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Therese Poletti's Tech Tales
July 8, 2010, 12:01 a.m. EDT · Recommend (2) · Post:
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By Therese Poletti, MarketWatch
SAN FRANCISCO (MarketWatch) -- It's high time for Apple Inc. to try and fix its corporate culture of arrogance.
The company's recent bizarre handling of the antenna/reception issue with its new iPhone 4 is an example of the swagger that has been woven into Apple's fabric since its early days, when a brash, young Steve Jobs was trying to convince skeptical investors in the late 1970s that there was a future in the then-unknown personal computer business.
But now that the company /quotes/comstock/15*!aapl/quotes/nls/aapl (AAPL 258.67, +10.04, +4.04%) is a leader in consumer electronics and has grown into a major force in Silicon Valley and beyond -- its market cap topped Microsoft Corp.'s /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 24.30, +0.48, +2.02%) to make it the largest U.S. tech giant in terms of valuation -- it needs to change.
Customer complaints about fraudulent activity in Apple's iTunes store have spurred the company to put new security measures in the store, the world's biggest music retailer. But the issue, on the heels of iPad security holes and iPhone reception issues, underscores greater security concerns and scrutiny of how the company is handling its recent snafus. Ben Worthen joins Digits to discuss.
"They used to be the underdog that everyone rooted for and now they are the bad boy on the block," said Van Baker, an analyst with Gartner Inc. "You have to have a different persona than you do when you are the underdog. That is something that their culture hasn't managed to change yet."
That underdog persona was once highlighted in Apple's late 1990s "Think Different" ad campaign, which showed photos or footage of revolutionary icons, like Martin Luther King Jr., John Lennon and Frank Lloyd Wright. The TV ads, narrated by actor Richard Dreyfuss, started out: "Here's to the crazy ones. The misfits. The rebels. The troublemakers. The round pegs in the square holes. The ones who see things differently. They're not fond of rules. And they have no respect for the status quo."
Apple's growth from a niche PC maker to a giant in consumer electronics means it now has to deal with expectations from the dreaded status quo, in addition to its die-hard fans.
Many consumers were not happy with Apple's confusing responses to the iPhone 4's reception issues, now referred to as being caused by the "iPhone Death Grip" when the phone is held in the lower left corner. Apple said on June 25 that "gripping any mobile phone will result in some attenuation of its antenna performance." It said customers can use the $29 plastic bumper to resolve the iPhone 4's loss of reception. See story on user complaints.
Chief Executive Jobs was also reported to have emailed a consumer, saying, "Just avoid holding it in that way," and telling another "It's not a reception issue, stay tuned."
Then last week, Apple issued another statement, and this one seemed disingenuous from the start. It said the formula to measure the reception bars has always been wrong, and a software fix will help consumers get the real read of their phone's reception. Even one Apple fan boy, the well-known blogger Robert Scoble, said in a tweet late last week: "Apple is lying and it is infuriating." See Apple news here.
Reuters Apple CEO Steve Jobs and an image of the iPhone 4.
Out come the lawyers. Apple (and AT&T) have now has been sued by plaintiffs' lawyers, seeking class-action status. They charge, in a suit filed by the Sacramento firm of Kershaw, Cutter & Ratinoff, that the new iPhone 4 does not provide the better reception consumers were promised. Out of the 1.7 million new iPhones that were sold, the law firm said in its blog that it received over 1,400 complaints in emails.
Gartner's Baker for one believes that the iPhone 4, with its new surround steel band antenna, by and large has better reception than the iPhone 3GS.
"They have taken what is a very exciting product and turned this issue into something much more newsworthy than it deserves," Baker said. "I hope they would learn from this."
Baker said that Apple's first response to the matter was enough. "Since that email surfaced saying, 'don't hold it that way,' it conveys a tone that is very arrogant and somewhat dismissive," Baker said. "That is not a good persona to put in the marketplace."
That persona, which many associate directly to co-founder Jobs, is one that may be OK for Apple's fans, but not perhaps with the general consumer. Rival carriers, such as Verizon /quotes/comstock/13*!vz/quotes/nls/vz (VZ 26.52, +0.39, +1.47%) , are now making fun of the death grip in ads and others are sure to come. Since its launch in 2007, the spotty reception with the iPhone has always been blamed on AT&T Inc.'s /quotes/comstock/13*!t/quotes/nls/t (T 24.33, +0.34, +1.42%) overburdened network, not the iPhone itself.
Ironically, Jobs's obsession over sleek industrial design, and the desire to make the phone thinner, may have led to the antenna problem. Apple's engineers are pushed to develop sleek products, and the novel exterior antenna let them design a thinner phone. Possibly, it wasn't quite ready for prime time, and problems were missed because much of the testing occurred with the phone disguised in a special case to look like an iPhone 3G S, as we learned with the iPhone-lost-in-the-bar story. See lost iPhone news.
"I suspect in the skunk works they are working madly on this problem," said Roger Kay, an analyst with Endpoint Technologies Associates. "The schoolyard bully thing just isn't a long term strategy."
We have seen Apple's bullying once already this year, during the flap this spring with the technology blog Gizmodo over the lost iPhone. The company needs to lose some of its imperious attitude, while retaining its admired revolutionary and quirky culture.
Perhaps late-night comedian Jon Stewart, an admitted Apple fan himself, put it the best when he asked in a thoughtful rant in April, "Are you guys becoming the Man?"
Therese Poletti is a senior columnist for MarketWatch in San Francisco.
Therese Poletti chronicles the machinations of the technology industry for MarketWatch in the Tech Tales column. Before joining MarketWatch, Poletti covered some of the biggest companies in Silicon Valley for the San Jose Mercury News. Previously, she spent over a decade at Reuters, covering a range of beats, from spot news and Wall Street to biotech and technology. Poletti was also the lead reporter on teams at the Mercury News that won two Society of American Business Editors and Writers awards for breaking news and two Society of Professional Journalist awards. She was also a finalist for the Gerald Loeb Awards in the deadline writing category. Poletti is also the author of "Art Deco San Francisco: The Architecture of Timothy Pflueger," published by Princeton Architectural Press.
There were a few things working in retailers' favor in June, including sticky weather driving shoppers to the mall.
12:10 p.m. July 7, 2010 | Comments: 15
- DolphinWatcher | 11:39 p.m. July 7, 2010
"Apple's culture needs a change http://on.mktw.net/9y3YPc" 11:01 p.m. EDT, July 7, 2010 from tpoletti
"Silicon Valley, please meet Emily Post http://on.mktw.net/bFBKt2" 11:54 p.m. EDT, July 5, 2010 from tpoletti
"Research In Motion caught in a perfect storm http://on.mktw.net/bhdl5o" 11:16 p.m. EDT, June 30, 2010 from tpoletti
"Apple can no longer afford clumsy product launches http://on.mktw.net/d0F4hl" 11:51 p.m. EDT, June 28, 2010 from tpoletti
"IPhone 4 debuts with renewed carrier hopes http://on.mktw.net/bG9z8U" 11:27 p.m. EDT, June 23, 2010 from tpoletti
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