iPhone Update Creates 'Bricks' - Apple's Reputation At Risk?

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.

This weekend’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.

Comments

[Jon T:]

Oh please. The only reputation at stake is the intelligence of someone who buys a product, breaks it to make it work on a network it was never intended to, then do an Apple update, and the sue the company.

Idiots.

iPhone is not an open platform, it is a new, developing one that has a long way to go.

Apple reputation: intact.

iPhone sales: set to explode

Most used mobile on the net for internet use: iPhone. 10 years of Microsoft and Symbian and iPhone has overtaken them in 4 months.

2007 Oct 01 09:23 AM

[Murphy-Mac:]

Jon T is right. Go to an Apple Store. They're mobbed, and the people inside have no intention of hacking their iphone. They see YouTube and Google Maps and say ooooh. They drool over the product as is.
You can grab headlines by talking about the bricks, but those customers are few - and they knew they'd traveled out of bounds. Their troubles are their own responsibility.
You can read the comments on your site's "ibrick corporate branding" sensational story. Further evidence that your site generates bunk like Business 2.0 and Elmer-Dimwitt.

2007 Oct 01 11:10 AM

[rlh:]

Way off base on this one Larry. You are grabbing at straws if you think Apple is not as creative in its ability to get the new customers as it is in retaining them. They have been doing the latter for over 20 years. Apple fans are fans for a reason, they love Apple. Those fans will not abandon the company merely because some folks could not play by the rules that were clearly spelled out in the iPhone/AT&T contract. I personally am glad they got what they deserved.

2007 Oct 01 03:18 PM

[Eliakim:]

Apple's reputation is not at risk. It's just the whiny hackers who are being babies. Get real and tell them to "get a life". Everyone else likes their iPhone.

2007 Oct 01 09:48 PM

[User 68310:]

I agree the reason I don't have a Iphone is I use Verizon and I tried AT&t and found I had a ton of trouble with calls and services. Sorry I realize though $10 a phone per month is pretty hard and tempting to upset a few people. I do feel that Apple is doing the right thing for them and At&t. It is quite profitable for them both to keep a closed system. Also the big thing most don't remember is that this is not just a phone but an Ipod too. Thanks

2007 Oct 03 05:02 PM