Apple’s decision in the past 24 hours to ban links from its customer-support discussion forums to a Consumer Reports post calling for Apple to fix the reception issues in the iPhone 4 predictably backfired today, leading to increased pressure on the company.
With the stock falling 2 per cent on an otherwise buoyant day for the sector, many tech observers and Wall Street analysts said dropped calls in areas of weak reception had been established as an antenna hardware issue and that the easiest solution was to offer the company’s $29 bumpers for free.
That would cost Apple about 1 per cent of its operating profit, estimated Gene Munster of Piper Jaffray.Others, though started throwing around the “R word”–a full recall, which Bernstein analyst Toni Sacconaghi said was “highly unlikely” but would cost Apple a less trivial $1.5bn.
What’s harder to gauge is the eventual cost to Apple of continuing to stonewall and do nothing. In the short term, it is struggling to meet demand for the iPhone, which wiped out previous handset records with 1.7m in units shipped during the first three days.
But Apple’s denial that the inventive wrap-around antenna design is causing the problem, its odd tactic of faulting inaccurately optimistic signal-strength displays, and now its suppression of discontent are starting to paint a portrait of hubris for a broader audience. Telling people that they were holding the phone wrong merely set Apple up for mocking ads from competitors, who invited customers to hold their ways any way they liked.
The emerging picture could be extremely bad for the cachet and power of Apple’s brand, which is worth billions by itself.
Like many of the amazing things about Apple, the failure to admit that it made a bad decision–and prized elegance over practicality–goes straight back to Steve Jobs.
Mr Jobs is a vastly better CEO now than he was during his previous reign at Apple. But the coming weeks will show if he has the ability to own up to a mistake and do the right thing for customers or if, as one Apple board commenter put it, the company is the BP of cool gadgets.
