Is the Sheen Coming off Apple?

Apple is in the midst of controversy concerning its I-Phone4. It seems that if someone holds the phone in a certain way, it drops calls. The problem is that the antenna is housed under a small fissure in the side of the case. It is fairly easy to inadvertently cover the antenna with ones hand.

Apple acknowledges that it knew about the problem before the I-Phone4 was released, but that Steve Jobs liked the design and authorized shipment. Following the controversy, Jobs said that it was not "big deal" because all smart phones have the same design flaw.

Regardless of whether or not other smart phones have a similar design flaw, we have come to expect more of Apple than the rest of the industry. Apple's products cost considerably more than comparable products. They sell at higher price because their are perceived to be of higher value. Apple diminished their perceived value by arguing that they are no different from others. If they are just like others, then their cost advantage disappears. Perceived value is a ceiling on price. If one were to plot a Kano Model analysis or perceptual map, it would show that Apple was--in Kano language--"a delighter", that constantly exceeds the expectations of its customers. Other phones would be fairly similar in their perceived qualities, and fall along a line of expectations--that is, they meet expected standards. Is Apple suggesting that it is no longer a "delighter"? Is it suggesting that it is now at parity rather than differentiated from others? I doubt that was what was meant. The argument by Jobs was a lousy one for any company, let alone Apple.

The solution Apple offered was admirable. They have offered a special casing to all I-Phone4 purchasers free. The casing will cover the fissure and eliminate the problem. That is a good solution, but it was not handled well at all. Apple should have apologized, noted that the design flaw was below the expectations of customers and not up to Apple standards, and then given the protective casing. There is nothing wrong with an apology. Those who apologize are forgiven and respected if they also offer a solution, which Apple did.

This incident shows that while Apple is an outstanding innovator--perhaps the very best--it remains arrogant and a bit immature. I have read articles suggesting that Apple's reputation has been tarnished. I don't think so. This was, as someone I used to work with called "a drop of water on a piece of granite". It doesn't cause much of a problem, unless the water drops continue and start to erode the granite.

There will be critics, fueled in part by a dislike for Apple or Jobs, or fueled by competitors who would love to knock Apple off its pinnacle. However, I doubt that customers will be bothered by the situation, considering that there was a quick solution. I was at an Apple store recently. The crowds were just as large and sales of the I-Phone4 seemed brisk.

This situation was a warning to Apple, though, that it needs to recognize and live up to the standards by which it expects to be judged. It has raised expectations of stakeholders above that of peers and competitors. It is now the most admired company, according to Fortune magazine. It must continue to meet or exceed the high expectations it has created, or it will risk damaging its brand and reputation.