Apple 2.0

Covering the business that Steve Jobs built

Did Apple solve its PR problem?

July 16, 2010: 2:05 PM ET

The key takeaways from Steve Jobs' "death grip" press conference

Photo: Engadget

Three weeks and a day after Apple (AAPL) launched the iPhone 4, Steve Jobs took the stage to address the company's biggest public relations crisis since his 2008 medical leave. The full video is available here.

Here, in a nutshell, is what he had to say:

  • Although Apple sold well over 3 million iPhone 4s in three weeks, it's not perfect.
  • No phones are perfect. His competitors' phones also drop bars (see videos). "This is life in the smartphone world."
  • The iPhone 4 was thoroughly tested in a state-of-the-art facility ($100 million; 17 anechoic chambers; 18 PhD scientists and engineers).
  • Apple knew the phone had a weak spot (X marks the spot). If you held it in a certain way, it dropped bars.

  • Only 0.55% of iPhone 4 owners called Apple to complain. The return rate to AT&T (T) was less than 1/3 of what it was for the iPhone 3GS (1.7% vs. 6%).
  • However, according to AT&T, the iPhone drops more calls than the iPhone 3GS did. Less than one more call per 100. Jobs' theory: more 3GS iPhones were bought with cases.
  • "We think this has been so blown out of proportion. It's fun to have a story, but it's less fun on the other end of it. So here's what we're going to do to make our users happy..."
  • Give a free case for every iPhone 4 purchased through Sept. 30¬† -- or a refund if you already bought one. (Apple can't make Bumpers fast enough, so you'll have a choice of 3rd party cases.)
  • If you are still not happy, return it within 30 days and Apple will give you your money back, no questions asked, no re-stocking fee. (This was already company policy for iPhones).

Wrapping up, he said (transcript via gdgt's Ryan Block):

"We take this really personally. Maybe we should have a wall of PR people keeping us away from all that, but we don't, we take it really personally. So we've been working really really had thsee last 22 days on this trying to solve the problem. And we think we've gotten to the heart of the problem here. And the heart of the problem is, smartphones have issues, and we made it easy to exploit the issue by showing people where to hold the phone to cover the antenna. But the data supports the fact that the iPhone 4 is the best smartphone in the world, and that there is no Antennagate... there is a challenge for the entire smartphone industry to improve its antenna performance  so there are no weak spots."

And in the Q&A:

"To our customers who are affected by the issue, we are deeply sorry, and we are going to give you a free case or a full refund."

So, there it was: a mea culpa, an explanation, a free case and a money-back guarantee.

Was it enough? Wall Street seemed to think so. The stock, which had fallen as low as $248.41 a share by 1 p.m. Friday, jumped before the press conference was over to more than $254 a share.

And then it got slammed along with the rest of the market.

And what about Apple loyal user base? Time will tell. But frankly we never thought Apple's customers were as concerned as its critics were. It's clear, given the latest sales figures, that they never stopped buying iPhones. Apple still can't make them -- or the Bumpers -- fast enough to meet demand.

Below: The iPhone antenna song with which Apple opened the press conference.

See also:

[Follow Philip Elmer-DeWitt on Twitter @philiped]

Join the Conversation
About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

Email | @philiped | RSS
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.