Apple, Tim Cook and Lousy Press
Apple's triumphant product launch turned into a public relations mess in less than a week. Some users couldn't make phone calls after they updated their mobile software. Some new iPhones bent. Bent! Amid all of the bad press, Apple representatives have been fairly quiet as their company scrambles behind the scenes to figure out the best internal and external moves.
Before getting into what this means for Apple and for its chief executive, Tim Cook, let's acknowledge that the issues will probably sort out something like this:
- iOS 8.0.2 will fix the major operating system flaws on Apple devices, and most people won't care about the fact that 8.0.1 was a clunker.
- If it turns out that most phones don't bend, sales will continue apace. (The company says only nine customers have complained so far of bent devices.)
- If bending turns out to be endemic, customers locked into the Apple ecosystem will buy an iPhone 6. Those that want the really, really big screen will hold off until the next iteration of the 6 Plus. Android users of huge phones will stick with their existing huge phones.
You've probably surmised that I think much of the hand-wringing over the iOS update and Bendgate is a little overdone.
Has quality control gone to hell? Perhaps no more than it did when Apple phones had bad antenna problems. Remember that? Or the map app that was so bad that Cook suggested using Google Maps until the problem was fixed. Remember that? Or the botched formula for calculating phone reception. Remember that? If you don't -- and I bet most of you don't -- then the current round of mess-ups are likely to also come and go.
Will shareholders freak out? As long as sales hold, the stock will soon continue its march past $100 a share. All of the analysts I spoke with today think that iPhone sales should hold, Bendgate or no Bendgate.
But the bending phone videos and the operating system problems raise an interesting question in the evolution of Cook's public persona. How will he handle crisis, real or perceived, inside and outside of the company? And can he maintain the cult of Apple, the famous brand loyalty that keeps customers coming back screw-up after screw-up and helps generate the company's enviable margins?
For three years now we've read some version of this story: "Can Apple Be Awesome With Tim Cook at the Helm?" Enthusiasts and detractors both hunted for signs of un-Steve-Jobs-like behavior, the stock had big ups and downs and an entire book outlined Apple's dim, post-Jobs future.
Cook methodically silenced his doubters. The stock has doubled since he took over in 2011, even as activist investors Carl Icahn and David Einhorn targeted the company. He proved that Apple could still build innovative, beautiful gadgets with the triumphant reveal of the iPhone 6, the supersized 6 Plus and the Apple Watch, the most elegant of all wearables. More than 10 million new phones sold in the three days after the launch, evidence that the company still had its hardware, design and marketing magic.
But nothing is perfect. A recent story in The Information says that the Watch was plagued by delays. Conventional wisdom is that delays in one part of a mobile product family could cause glitches in others, like a shared mobile operating system. And if it turns out that the 6 Plus bends with normal use, it could be expensive to fix and be a very real taint to Apple's brand.
Still, let's all take a breath. Cook built Apple Care, one of the best customer service programs in hardware. He's a more open and less combative executive than Jobs, who's often described as a charismatic dictator. (Jobs' response to customers with antenna flaws: Hold your phone differently. Brand experts applauded, saying Jobs took "the bull by the horns." Really?) Cook has also chipped away at the silos and in-fighting that had long gripped Apple under Jobs, as my colleagues Brad Stone and Adam Satariano recently noted in Bloomberg Businessweek.
I've got high hopes for Cook. Of course, whether his talent for top-drawer customer service helps him overcome this week's missteps remains to be seen. He needs to reassure customers, not tell them that product issues are all in their heads. He needs to evaluate processes within the company to ensure that the fixes are spot on. And he's got to do it all while upholding Apple's brand and maintaining the reputation of the new products. As Forrester analyst J.P. Gownder put it, it's tough to thread the needle between customer satisfaction and defending the brand.
Apple has a very small, very expensive and very elegant product line. So it's essential that it maintains the integrity of each one of those products -- especially the iPhone -- and effectively cultivates their worship. As Cook pointed out in an interview with Charlie Rose, few other multibillion-dollar companies can fit all of their wares on the table in Rose's studio. That's why Cook's current test is so interesting. It speaks to the heart of what has made the company so untouchable and such a success.
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