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Why Apple has a split personality when it comes to keeping iPhone owners happy

After shelling out top dollar, the customers felt betrayed and angry. The shine on the company's new flagship product was tarnished. The remedy wasn't cheap... and the CEO stepped up and spoke to those irate early adopters. "We want to do the right thing for our valued customers. We apologize for disappointing some of you, and we are doing our best to live up to your high expectations of us," he said, responding quickly after the first complaints came in. Within a few weeks, the PR hiccup was calmed, and the new product went on to glory and success.

Looking back on that experience is illuminating. With the rapid response, the willingness to pay for customer happiness, and the frank handling of the situation, it's a bit surprising to be in the midst of the current stressfest and see how things have deteriorated. Where's the corporate responsibility and the can-do attitude of 2007 when we need it? Let's take a look at how the two scenarios diverge, and why Apple didn't -- or couldn't -- step up to the plate now like it did then.


The one way in which these situations are similar are pretty obvious: both feature frustrated iPhone customers in the starring role. The differences, however, are equally interesting:

  • Scale. The iPhone was a hit product when it was introduced, but it wasn't the raging behemoth it has since become. 600,000 phones on one domestic network in two months is a pretty nice run rate; now let's look at iPhone 4, which racked up preorder and launch sales of 1.7 million devices in three days. Estimates vary for iPhone sales since the close of Apple's third quarter on 6/27, but even the conservative analyst forecasts are over seven million. That's a lot more customers to walk back off their respective ledges. Still, if there are 10 million iPhone 4 owners and you spend $10 on each of them (to manufacture and ship a Bumper on request) that's $100 million -- not much more than the $60M exposure on the price cut credits.

  • Ubiquity makes it easier. In the case of the price cut, the universe of iPhone owners was completely homogenous; every single person with an iPhone paid more for it before the change than the people who bought afterward. This uniformity meant that they were all suffering equally (despite the fact that they all had the use of their iPhones for two months, and they continued to work exactly the same while new buyers were paying less); it made it easier to work with them as a class, and offer a solution to everyone at once. With the reception issues and proximity sensor problems, it's not uniform -- most iPhone 4 owners appear to be completely happy with their phones, and only a minority are having problems. How big a minority, we don't know; chances are, neither does Apple. Offering an extended warranty swap period or free cases entails some unknown risks when the affected population isn't well defined.

  • It wasn't broke, no need to fix it. As mentioned above, the original iPhone worked just as well on September 6th of '07 as it did the day before. The price cut wasn't a flaw or a performance problem, it was a public relations and marketing problem -- there was nothing inherently wrong about a $599 iPhone unless you were trying to resell it on eBay and saw your bid count dry up precipitously. By admitting that Apple had kinda sorta shafted the early adopters, Apple gave up nothing in terms of legal responsibility or practical concerns; there is no "poor form" penalty except the one that potential buyers impose on the company. Old customers were loyal by definition (and more likely to take advantage of the $100 credit), and the customers-to-be were happy about the cheaper iPhone. By contrast, even if Apple knew for a certainty that there were engineering problems with the iPhone 4's antenna and proximity sensor, and even if they were definitely affecting a percentage of customers, admitting it up front would be a big, big risk. Any acknowledgement of a manufacturing flaw or a poor design decision would almost certainly trigger more lawsuits, a flood of product returns and a big black eye for the company long known as a leader in effective design and quality products. Nobody would have been able to mount a credible case against Apple for dropping the price of a product, but that didn't stop a few "Don Quixote, Attorneys at Law" from giving it a try; in the iPhone 4 scenario, plenty of gritty legal action would be inevitable.

Those are all solid, rational reasons why Apple may have chosen to handle the 2010 crisis du jour with less grace and clarity than the 2007 customer uprising -- but that's not an excuse for obfuscation or misdirection. Nor is it a substitute for the direct and enthusiastic embrace of the "we want to do the right thing for our valued customers" ethos that characterizes Apple at its best. Those millions of iPhone 4 owners deserve a straight answer regarding their issues, and not more static.

I don't know what Apple is going to do tomorrow with an audience of hurriedly-gathered journalists and eagerly page-refreshing web surfers. I hope, however, that it's more in line with 2007 than with the last few weeks of 2010.



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Apple iPhone Apple History

After shelling out top dollar, the customers felt betrayed and angry. The shine on the company's new flagship product was tarnished. The...
 

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William McIntyre

I strongly doubt it cost Apple $60million to appease the original iPhone adopters, $100 cash would have, but a gift card to buy marked up products,, would only cost them their cost price and bearing in mind Apple's markup, this would be at worst $30million and probably more like $10-$15mil, and that's if you don't take into account the card being an incentive to buy something more expensive.

Now bearing in mind a rubber bumper realistically costs $1 to produce at the very, very most, they could quite easily supply one to everyone and still come in under $15mil, and if they started shipping it with the phone as per Nintendo, it would cost them pennies at most.

And the iPhone 5 is only 9/10 months away from being announced.

July 16 2010 at 10:38 AM Report abuse rate up rate down Reply
KevinCamera

$60 mill???? I know a few buyers who used the 100.00 credit and got a 1299.00 MacBook. Take the extra 500.00 apple made from those sales and the total cost was under 30 mill tops.

July 16 2010 at 9:09 AM Report abuse rate up rate down Reply
rackley

I am an Apple fan and they've never let me down until now. I bought iTouch, iPhone3G, iPhone3GS, iPad 643G, and now iPhone4. I have MAJOR problems with the iPhone4, FAR worse than anything I experiences with my 3GS model.

I don't really like the look and feel that much but I can live with it. It is my primary phone and I depend upon it. It drops calls, shows No Service of No Bars in areas where my 3GS operated efficiently. I don't hold it with a Death Grip and I have a Bumper from day one.

It has been a major disappointment to me. I've gone back to my upgraded 3GS and basically had no problem. The 4.0 software is awesome and everything works flawlessly on my 3GS. The iphone4 with the same software is very frustrating and a huge disappointment.

I went to Apple Store and they swapped it out. It seems to be better but I'm still very disappointed and hope the issue is fixed sooner rather than later.

July 16 2010 at 8:28 AM Report abuse rate up rate down Reply
exnewt

At least Apple TRIES to get it right, and they usually do eventually.

You ever deal with Chrysler on a lease return ("you owe us $400 for early termination? Well you owe me $212 for unused purchased miles, so send me a bill for the difference. Can't do that, you pay the $400 and then we'll send a check for the balance. I'm not going to do that. Sir, that can affect your credit rating. M'am, I refinanced my house and bought a car, so I give a rat's ass about my credit rating for the next 5 years")

or HP for chrissakes? I mean THEIR OS updated hosed a unit, and they accept no responsibility
http://opusmark.blogspot.com/2008/02/why-hp-sucks-ass-pg-t.html

Or when my dogfood almost killed my dog, just try and submit a vet bill
http://www.accessdata.fda.gov/scripts/petfoodrecall/

July 16 2010 at 8:10 AM Report abuse rate up rate down Reply
Mickey2101

I bought an Iphone4 a week after release and sitting at my desk it would go to "searching"
and have no "bars" where my Iphone3GS would have 5 bars of signal. My co-worker 10 feet away stayed at 5 bars when the new Iphone4 would switch to the edge network or not be able to even open a web page or make a call. This all while I am not even hoding the phone in my hand. as far as I am concerned this was no phantom issue. I promptly returned the phone for a full refund (AT&T has yet to reset my contract date back to original) and I have happily gone back to my trusty 3GS that preforms great. If everyone that had problems with the phone would return it for a refund, Apple would have a better idea about the magnitude of the problem and it might push their buttons enough to get a fix in the works. I realize that everyone can't probably do this as some people traded there phones in. Why you would do that when they bring so much on Ebay is a mystery to me though. Turn them in for a refund while you can and wait for a confirmed fix to show up!

July 16 2010 at 8:04 AM Report abuse rate up rate down Reply
Mgsmith75

The Apple fanboys are too much, such a small issue?! 80% of the people I know have signal issues over thier last iPhone and 100% of them have the proximity sensor issue. I guess convienantly we all happen to be in the small minority.

July 16 2010 at 7:48 AM Report abuse rate up rate down Reply
lens

It's a toss-up between Apple a) thinking they can still control the message and trying to spin their way out of this, or b) doing the right thing and fessing up to whole mess and doing their best to fix it for customers.

The truth would not have been so bad if they hadn't waited so long, but it will be VERY bad if it doesn't appear tomorrow.

They knew how the antenna worked from the beginning. They are simply not that dumb. I would not call it a defect, but rather an ill advised tradeoff. They got good things from the trade (better than 3GS reception when held "right") and some bad (worse reception when held "wrong"). The reaction to this was far worse than they figured. The number of people who have a real problem may be small, but by believing too in much in their own magic, they completely lost control of the message, and that control is like life blood at Apple. It will interesting to see how they attempt to get that back. At this point anything less than honesty won't work.

July 16 2010 at 5:11 AM Report abuse rate up rate down Reply
Bryan

I do have the antenna problem, and I feel like it is more widespread than apple thinks it is, because a lot of people probably dont speak up. To me, its NOT a HUGE issue, but when you pay top dollar for something like a cellphone, you should be able to hold it anyway you like. I realize also that every phone will have some attenuation when you hold it, but not so much that it drops calls. Free bumpers, or even discounted bumpers would be a big plus...apple needs to do something to save their reputation.

July 16 2010 at 4:29 AM Report abuse rate up rate down Reply
Tom Gregson

Yawn.

Just another long drawn out drone to nowhere. Stick to news, guys. Op ed isn't your forte and it's not why people come here.

July 16 2010 at 3:33 AM Report abuse rate up rate down Reply
sinX

It's pretty much just the lefties who are screwed.

July 16 2010 at 2:47 AM Report abuse rate up rate down Reply
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