Tuesday, July 13, 2010

The Beginning of the End for Apple?

The story of the iPhone, right from its inception in 2007 has been every product manufacturer’s dream story. It took the world by storm, rejuvenated the snail-paced cellphone industry (thanks to all the non-inventors out there) and touched (ahem, pun intended) the end user in every way possible.

The next chapter logically is the rise of the 'iPhone 4' mammoth - one that squishes the competition and leaps ahead. But well, despite the raving initial reviews, the path to stardom is not so rosy anymore. Infact, it is getting murkier as the days roll.

The 'death grip' antenna issue plaguing Apple’s new baby, the iPhone 4, is sounding the warning bells for Apple in the smartphone kingdom. Apple, touted as the undisputed leader in marketing, has so far completely botched up in handling the issue.

From the beginning

It all started with a user at MacForums posting a video of the brand new iPhone inexplicably dropping signal if held in a certain way. Soon it grew into a viral video campaign with users posting video demonstrating it all over the internet. Most highly technical analysis came to mixed conclusions. They all agreed that the signal attenuation was bigger than seen in a normal cell phone or the previous models, but failed to convincing prove that it was consistently replicable in all phones or that it was a deal-breaker. Almost a month since the release, the latest and the strongest dent comes from ConsumerReports which flipped sides from heaving praises to the devices to calling the ‘death grip’ a dealbreaker and withdrawing its recommendation to buy.

Where Apple failed?

The last time that Apple faced such a strong backlash from its users was the huge price drop of the initial iPhone, just two months after the launch, leaving all the early adopters out in the lurch. But then came in a genius marketing move – an apology letter from Steve with a $100 itunes credit to every early adopter. No company had pulled off a move like that, ever. Overnight Apple became the consumer’s darling.

This time, the response has been completely the opposite. An email from one of the fans to Steve was met with a curt ‘Just don’t hold the phone that way’ response. The sense of arrogance and dictatorship in that statement alarmed ever the most loyal followers. The resulting growing anger over the issue resulted in an unconvincing explanation under the pretext of the iPhone signal calibration. Very un-Apple-like. When ConsumerReport openly withdrew its recommendation of the iPhone 4, it instigated a bigger backlash and discussions over at the Apple board. And all that Apple did was to merely delete those discussions. The mere silence and the failure to communicate to its users is strongly denting the iPhone’s sales and along with it the company’s reputation and stock value.

What's next

For the competitors: For the last few months, many rivals under the Google wagon have released formidable opponents to the iPhone. Still none have so far bettered it in consumer sentiments. Finally, they get to cache in on all the negative sentiments piling up against Apple. In fact, the latest marketing campaign of Droid X, titled ‘Hold the phone any way you like’ does exactly that.

For Apple: This presents a very difficult situation for the company. It need to act fast to stem the negative sentiments and stop losing the loyal followers. And it better get its marketing act together. Of course, the solution may not be simple nor will it be at a cheap price, but it needs to be done to uphold the company’s image.

The solution

I don’t know what the right answer might be. Personally, I don’t think supplying a free bumper is a solution. It is not what I have come to expect from a company like Apple and moreover it is but a meek submission to the real underlying issue. A recall may be only apt solution. Or maybe, there’s a magic software/firmware fix which makes it all disappear. But whatever it is, time is not on Apple’s side. Apple might still sell a ton of iPhone 4s with the death grip and the records will keep tumbling. But in the process, it might lose a huge chunk of the early adopters – those who are the core of the companies success and those who word-of-mouth marketing will have a value of millions of marketing dollars.

So, your call Apple …