26 Comments

Summary:

I have followed everything about the iPhone situation closely, and the message I got from Jobs yesterday matches what I have said for years. It doesn’t matter what the techerati says about a given technology or gadget. Ultimately the only opinion that matters is the consumer’s.

iPhone 4

I held off commenting on the Apple iPhone 4 “Antennagate” situation as long as I could, but it’s everywhere I turn. My local news on TV this morning was showing clips of Steve Jobs’ speech yesterday, bringing the current situation to the masses. I have followed everything about this unfolding tech drama closely, and the message I got from Jobs yesterday matches what I have said for years. It doesn’t matter what the techerati say or think about a given technology or gadget. Ultimately the only opinion that matters is the consumer’s.

That may sound trite but Apple understands that better than any company. That underlying message was bubbling to the surface throughout Jobs entire presentation about the iPhone 4 antenna problem. We want everyone to love our products, but the only opinion that matters is the customer’s. They are the ones who buy the products, they are the ones who use them and show their friends. Most importantly, they are the ones who will buy our products in the future based on the experience of ownership from each of our products.

The numbers prove this philosophy. The iPhone 4 problem has been all over the news for weeks, yet as Jobs pointed out Apple is selling as many phones as they can make. Customers are snapping them up in spite of the major controversy, and are keeping the phones. The press and tech bloggers may crucify Apple for the iPhone problems, but people are not hesitating to put their money on the table.

No matter what you think about Antennagate, or about Apple as a company — customers love them, love their products, and buy them in massive quantities. Jobs understands better than anyone that this is what matters. Is the antenna problem a deal breaker? For some it surely is, but for the majority of customers obviously not. This is ultimately what matters, not good press.

Related research on GigaOM Pro (sub. req’d): To Win In the Mobile Market, Focus On Consumers

  1. It’s far from being over, consumers aren’t satisfied by the response, they want a real fix not a patch!

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  2. James,

    I think no one can deny Apple’s consumer focus and subsequent success. What I find interesting about the whole situation is how Apple (by their actions) views the mentality of their customers. It also speaks to how that customer base has evolved over the years.

    A decade ago, Apple’s customer base was drastically smaller. It was also made up of a much higher percentage of amazingly loyal (to the point of religious fervor). I recall the number of times Apple obsoleted hardware in those days with a message of “deal with it and buy the new stuff” with little to no objection. If you turn the clock ahead 10 years, the number of customers have grown enormously, and the loyalty level, while strong, is still far more pragmatic.

    Yesterday’s “Town Hall” event might have worked a decade ago. Saying “everyone’s got this problem” yet refusing to acknowledge that they are included in “everyone”, pointing the finger at the media and bloggers – to an extreme user base these tactics work. To the customer who loves your product but recognizes an issue, though, this comes off as patronizing at best and insulting at worst. I really believe that if 95% of yesterday’s commentary were removed, instead focusing on “we make great products but we made a mistake and here’s what we’re doing”, Apple would have done itself a much larger favor in the long run. Instead, many people in the “mainstream” are now made openly aware of a corporate mentality that they may not like.

    I still think no one understands identifying market needs and desires and building solutions at the hardware and software level like Apple. I think that they now need to understand how to deal with and communicate with a customer base that is a bit less “religious” about their products and expect answers when questions arise. While I recommended the iPhone 3GS to a number of people who I thought were a good fit, I (like Consumer Reports) am holding on that recommendation for the iPhone 4 until Apple presents a better solution to the problem and not just a workaround.

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  3. “consumers aren’t satisfied by the response”…

    Really… I guess that’s why it’s selling faster than any smartphone in history & has a return rate of < 2% (an unheard of low percentage for smartphones).

    “I (like Consumer Reports) am holding on that recommendation for the iPhone 4 until Apple presents a better solution”…

    Wow…. I’m surprised Steve Jobs hasn’t visited your home to plead his case yet. I mean sure… they’ve sold over 3 million phones in 3 weeks & pretty much every retailer in the country who sells the phone has a 2-4 week wait-list going but man… just imagine how many more they could have sold with YOUR recommendation.

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    1. You quote 3 million phones over 3 weeks. Do you remember Apple’s announcement about 1.7m Iphone 4 sales in the first two days?

      What does the distrubition above tell you?

      I am not surprised they rushed to release success figures after two days before the people find out about the issues.

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    2. Kirk,

      Quoting sales figures doesn’t solve the problem. If it did, Toyota would be in a far better position today then they are.

      As I stated in the first line of my original comment, no one can dispute Apple’s success. What is up for discussion is how they handle an adverse situation when it arises. Personally, I believe that Apple has never come under scrutiny the way they are over this issue. It’s the price of success. I also believe that the way they are handling this rather oblivious to their newer customer base; one that really likes their products but is not blindly loyal and unconditionally accepting to whatever is told to them. I simply think Apple needs to adjust to their changing demographics.

      On the return rate – I think the return rate statistic is totally misleading at this point. Almost every iPhone 4 customer I know (and I know hundreds, including enterprise purchasers) have not returned anything to this point simply because they were in a sort of “holding pattern”, waiting for some word from Apple on a course of action. It will be interesting to see how yesterday’s information will affect these numbers.

      Finally – While I am not Consumer Reports, I spent the greater part of the last 3 years working with large corporations directly consulting on large deployments of mobile technology. The results included deployments of iPhone 3GS devices running well into the thousands based upon determination of corporate and end user needs. Even if my recommendations mattered to one person, a response that only serves as an emotional attempt to trivialize someone’s opinion does nothing to answer the questions surrounding the problem. It only proves the point.

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    3. How many of those 3 millioan phones are upgrades? I am guessing at least half. Also how many of the 3 million are pre orders for other countries? I never try to take a companies numbers as fact or a statistic showing how good a product is doing. 3 million is great but when half or even more are just upgrading their old iphone the number seems misleading. The number that matters to me is how many of the 3 million are new and happy. Old iphone users already have used the same system for some time. Oh and don’t forget that at&t moved the upgrade date for the phone for a lot of customers so that also added a lot of fluff to the intial sales numbers.

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      1. Here’s one article about a widely cited survey of 608 customers reporting that 77% were upgrading to the iPhone 4 from a previous model:
        http://tech.fortune.cnn.com/2010/06/25/77-of-iphone-4-sales-were-upgrades/

        The survey was conducted during the iPhone 4 launch, when Apple was reporting between 1 to 1.5 million sold.

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      2. Pull My Finger Monday, July 19, 2010

        Stop with your monkey math number game. 3 MILLION is THREE MILLION SALES. You are obviously on some kind of crusade to justify a weakness in Apple sales. You probably wish that the new Android phone could sell this many phones so quickly. The reason Apple has so many repeat customers is because their products have been shown repeatedly through every objective comparison to be far superior than the competition. Until somebody makes something better don’t look for these numbers to change.
        Please quit spinning numbers in your head to make youself feel mo betta or something.

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  4. So, there are customers who love Apple because these customers buy Apple products. So, way way way more people then love Windows PC because 90% of desktop computers sold are Windows. Way way more people then love Blackberries in the US because more Blackberries keep being sold in more massive quantities than iPhones, even before Antennagate when the myth of Apple’s infallibility was more intact.

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  5. James,

    For the most part I’d agree with you except for one thing: it’s a cell phone, and cell phones are special. The day may come when users need their cell phone to help save their lives.

    As some one whom has had his Apple iPhone let him down when calling 911 in a medical life and death emergency I take this issue very seriously. So seriously that giving up at&t due to all the dropped calls, calls that can’t be made and poor quality (alien voices, digital artifacting) drove me away from the iPhone (I now use an EVO 4G and feel much safer due to Sprint’s service.)

    Not only did Steve not address the 911 aspects of the antenna issue, he also didn’t get into the exacerbating factors for their unique antenna design.

    You’re in a single vehicle car accident, possibly your Toyota accelerated out of control :-), and post accident you have the potential for a couple issues for using your iPhone 4 to call 911. Bloody hands? Clammy hands? It’s been shown that substances such as sweat and blood bridging the antenna gap in the lower left trigger the impossible to make a call issue. It’s also the case that whereas you can remember not to use the grip of death, blood and sweat get down in that gap and are difficult to get out.

    Medical issues such as congestive heart failure, heart attacks, diabetic shock etc can trigger production of large (or even copious) amounts of sweat. Plus you may already be experiencing mental confusion so trying to clear the gap so you can make a call to 911 is possibly beyond you to even think about.

    This antenna design has an obvious life threatening failure mode and I personally feel Apple should have recalled it once they realized the previously not well understood failure mode. But as with the Ford Pinto, perhaps Apple has run the numbers as it’s cheaper to pay off on a few dead customers than recall all the phones to fix them.

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  6. Apple Admirer Saturday, July 17, 2010

    THere are a lot of Apple haters in the blogosphere but their true numbers a quite small in the grand scheme of things. They are like the vocal minority in politics, they voice drowns out the competition but in the end most people dismiss their views.

    I think no other technology company would have had the mea culpa that Apple did yesterday and certainly none of them would have given away a 30 buck gift to every customer to show their appreciation. The Microsoft,intels, Ciscos and Oracle’s of this world would have acted much different.

    Apple understands technology and how customers embrace it better than any company out there and that is why they have risen to be the largest technology company in the history (based on market cap). They can only get bigger with the way they so admirably handle themselves during a crisis.

    Remember Steve interrupted his vacation to appease his loyal customers, I mean no other CEO on the planet would have cut short a long planned vacation like that.

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  7. Allan Jones Sunday, July 18, 2010

    Apple products might be flying off the shelves now, but that doesn’t mean they always will. It’s a mistake to think that demand indicates merit. Demand has a lot to do with fashion, especially among young buyers.

    James writes: ‘..customers love them, love their products,..’ but love is fickle. It’s not unthinkable that Apple could end up like Dell. There was a time, not so many years ago, when Dell was held up as a model of a successful business. I bought one of their computers at a time when they were shifting large volumes. Now I know better. It could happen to Apple.

    Actually, I suspect Jobs knows this, despite his quoting sales figures as indicators of merit.

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  8. What really got me about what Steve Jobs said was that Apple really cared about their users. If that is true why do they continually make deign and business decisions that are not in the consumer interest. All we can hope is that this issue finally results in less advertistorial “reviews” of Apple products and more balanced reporting. It would be great to see Apple judged by the same standards as other companies. if this end of the hype machine and the start of eel journalism then this be a positive outcome.

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  9. Jobs’ attitude that “It doesn’t matter what the techerati say or think about a given technology or gadget. Ultimately the only opinion that matters is the consumer’s” reminds me of Richard Nixon’s use of the term “silent majority”. Both ignore concerns that can be leading indicators of trouble ahead.

    It does matter what Consumer Reports concludes. Deleting references to their report from Apple-hosted online forums (http://www.ft.com/cms/s/2/874b1228-8eab-11df-8a67-00144feab49a.html) will not stop people from learning about such concerns. People trust Consumer Reports to tell the whole truth. If Consumer Reports finds that signal loss in the iPhone 4 is ten times as frequent as such loss with the BlackBerry will that result get deleted from Apple forums too?

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  10. While I agree with the general premise of the article (only the customer matters), I disagree that Apple handled this the right way up until the end. What I think Apple (and most companies) don’t seem to get is that it doesn’t matter how large the problem is, only how large it’s perceived to be. Right now Apple is riding a huge wave of positive consumer sentiment, and like a wave, its not going to change course overnight. But apparently enough people experienced this problem for it to become a stink, and Apple’s initial response was essentially to tell these people to piss off. “It’s a non-issue”.”Don’t hold it that way”.”Buy a case”. “We’ll release a patch to show you its your signal that sucks, not the phone”.

    Consumers now have the option to return the phone or get a free case, which I think is very fair. From what I have read I really do think the issue is over-hyped. But it feels like Apple ended up reacting more to the media frenzy than its customers. And in the back of a lot of people’s minds, they are going to be wondering “if I have a problem with my Apple gear, will they take care of me? Especially if MY problem doesn’t get the same press?”
    And that’s how the momentum in consumer goodwill can start to shift.

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