Is Something Rotten at Apple?

E-mail problems, flaky iPhones, and broken Macs. What’s Steve Jobs to do?

Farhad Manjoo chatted online with readers about this article. Read the transcript.

Steve Jobs

In its ubiquitous TV ads, Apple claims that its new iPhone is twice as fast as the original version and just half the price. Neither is true. The half-price fib has been obvious for some time: When you add the price of AT&T’s required two-year contract, the new phone costs slightly more than the old phone. In a lawsuit filed last week, an iPhone owner named Jessica Alena Smith argues that Apple hasn’t been honest about the phone’s speed, either. Smith, echoing thousands of complaints logged on Apple’s Web site, says that her iPhone rarely connects to AT&T’s fast 3G network, instead staying fixed to the pokey EDGE service that was the bane of the first iPhone. Smith’s iPhone doesn’t just fail on tasks like downloading e-mail and surfing the Web, she says. It also drops many of her voice calls.

Smith lives in Birmingham, Ala., but I’ve had the same problem with my iPhone 3G in cell-tower-rich San Francisco—more dropped calls than I’ve ever had on a cell phone (including on the original iPhone) and terribly spotty 3G service. Last month, I raved about the great third-party programs available on the iPhone’s fantastic built-in App Store. But I’ve since soured on that system, too. As many iPhone owners have noticed, the phone often mysteriously refuses to load these apps, rendering them useless. Smith is asking a judge to grant her lawsuit class-action status. I hope it’s approved. Apple has reluctantly acknowledged flaws in the iPhone and has quietly promised to correct them, but there’s no sign that it’s taking the complaints very seriously. The lawsuit might be just the kick it needs to fix the world’s broken iPhones.

But the company’s troubles go beyond the iPhone. Last month, Apple launched MobileMe, a $100-per-year online service that aimed to sync documents and e-mail across computers and Internet devices. MobileMe failed spectacularly in its opening weeks, with some users reporting losing years of saved e-mail. In a widely circulated post, Techcrunch’s Michael Arrington claimed last week that Apple’s PCs aren’t doing so well either. Arrington, a longtime Apple fan, says he’s had four new Macs break in different ways—one refused to connect to Wi-Fi networks, one suffered a keyboard flaw, and two shut down mysteriously.

Is something rotten at Apple? Is it “flailing badly at the edges,” as Arrington argues? Is it possible that Steve Jobs’ reality distortion field is finally weakening—that the scales have fallen from our eyes and we’re now seeing that Apple’s products are just as flawed and prone to failure as any other hardware?

Well, not really. As Apple fans point out, people still love Apple. Last week the American Customer Satisfaction Index, an annual survey of consumers’ feelings about major brands, gave Apple a record score of 85 points out of 100 in the personal-computer category. Apple scored 10 points higher than Dell, 12 points higher than Hewlett-Packard, and 13 points higher than Gateway. Apple has led the category for five years straight. Claes Fornell, who directs the survey, told Computerworld that even though customers know that Apple’s products aren’t perfect, “Apple has an almost Teflon-like quality. Its problems don’t really seem to matter to consumers.” So much for the death of the reality distortion field.

Why don’t consumers seem to care about Apple’s problems? For one thing, Apple gets more press than any other company in tech, and both its successes and failures tend to dominate the Silicon Valley blogosophere. It registers as big tech news when a high-flying blogger like Arrington gets a few unlucky Macs, but such difficulties probably don’t filter down to most customers. Years of savvy brand advertising and a string of genuinely great products have helped Apple build up a well of good-feeling; as a result, people are more willing to overlook the company’s occasional failures. Besides, many Apple products still beat their rivals, hands down. You may hate Apple for selling you an iPod with a battery that dies, but what are you going to do when you go looking for a new music player—get a Zune? Not likely.

What’s troubling, though, is Apple’s tendency to milk this advantage—when it does screw up, it prefers secrecy over full disclosure, and it expects customers to quickly forgive any slight. Its response to the MobileMe meltdown was a classic example. For several days after the site’s rocky launch, Apple refused to disclose what had gone wrong. It wouldn’t say why MobileMe was down, and it wouldn’t say when MobileMe would be fixed. Only after the New York Times’ David Pogue and the Wall Street Journal’s Walter Mossberg published critical columns did Apple change its tune. Two weeks after MobileMe’s launch, the company put up a blog documenting the service’s status. Last week, it gave all users a credit for two months of MobileMe service.

Apple is dealing with iPhone problems in much the same way—grudgingly. Apple-focused blogs recently reported that Jobs fired off one-line e-mail replies to two different customers upset about iPhone difficulties; in each case, he said Apple was working on the problems. And an Apple spokeswoman told USA Today that Apple would issue a software patch to improve “communication with 3G networks.” But that’s it: The company won’t say why the phone’s failing to load apps or connect to 3G, it won’t say how serious the problems are, and it won’t say what, if anything, customers can do to resolve the problems until it issues a fix.

Contrast Apple’s response to how other major tech firms handled recent failures. As Adam Engst, editor of the Mac newsletter TidBits, points out, when Netflix suffered shipping delays earlier this month, it issued an immediate, clear explanation and apology and automatically credited customers’ accounts. Netflix customers raved about how the company handled the problem. Voilà: The company turned a tech failure into a PR win. Google accomplished something similar when Gmail died for a few hours on Aug. 11. Within hours of noticing the problem, Google put out a statement on its blog explaining what had gone wrong—the post was titled, “We feel your pain, and we’re sorry”—and the steps it had taken to prevent a future failure.

Apple’s strategy for dealing with complaints stems from a companywide emphasis on secrecy. Tight lips work well for Apple, building suspense among loyalists and the press about upcoming products and burnishing its reputation as a company that leads rather than follows. But as it expands into new, highly complex businesses—phones, set-top boxes, “cloud computing” services—Apple is sure to make more mistakes. As Jobs wrote in an internal e-mail to employees, the MobileMe screw-up happened because the company was trying to do too much at the same time (the system launched on the same day as the new iPhone) and because “we have more to learn about Internet services.”

What’s more, Apple’s customer base is widening beyond longtime Mac fanatics—people who give the company a pass because they regard it as an underdog. The Mac’s market share is growing rapidly, suggesting that lots of Windows users are switching. Last month, millions of people waited in line for the iPhone not because it was emblazoned with the Apple logo, but because they’d heard it was the best phone on the market. Combine that with the fact that the iPhone and MobileMe are vital to people’s lives in a way that, say, an iPod isn’t, and you’ve got a recipe for customer dissatisfaction. You may be willing to overlook Apple’s silence about a dead battery on your MP3 player. But if the company continues to stonewall people whose phones cut off every five minutes, Steve Jobs better get ready for some marches on Cupertino.