There have been fans and non-fans of companies for years – Apple, Google, Microsoft all have their Fanboys and Haters. However, I believe the advent of blogs and services like Twitter – have taken it to a new level. These technologies make it easier for people to express their views and few are shy about it. The voices of the Apple Haters reached a feverish pitch this week as they demanded that Apple do a complete recall of their newly released iPhone 4.
Shortly after the iPhone 4 was released, reports started appearing on the internet about a loss of signal strength when the phone is held in a certain manner. When Consumer Reports duplicated the death grip, as it had become known, and stated that it could no longer recommend the phone – this went beyond the blogosphere to the nightly news. Letterman was cracking jokes. Whoopi Goldberg, on the View, told her audience how she stopped her car and slammed the phone in the road. In three weeks time, this had become a major PR issues for Apple. On July 16, Steve Jobs held a press conference to address this head on.
If you have read my past blogs, you know that I own Apple shares. If you haven’t read my work – now you know (The Long Apple Short iKillers Trade is Working). As a shareholder, I couldn’t be happier with the way Jobs handled the situation. Most Apple Haters wanted Jobs to admit that he had rushed the phone to market, fall on his sword and beg for forgiveness. Instead Jobs came out swinging with this video.
That video didn’t set the tone that the Haters were expecting, but Jobs first words were the following, “We’re not perfect. Phones aren’t perfect. We want to make all of our users happy.” So he admitted the problem and stated that every customer would be taking care of. Then he threw a curve ball.
Jobs went on the attack. He said that this problem was not unique to Apple. He showed videos of Research in Motion, HTC and Samsung phones demonstrating the exact same problem. Then he showed pictures of the company’s state of the art antenna testing facility. Over the past 5 years, Apple has invested $100M in its wireless lab. It has 18 PhDs on staff in the antenna group. This was not an area that Apple took lightly.
Then more data. 0.55% of all iPhone 4 users had called Apple’s support center about antenna or reception issues. Considering that the company had sold over 3 million phones 0.55% was minuscule. 1.7% of users had returned the phone for various reasons. Once again, minuscule. Drop call rate – insignificant. The number of actual iPhone 4 users complaining about this issue was hardly registering. However, the media was calling this antennagate.
Jobs went on to say that per Consumer Reports, enclosing the phone in a case would solve the problem. So, Apple would provide each iPhone 4 customer with a free case. Customers who were still unsatisfied were free to return the phone without question. In 22 days from the first notice, with the whole world watching, Apple discovered the root cause of the problem and provided a solution. A Microsoft Exec had the gall to say maybe this is Apple’s Vista moment. Vista has been out 3 years and is still a piece of crap. Give me a break.
Business is like a competitive sport. Everyday there is some out there trying to steal your market share. Research in Motion’s stock rallied after the Consumer Reports article. The market assumed dissatisfied or apprehensive Apple customers may buy RIMM phones instead. Jobs understands the competitive nature of this business better than most. If you are not aggressive you will be history. During the presentation, Jobs flipped this from a negative into an opportunity to uplift the strengths of Apple. The antenna lab, the trivial number of returns and complaints, and Apple’s determination to make every customer happy increased the desire to buy the phone. This not the way the Haters had drawn it up.
RIMM and Nokia both responded to Apple’s assertions after the call. Neither were pleased that Apple positioned this as an industry problem (response). Apparently they hadn’t gotten the memo. Eepkay ouryay eadhay inway away olehay untilway your stock gets over break-even. RIMM’s stock is down 22% YTD. Nokia’s down 32% YTD. Apple’s is up 19% YTD.