R.I.P., Apple!

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Apple's customer-relations crisis with iPhone 4 reception problems is a vision of the future. It's a look at how Apple will die.

I don't know when that event will happen. Could be next year, could be in 50 years. I hope it's a long way away. I love Apple products, even though the company drives me crazy.

Apple is hugely successful today, but all companies inevitably lose their technology edge, become bloated and sedentary, and eventually begin losing market share and profits. At that point, elements of corporate culture and the company business model that were previously invisible problems -- or which might even have been strengths -- become crippling liabilities. We're seeing this happen at Microsoft right now.

We're seeing a preview of Apple's death today with the hardware problem vexing Apple's new star product, the iPhone 4. Users report drastic signal strength loss if they grip the phone while touching the lower-left edge so their hands bridge two antennas designed to be separate.

How serious is this problem? Hard to say. For some people, it's very real, and it makes the iPhone unusable. Others love their iPhones and aren't experiencing the problem.

Two Problems?

I fall in the second camp. I've had my iPhone 4 since last week, and I'm very happy with it. I think I've been able to reproduce the grip problem, but I'm not sure, which is an indication that it's inconsequential for me.

My colleague Jonny Evans has an intriguing theory that would explain a lot: The iPhone 4 actually has two reception problems: A software problem which results in the number of bars wrongly representing signal strength, and the hardware problem affecting the antennas.

Apple's reputation took a big hit Monday, when the highly respected Consumer Reports said it can't recommend the device. It's a measure of the confusing nature of the grip flaw that Consumer Reports also ranked the iPhone 4 as the best smartphone on the market, according to AllThingsD. Huh? Which is it, Consumer Reports -- is the iPhone 4 a piece of junk or a jewel?

Faced with this kind of controversy, Apple needs to go into crisis-communications mode. Apple needs to decide what its message needs to be. In this case, a good message might be: "We respect our customers and we're sorry that many of them are reporting a bad experience with the iPhone 4. We're looking into the problem and we'll respond as quickly as we can." As more hard information becomes available, Apple needs to release it.

Apple needs to saturate the Internet and media with this message, responding to every journalist, blogger, discussion forum and mailing list it can find.

Hands-On Marketing

Is that time-consuming and expensive? You bet it is. But the alternative is letting outsiders and enemies tell Apple's story.

But that kind of hands-on marketing is anathema to Apple's culture. Apple likes to control the conversation from a distance. They communicate through TV commercials, statements on their Web site, two or three public appearances by Steve Jobs every year, and the occasional interview and sending out samples of soon-to-be-released hardware with a small group of highly selected journalists. Apple runs like Willy Wonka's factory: the gates are chained shut, and nobody ever comes in or out or sees inside, while Oompa Loompas turn out wonderful products.

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