The Value of a Strong Brand, Apple Edition

| About: Apple Inc. (AAPL)

Steve Jobs did a great job at his press conference today, in classic Stevenote style. He showed that the “death grip” problem is endemic to the entire smartphone space, rather than being something unique to the iPhone 4. He talked a lot about how most of his customers love the phone, and how its return rates are a fraction of the equivalent number on the iPhone 3GS. He put up cool photos of Apple’s formerly-secret anechoic chambers. He announced that the iPhone will soon be available in white, and in 17 new countries, including Canada, Italy, and Spain. And he’s throwing in a free case for anybody who wants one, or a full refund. (Which existed all along, but it still sounds good.)

The only slightly dubious part of the presentation came when he said that the rate of increase in dropped calls, for the iPhone 4 over the iPhone 3GS, was less than 1 call per hundred. Without knowing what the rate is for the 3GS, or how the iPhone 4 rate compares to other phones, that number is meaningless.

What Jobs did well in this presser was to be both helpful and informative, rather than merely apologetic. That’s probably smart, because it’s really hard for anybody to apologize effectively, especially someone with an ego the size of Jobs’s.

Still, it’s going to be hard for this one event to counteract the narrative that has slowly built up over the past 22 days. Jobs is famous for pushing his design criteria beyond the bounds of common sense — most famously with the NeXTcube, but with the Apple Cube as well. (The cube on 5th Avenue is more successful.) So the story was easy to tell: Jobs loved the idea of a simple band around the edge of the phone which would act as the antenna. That kind of band doesn’t work well when touched. But Jobs overrode those objections because he loved the design so much.

In any case, the free-cases-for-everybody solution solves the problem, insofar as it is a problem. There are now two competing narratives when it comes to smartphone antennae and reception, the discussion is going to become very geeky very quickly, and most people will sensibly ignore it. Jobs also set up competing narratives when it comes to yesterday’s Bloomberg article alleging that he knew about antenna issues before the phone was released: by vehemently denying the allegations, Jobs again just creates a noisy debate which most people will pay no attention to. (Of course, the Bloomberg article also conflicts with the storyline that Jobs didn’t know about the problem because the real-world testing of the iPhone 4 took place in cases which disguised it.)

I also love the way that Jobs explicitly privileged customers over investors: he knows that investors ultimately care more about Apple’s happy customers than they do about the stock moving up or down $5 in a month.

Personally, I’m not a huge fan of the iPhone 4: while the screen is beautiful, I don’t like the hard edges, the extra weight, and the way that there’s no easy way of telling by touch which side is the front and which the back. But that’s just me. The US population as a whole seems to love the phone, and although there’s been a media firestorm over the antenna issues, Jobs has done such a good job of building up the Apple brand that the real-world effect of the story seems to have been minimal.

As Jobs says, Apple’s not perfect. But the real story here I think is one of brand value: if people love your products, they’ll trust you much more than if they don’t. The only downside is that the media will tend to glom on to any perceived problems. It’s a trade-off that all of Apple’s rivals would be very willing to accept.