Apple’s Containment Tactics No Longer Work

When Apple was the underdog, the company developed some standard procedures for containing negative publicity about a product flaw. Now that Apple is wildly successful, wealthy, and seen as a bully in some circles, the methods must also change.

Yesterday, Consumer Reports dropped the bombshell. They couldn’t recommend the iPhone 4 due to a hardware flaw in the antenna. That sent Apple stock (AAPL) plummeting today. NBC News with Bryan Williams covered the CR report on Monday evening, and the Late Show with David Letterman poured on the coals Monday night.

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Credit: The Late Show, CBS

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Apple has responded in typical fashion. They didn’t own up to any hardware problems, no matter how slight. Instead we got a letter from Mr. Jobs saying it was all a calibration issue with the signal strength bars. Recently, Apple deleted a discussion forum in which customers were discussing the Consumer Reports report. That strategy no longer works when Apple is the top dog.

Also, dark clouds are brewing with some elements in Washington D.C. We’ve seen an interest by regulators to look into Apple’s dealings with consumers and competitors. Others feel that Apple has far too much power and isn’t playing the right role as a nice corporate entity. These forces are perhaps misguided, but Apple would be foolish to ignore them.

Apple may also believe that most customers don’t know about the alleged problem, but that’s fading fast as every news organization, and even talk shows, are jumping all over Apple.

While debate continues as to the exact technical details of the problem, and it is very complex, Apple is suffering from a PR nightmare and, so far, hasn’t taken any further action. I wrote awhile back that Apple needs to acquire a very solid technical understanding of the problem, and perhaps the initial statement from Mr. Jobs was intended to buy time for that research by SVP Bob Mansfield and his staff. I hope so.

The next step, I also hope, is that Apple will spend some of its cash, in the form of a field upgrade at the Apple retail stores (or by mail for those too far away from an Apple store) that will address the technical issue. A free bumper or case or change to the antenna might be all that’s required. That might cost US$10 per phone, maybe more. With 2 million iPhone 4s in consumer hands, that would come to more than US$20M, but that’s a small price to pay to make this PR disaster go away with the customers, the public, the press and the courts.

This would be seen as a refreshing approach by a powerful, wealthy company that understands its new role and responsibilities in the consumer marketplace.