iPhone 4 buyers.
On Friday, July 16, Apple finally said it was not “perfect” and offered customers the “bumpers” free. It also offered to not penalize any customers who wished to return their phones within the required 30-day post-purchase period.
A company’s public image is as critical to its continuing success as the quality of its products. Apple’s public relations need to be overhauled.
There are significant risks ahead for Apple not only from regular customers but also from other businesses if it does not do something soon to improve its current image in the market.
The company is leaking goodwill and there are financial implications here for Apple. The company’s gross profit and operating margins are among the highest in its segment and Apple now has a fat target on its back as rivals muscle in on the territories it has dominated over the last years.
All the things the company does extremely well are now being done by other companies: its apps stores are being duplicated by OEMs and telecom service providers; smartphones from Motorola Inc., Nokia Corp., Samsung Inc. and Son-Ericsson Inc., are shaping up as strong iPhone rivals and; online music stores that can rival the iTunes market are proliferating all over the web.
Apple will continue to do well but its margins will erode as competition intensifies. What it cannot afford to lose is the core group of people who supports it and wish it well. Apple showed it cared today by offering to give free "bumpers" to iPhone buyers.
It was a good start. However, blaming the media for the iPhone 4 antenna controversy and attempting to shift the discussion to the performance of other OEMs’ smartphones as Jobs did during his conference call Friday, July 16 show the company is still in denial or ignorant about the beating its public image has taken from supporters and detractors.
That’s why this is not antennagate. It is Applegate. This controversy is all about Apple and not merely due to a piece of faulty mobile phone hardware.