Jul 10

The great mystery of Apple’s stumble

There are a few reasons I respect Apple as I do.

Corny as it sounds, the biggest one is that they believe in “doing the right thing.” In my experience, other companies believe they share this value, but frequently confuse the right thing with “the most cost-efficient thing” or “the least controversial thing.” Apple focuses on the customer experience and makes decisions accordingly — even when the cost is high.

That’s the Apple I know. It’s also the Apple that, for reasons unknown, has taken the last few weeks off.

The good news is, there is now a press conference set for Friday morning. We can safely assume Steve will explain what’s happened and tell us how Apple is going to set things straight. It’s important to note that this is being billed as a press conference, which is something I’ve never seen Apple do before. That means they’ll be taking questions from the assembled press, and those questions are sure to be pointed. This is brave, but also necessary. By their own action and inaction, Apple’s “got some splainin’ to do.”

I’m confident that sanity will be restored. The bigger question is, how did sanity slip away in the first place?

Personally, I cannot imagine that Apple — or any company — could possibly design antennae in such a radical way without being aware of what happens when a human hand bridges the gap.

My theory is that Apple did what they’ve always done so well in the past. They looked at the total product design and made the tradeoffs necessary to create the best possible iPhone. What they gained by this design — a 24% thinner phone that gives most users better reception — seemed like a good tradeoff.

In hindsight, of course, that seems terribly naive. Apple attracts way too much scrutiny for such things to go unnoticed. They created a lose-lose situation for themselves. It appeared that they either didn’t have a clue about antenna engineering or they tried to slip one past us. This wasn’t just an opening for the anti-Apple crowd — it was a disappointment for Apple customers used to the pursuit of perfection.

Anyone looking for evidence that Apple knew about the flaw from the start would point to Exhibit A: the bumper. A few designer cases aside, Apple hasn’t dabbled too much in cases before, yet bumpers were a part of iPhone 4 from the start. This could be perfectly innocent — it just looks suspicious given what’s happened.

So why didn’t Apple handle this better? Why would their response be an open letter (not written by Steve) that reeked of a company avoiding responsibility? For those experiencing dropped calls, the display of bars is hardly the issue. A software fix alone seemed laughably inadequate, and terribly un-Apple.

Why didn’t Apple do what they’ve done before? Steve personally responded to the original iPhone pricing fiasco by offering $100 gift cards to those who overpaid in the first three months. Why didn’t they offer iPhone 4 buyers something as substantial?

Personally, I believe lack of “substantial” has been the hold-up. That iPhone 4 open letter was their attempt to calm the torch-carrying masses at a time when they literally had nothing substantial to offer. The engineers hadn’t yet solved the design issue for future iPhones. Bumpers were back-ordered, so Apple couldn’t even reasonably suggest them as a fix. They may well have gotten themselves into a situation where there wasn’t a viable “right thing to do.”

But Steve has one power that few CEOs have. He can make things happen, even if they don’t seem possible. So I believe all the pieces are now in place for Apple to respond as we wished they would have responded earlier. I expect them to get back into to the right-thing business on Friday. It will be expensive, probably involving $50 gift cards or free bumpers to those who’ve already bought — and a no-questions return policy for those about to buy. Obviously it will also involve a plan to address the design flaw in manufacturing.

The great shame of this is that iPhone 4 is an amazing bit of technology. I have experienced no reception issues with mine. It’s one of those devices that makes me happier every day. Despite the feeding frenzy in the mainstream press and blogosphere, there is no iPhone 4 user revolt. People aren’t flooding the Apple Stores to get their money back. What we have is a huge number of happy customers being bombarded by stories telling them they shouldn’t be so happy. I’m not sure there’s any parallel in consumer product history.

I don’t mean to downplay this. The iPhone antenna issue is a problem that needed fixing yesterday. But there is an art to turning negatives into positives, and Apple is pretty good at it. I hope Apple sees this as another opportunity to demonstrate their commitment to customer satisfaction — and another opportunity to do the right thing.

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  • neilw

    I’ll be interested to see how they spin this to avoid exposing their previous statements as lies. They can’t just come out and say “oh, you got us, it really *is* a problem, even though we said it isn’t.” They’re going to have to do an interesting little dance.

    I wouldn’t be surprised to hear something like:
    1) iPhone 4 is great. Our customers love it.
    2) The antenna design is great. Most customers experience much better reception than previous iPhones.
    3) Even though *we* think it’s great, as do most of our customers, *some* customers under some circumstances clearly have a problem, and are dissatisfied with performance. Therefore, we’re going to do _this_ to remedy the problem for them.

    This way they fix it without really admitting anything beyond what they already have. Sort of the way a lot of companies settle class action suits. I don’t know how well this will stand up to tough questioning from the crowd, but I’m sure Jobs will be extremely well prepared.

    Gonna be interesting!

  • I love this line:

    “What we have is a huge number of happy customers being bombarded by stories telling them they shouldn’t be so happy.”

    Exactly. I couldn’t be happier, but I keep reading everywhere about how unhappy I should be!!

    In any case, Apple does have a complete PR nightmare on their hands, and I hope — just like you explained in this article — that they will finally “do the right thing” again tomorrow.

    Which is what they HAVEN’T done over the last several weeks.

    The press conference couldn’t come soon enough!

  • Ken–

    Don’t you think this PR problem has more to do with the de-evolution of the news media than anything else? In a 140 character world fueled by linkbait, there’s really very little interest in presenting a cogent, balanced argument.

  • Paul

    Ken, good points. Apple doesn’t have to do much to placate their fans. PR wise as Scott points out it couldn’t come soon enough. Particularly if the Bloomberg piece about the antenna engineer giving warnings a year ago is true. I’ll give a $1 if Jobs ends his talk tomorrow with a Microsoft Kin joke….

    As far as parallels I thought Lexus’ response was good when Consumer Reports announced “Don’t Buy”on April 13.

    That same day Lexus came out with a statement (two actually) Just swap out the car for “Iphone 4” and the manufacturer for Apple:

    “For more than 20 years, Lexus has made customer safety and satisfaction our highest priorities. We are taking the situation with the GX 460 very seriously and are determined to identify and correct the issue Consumer Reports identified. At this time we have asked our dealers to temporarily suspend sales of the 2010 GX 460.

    Lexus’ extensive vehicle testing provides a good indication of how our vehicles perform and we are confident that the GX meets our high safety standards. Our engineering teams are vigorously testing the GX using Consumer Reports’ specific parameters to identify how we can make the GX’s performance even better. For any customer who has purchased a 2010 GX 460 and is concerned about driving their vehicle, we will provide a loaner car until a remedy is available. As always, Lexus is committed to providing our customers with outstanding products and service. Customers who have any questions or concerns should contact Lexus Customer Satisfaction at 1-800-25 LEXUS or 1-800-255-3987.”

    They didn’t say, “Don’t drive it that way”…. ;)

  • RC

    To summarise your post Ken:

    Apple is holding a press conference – will they hold it the right way?

  • rd

    Free bumper with $10 shipping and handling.

  • ChuckO

    Lots of good points mentioned here in the comments. I think the biggest problem here is Apple being Apple during a slow news cycle combined with post-Flash\post-Engadget schadenfreude for Apple.

    BUT…It’s only been what THREE WEEKS since the thing came out?! People jumped right down Apple’s throat about this. And again it seems to be a gadget blog issue much more than a customer issue. It doesn’t sound that much different than old iPhones except now you know exactly where to hold it to create (thanks to the band breaks) a disconnect (sometimes).

    But yeah they should have come right out with “we’re looking into it!” and keep communicating. That might not be their usual m.o. but it should have been here.

  • neilw

    Oh my, complete denial of the problem. Nonetheless, went about like I expected it to.

    “Other smartphones have same problem”. Others aren’t susceptible to a single finger in the right spot, and others don’t drop as much signal (see AnandTech tests). Very disappointing. Not going to put this to bed, though the free cases will solve the problem for most.

  • ken segall

    I think Steve was technically correct that other phones have the same problem, but glosses over the obvious truth that other phones don’t put their antennas on the outside, where human hands can exacerbate the problem. Free cases do solve the problem for everyone — except maybe those who hate cases of any kind and loved the idea of having a superslick phone in their pocket. I suspect those who wish to bash will keep bashing, but most will move on.

  • Ray Lau

    When my friends and I talked about the apple event today, we immediately asked one of us to hand out his blackberry phone to let us grip it with my hands around it. Its signal at once dropped to SOS. Signal loss like this doesn’t mean you would always have calls dropped.

  • ken segall

    @Ray Lau:
    Interesting. I did my own testing with my iPhone 4, and found that I could duplicate the attenuation problem — but I didn’t drop any calls. Giving the critics their due, this isn’t exactly an industry-wide problem as Steve says, only because no one else designed their antenna on the outside of the phone where (a) it is more easily touched, and (b) you can see exactly where the problem spot is. However, it’s a problem that affects only a small percentage of the customers, and it’s a problem easily solved with a bumper. However, I’m sure the detractors aren’t going to let this go away, so we’ll see if Steve has done enough to defuse the issue…