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Is Apple the New Toyota?

By Jeff Kagan
Jul 15, 2010 5:00 AM PT

Over the last 10 to 15 years, Apple has done a remarkable job of creating cutting-edge devices that have won the hearts of their users. It forged a special bond with customers and investors that other companies want but don't have. It seemed to be bulletproof.

Is Apple the New Toyota?

Suddenly, Apple may have a chink in its armor. The new iPhone 4 seems to have real problems with reception. The question many are asking is this: Will Apple become the next Toyota? It's too early to say -- but so far, things don't look good.

Let me say that I have developed the utmost respect for the company and its ability to wow the marketplace with products that were better than customers dreamed over the last decade. However, this new reception problem seems to show a company that has grown too quickly and may have lost its focus -- as did Toyota.

That loss of focus let a new device enter the marketplace that obviously had not been tested well enough. If you hold the device and touch the lower left corner, according to reports, your signal strength drops and you can even lose calls.

Simple Fix?

One fix that seems to work is a rubber-like edge around the device that keeps your hand from actually touching the antenna. If this works, it is a problem with an easy solution -- but it's still a problem that should not have happened.

Even Consumer Reports said it couldn't recommend the iPhone 4 because of the glitch.

These are the early stages of what could develop into a larger Toyota- and Lexus-type debacle for Apple, and it could happen very quickly.

Whether this has a happy ending depends largely on what Apple does next. Will it continue to ignore this obvious problem, or will it fix it and apologize for the goof?

State of Denial

Toyota denied it had a problem for a long time. Then it apologized and said it would make sure it did not happen again. If the problems had stopped then, I think Toyota would have recovered quickly. Unfortunately, every few weeks we hear of more problems. Just last week, we heard of problems with Lexus and Toyota engines.

Instead of continuing to focus on quality, Toyota changed and started to focus on growth -- and that was the problem. Many things started to go wrong.

Despite mounting evidence to the contrary, let's just say this is not a real problem. Let's say Apple did everything right, but for some reason became the victim of an avalanche of bad publicity. What should it do next to save its brand?

The only things Apple can do now are 1) apologize for the problem; 2) supply a free fix for the problem; and 3) promise to do better so that this will not happen again. Then it has to make sure it lives up to its promises.

If this is the only major quality problem Apple has -- and if it apologizes and doesn't cross this bridge again -- the company can recover pretty quickly. However, if it doesn't, it will have a problem like Toyota that will live on and eat away at its brand name.

At this point, Apple will have egg on its face either way. The question is, will it regain customers' love and respect -- or will angry customers continue to pound the company? It is Apple's choice.

This Time, It's Not AT&T

AT&T does not seem to be a part of this problem. AT&T Mobility has taken its share of criticism in recent years due to overwhelming demand on its network in certain spots around the U.S., in large part due to the iPhone. However, this is not a network issue -- it's a device issue.

Apple took its eyes off the ball. Like Toyota, it had a great reputation for quality products, but it may have gotten arrogant and blown it. It happened to Motorola in the 1990s.

In recent years, Apple has become insular. It is virtually impossible for outsiders to communicate with the company -- unless you're one of the lucky recipients of the occasional email reply from Steve Jobs himself.

Apple customers did not like this state of affairs but they put up with it, largely because the company seemed like it always tried. Could the iPhone 4 problem change that perception in the minds of customers and investors?

This story is still in the early stages, but whatever happens to Apple in the long term depends on the next steps the company takes. This is a real public relations problem. Apple has incurred real damage to its previously unsinkable brand.

This damage can be quickly repaired if Apple does the right thing by apologizing and fixing the problem now -- and if other problems don't follow on its heels.

Whether Apple remains at the top of the list of companies that customers adore depends on what it does next. Everyone is watching.

Jeff Kagan is an E-Commerce Times columnist and a wireless, telecom and technology analyst, author and consultant. Email him at

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How do you feel about accidents that occur when self-driving vehicles are being tested?
Self-driving vehicles should be banned -- one death is one too many.
Autonomous vehicles could save thousands of lives -- the tests should continue.
Companies with bad safety records should have to stop testing.
Accidents happen -- we should investigate and learn from them.
The tests are pointless -- most people will never trust software and sensors.
Most injuries and fatalities in self-driving auto tests are due to human error.