Apple's growth, an unwinnable iPhone war and a reputation at risk

Apple's growth, an unwinnable iPhone war and a reputation at risk

Summary: Apple is clearly in a war with hackers over the iPhone and its most loyal fans could take a few hits. How Apple performs through these battles will determine the company's overall reputation going forward.


Apple is clearly in a war with hackers over the iPhone and its most loyal fans could take a few hits. How Apple performs through these battles will determine the company's overall reputation going forward.

Today's angst over iPhones becoming iBricks because they were modified is really just the beginning. There are a few reports of non-hacked iPhones going dark following Apple's latest firmware update. Adrian Kingsley-Hughes and others note that Apple has a PR problem on its hands. These issues could affect how Apple is perceived in its core markets.

The iPhone issues are really just a side effect of a much larger issue. As Apple grows it increasingly loses that feel-good underdog image. It starts looking like every other large company. Apple even starts to look like a bully--even to large media players that merely want to try different pricing schemes on iTunes. To make matters worse Apple is alienating its base. Add it up and customer service declines. Customer service declines won't happen overnight, but Apple will have issues simply based on numbers--the more customers it has the more people it can annoy. Steve Jobs is treated as a messiah able to leap over options scandals and create a never-ending stream of delightful products, but that won't last forever.

It's one thing to preach to the converted Mac and iPod fans. It's quite another to bring on new iPhone customers and then annoy them. And if the reports are accurate about Apple's iPhone update Steve Jobs & Co. is annoying some folks.

The iPhone update is just the latest example. Consider the following moving parts:

  • Apple cut the price of the premium iPhone by $200 just weeks after die-hards waited in line to pay $599 for it. Steve Jobs met these early adopters half way and gave them a $100 store credit. Where's the other $100? If Steve really cared about you perhaps Apple would have made you better than whole, say a $250 credit.
  • The iPhone sticks you with one carrier--AT&T--that few people want. Why? Apple got the best deal from AT&T. We aren't privy to the math behind the AT&T and Apple deal, but we do know none of these hacks to unlock the iPhone would be necessary if we had carrier choice. What's the cost differential between adding a few carriers to the iPhone and wasting time developing software to outflank hackers?
  • Apple has the best tech support in the business and could put it at risk over the iPhone. According to Consumer Reports June 2007 rankings Apple had a reader score of 81 out of a possible 100 when servicing desktops and laptops. On laptops the next best score was Lenovo's 66 and Dell's 60. One theory behind Apple's score: Apple owners are an elite--some would say elitist--club. These folks will get whatever Apple pumps out of the product pipeline. Consumer Reports bases its scores on reader surveys. In these surveys perception matters. With the iPhone Apple is going mass market scores for Apple are only going to decline based on the laws of large numbers.

Simply put, the wireless market is a different ballgame. Apple may become a dominant mobile phone player with the iPhone but it is going to suffer a few black eyes along the way. The key for Apple will be to quarantine the iPhone issues without infecting its corporate reputation.

Update: Check out MacDailyNews for a rebuttal (in addition to all the talkbacks of course) to the above post. For the record, I'm not overwrought. But it does seem quite possible that an Apple backlash could brew. It's called success and a big bulls eye often comes with it.

Update 2: Macalope has another rebuttal. Best quote:

But let the Macalope get this straight, Larry. You're asking Apple to refund early adopters more than the price drop? That's um, well, nuts is what that is. The Macalope didn't think it was possible but you may have out-Enderled Rob Enderle. There's a feather in your cap.

Topics: Apple, Enterprise Software, iPhone, Mobility, Security, Software

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  • Unfortunately ...

    Mac devotees are the same as MS devotees - no matter how they get treated, they will still buy.
    This may lose them a few sales to Techies but the great unwashed won't know about this and buy anyway.
    iPods/iPhones are a status icon and most of the people want the status regardless - look at how many people wander around like an advertising board with a piece of their clothes advertising the brasnd they bought. Unfortunately they don't realise that people with style don't need to advertise they clothes they buy - same as the iXXX generation.
    There are plenty of devices around that do the job i.e. play music, make phone calls that are a lot cheaper.
    The people of this world are getting more celebrity conscious and therefore shallower.
    gawd i could rant on this for ages.......
    • Agreed

      The average reader who frequent blogs like this look at the world from a very skewed, techie perspective. But the reason the Ipod has been such a massive hit (with the iPhone hoping to follow up on that success) is all about style and status. People here can talk about OS X being the difference maker all they want, but the real selling point will be absolutely no different with the iPhone. However, the competition is MUCH stronger in this segment and even massive sales will constitute only a small fraction of the overall market. It can influence this more mature market but it will far from dominate it anytime soon.

      And the argument about the early adopters getting ONLY $100 back after the $200 price cuts is just downright whiny (not sure how much Larry believed what he said or if that was just fodder to attempt to make the article more buzz-worthy.) I'm no Apple fanboy at all (far from it) but people should be grateful they got even that. Most companies don't treat their early adopters the same way once the inevitable price cuts come to fruition - and I don't think users should expect that, it's the price for being an early adopter. Most companies don't have the evangelical following that Apple does either though. Larry's right on that point. If you have a hardcore, radical following you sometimes have to handle them with care.
      • What?

        Do you own anything? Do you drive a car that you like? Did you buy a house that you
        wanted? Why is it that some people think that anyone that buys something that they
        want falls into some sort of category. Spare me the dime store psychology.
    • History repeats itself

      What sold the iPod and made it popular was the superior user
      interface. That's what is selling the iPhone now, with or without some
      features and cheaper prices of other phones on the market.

      Yes, Apple needs to tread lightly and not alienate its users, or
      prospective users, but so does any other company who wants to
      remain in business. And if you are silly enough to buy the first
      release of a new technology, regardless of who makes it, then you're
      silly enough to be grateful Apple bothered to return $100 of your
      venture money. How many other companies would do that for you?

      Most new products under warranty are discouraged from being
      hacked, since you have a good chance of killing your new toy forever.
      No one can prevent you from hacking, but do you really expect them
      to support your whoops when something bad happens? I'd like to
      see Apple be more TiVo oriented with the hacks, but that's its
      decision (and ATT, perhaps) and you'll have to live with it. If you
      hacked it, and you applied an update and something broke, you
      played and you paid.

      I'm so tired of Apple fearful people spouting the same old same old.
      Apple makes overpriced products, the users are cult-like drones who
      will buy anything made by Apple, blah blah blah blah blah. Stop the
      insanity and try to get a clue. Most people don't have money to
      waste. They want quality for a fair price. What a surprise that is.
    • For some maybe.......

      But to know me is to know I know and care NOTHING for style. What appeals to
      me is that it just works and does not force me to work to get it too work. Get it? I
      don't like the iPod because it's cool.... I like it because it does what I need it to do
      it is functional in all ways. I use the iPod shuffle. It is simple to use and simple to
      carry. I have an iMac 24" model that allows me to simplify my livingroom. It's a
      TV thanks to EyeTv Hybrid it's a stereo thanks in large part to iTunes and some
      external Bose speakers. It's a PC gaming system thanks to boot camp. It's and
      excellent computer system thanks to OSX. I could go on but you get the idea it
      simplifies my life and because of it's design it reduces clutter by a large margin.
      Heck even my XBox 360 is attached to it. MS Windows and the Zune don't do it for
      me. Linux and what? Don't do it for me. It's not a matter of cool or style you
      should see how I dress and I drive a 1989 Honda Civic for crying out loud. No it's
      a matter of simple for me. As for the iPhone I think it's an interesting device to be
      sure but I don't use a cell phone again to keep my life simply and keep myself
      unconnected I might add. So I don't need such a gadget but I will watch as it
      develops and perhaps someday who knows.
      James Quinn
  • Why are people surprised?

    Apple has always controlled its hardware and software. It's what makes Apple
    products what they are. They aren't meant to be morphed into something else. Why
    are people surprised? I think this may upset the hackers and people who like to
    mess with their gadgets, but I would think this is a small percentage of the people
    who will buy an Iphone. I certainly don't have any interest in trying to alter the way it
    works. It's a well designed tool that suits my purposes. I have better things to do
    than make something do that it wasn't meant to do.
    Prime Detailer
    • Apple Are Control Freaks...

      You are correct, Apple has always been a total control freak, and sometimes that is what's delivered a Great User Experience. But in this case, being a control freak is only a proxy to Great User Experience:
      • Ummm... huh?

        Have you ever thought there was a reason why Apple is such a
        Control Freak? Maybe it's because they want to make sure the
        User Experience is good, and the only way to do that is to make
        sure the product is the best it can produce.

        Ok, to keep the product the best you need the best hardware and
        you need it designed to a tight specification. Anything that alters
        this specification, whether it be hardware modification (as some
        iPhone hacks are) or software modification (outside of Apple
        approved limits) alters the reliability and the functionality of the
        equipment. This holds just as true for the iPod and the Macintosh
        computers as it does for the iPhone.

        Yes, I would be upset if my un-hacked iPhone quit working after
        this update. But knowing Apple from long experience, they will
        either issue a new update or somehow find a way to repair or
        replace the non-hacked non-functional hardware.

        There is a reason why so many warranties (non-Apple) have
        exclusions to their contracts. If someone opens a sealed box and
        then sends it back for warranty, that company has every right to
        say it's been tampered with and void the warranty. Apple is not
        doing anything different here, and they have every right to
        disable units that have been tampered with.
    • It's because it's a phone

      The market for smartphones is well accustomed to adding things to them by now. AT&T encourages developers of 3rd party apps, as do Palm and MS, by providing the appropriate information to make it possible.

      This is because many people have their entire lives in their pocket when they carry their cell around. It's not just a phone. The fact that Apple won't let anyone add anything to the phone that they may want or need flies in the face of the standard in this industry.

      That, my friend, is why people are surprised.
  • RE: Apple's growth, an unwinnable iPhone war and a reputation at risk

    Several grammatical and mechanical issues in the piece. Int the beginning, it mentioned something about blackouts, but did not elaborate. I would like to know more about the blackouts to normal users. It was a good topic with good points, but the author did not do it justice. Next time, make sure you don't drop things you've mentioned. Use them as evidence in your arguments.
    J I B
  • RE: Apple's growth, an unwinnable iPhone war and a reputation at risk

    Apple created the iPhone and has all the rights to protect it.They made it they made the rules and it is just fair.All the hacking,schmacking crying about it get a life...To have the iPhone I canceled all my verizon accounts paid the early termination fees and I AM HAPPY and never go back.I believed in Apple scince 1991 when I came to US and I will believe in to the day I will leave this planet,because they are extraordinary.The quality,design,it is all way above anything else and you can offer me 10billion dollars to buy a different computer than apple or a different cell phone than the iphone and I will turn you down for real.Nothing is perfect in this world but you have to give it to the apple it is no phone like the iphone it is no ipod like the iphone and is no computer like an apple and keep in mind the apple logo is missing a bite :) lol so it is not even an entire apple...
    I dropped verizon after 15 years and cancelled even my landline and switched to att and surprise they are almost as good as verizon and I will never go back.What were you thinking ?to turn down the iphone?You tought that I will wait 5 years until verizon will get the phone?Wrong answer and like me millions that will switch and be happy.Have a wonderful

  • RE: Apple's growth, an unwinnable iPhone war and a reputation at risk

    Hacking the iPhone is just plain stealing and if people cant see this then there is something else seriously wrong with society. So how will Apple get a "black-eye" from protecting its product from these thieves? Is it safe to say hacking your iTunes to sync with any iPxxx and compile music is also acceptable? Or would this type of activity be OK with the music industry?
    J I B
    • I'm puzzled by your statement

      After a person has paid a premium for a device, such as the iPhone, why is it stealing for them to load software on their own device to make it work as they wish? Am I missing something here?

      People who purchased the device, own it. Apple doesn't own the devices that it's customers purchased.

      Would you feel the same way if, say, General Motors disabled the autos customers modified by adding different exhaust systems or fuel injection systems in the same way?. I believe that litigation would start almost immediately. Why would you suggest that Apple has the rights to control things at this level.

      Can you help me understand your position?
      • Then don't install the update

        If your hacked phone is working just fine, you should simply avoid the update. Apple clearly stated that the update might screw up hacked phones. It's not like the update is forced on iphone users.
        • Agreed, but not the point

          Sure. Don't update. Common sense. I can't believe that this update actually hit anyone other than those that intentionally "tested" it to see if it would brick so they could fix it. That's just ridiculous. They warned you.

          However, the point is, how is it stealing to add programs to a piece of hardware that you have paid for in full? The OP is either high, dumb, has an odd sense of humor, or is far far more clever than the rest of us. Just look at all the replies he got. :)
      • ???

        you purchase the hardware and the software on the device and access to future software updates...if and only if you want them, they are not forced on you. just like unlocking the phone is not forced on you either. these are choices that YOU made... if someone CHOOSES to unlock their phone and then CHOOSES to update their phone knowing full well that this will "likely" brick their phone... then THEY bricked their phone, not Apple... WHAT THE HELL HAPPENED TO PERSONAL RESPONSIBILITY FOR ONE'S ACTIONS???

        if GM told you before hand that we are offering a free exhaust system and fuel injection system, but if you modified you engine in any way this may kill you engine and YOU knowing this full well still took the updates and it killed your engine just as they said... who really killed the engine? YOU DID... HELLO!

        what kind of an idiot would update their phone knowing that it could brick their unlocked iPhone?

        Apple has no obligation to take any care in updating your un-locked iPhone. un-locking it voids the warranty... if you don't bother to read the terms of the use of the product then you are a fool.. if you update your phone when Apple warns that it will in all likelihood brick your phone then you are a complete an utter fool!!!
        • Its all about supportability

          The one point that seems to be lost here is that of supportability. When a vendor, any vendor, offers support, it states what is or is not supportable. Period. That goes double for software vendors. Just look at the side of any boxed software for a list of requirements for that software (OS, Processor Type, Memory requirements, Video hardware, Driver versions, etc).

          Apple is not just selling the iPhone, they are also selling a service. When Apple knows what software can be installed on a phone, they have the obligation to ensure that things continue to work as expected after an Apple supplied update is applied. If people modify their iPhone, and it's their choice, and things break after an Apple supplied update who is to blame for the device not working? If the user modifies things, or installs unsupported applications, then the responsibility is rests solely on the person or the supplier of the unsupported application. If, however, the Apple supplied fix renders a fully supported unaltered device unusable, then the onus is on Apple to make things right. I'm sure that folks can relate to having installed a new piece of software or software update, only to find out later when things did not work properly that the OS vendor stated it was the software vendors fault and vice-versa.

          This is how I see Apple chooses to control their support destiny. Their customer satisfaction numbers are high because they produce devices that are reliable. Do they have issues, sure but that's why their Stats are at 80% or so and not 100%. By controlling the OS and the applications, Apple can provide the best support possible.

          And just for the record, I only own an iPod and not because I went out and bought it - I won it.
          Dom Doe
          • No one is disagreeing about supportability...

            The issue is you have a small base of customers who want to add 3rd party apps to their phone and Apple does not have to support it, but they should not go willingly brick those customers iphones either.

            I dont consider a press release enough, they can detect the iPhone has been modified and prompt the user "This iPhone had been modified and the update may(will) break your iPhone, Cancel or Allow"

            We are not talking about customers who are depriving Apple or AT&T of their money.
          • Cancel or Allow ??

            OK, My PC - Please leave the Mac users alone. LOL!
          • One thing...

            It's not about supportability... It's about 'You changed your iphone, so we have to brick it'. They are purposely destroying the hacked iphones, not doing it as a side affect of the update.