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[10 comments]

Is Apple's Rep Rottening?

May 14, 2010

By Tom Ryan

With its string of successes, some restrictive policies, and perhaps a newfound arrogance, Apple's hip reputation is taking a hit in the techie community.

Two articles, "Has Apple Lost Its Cool?" in the New York Times and "5 Things Apple Must Do to Look Less Evil" in Wired, brought many of these PR issues to the forefront -- some self-inflicted; others at least calculated.

The laundry list of complaints is large and growing.

For one, Apple is continuously second-guessed on why it approves some applications for its Apps Store as well as why it doesn't approve others. It has also been getting some flack recently for revising terms to forbid application developers from using software tools other than Apple's to build their programs. A big issue is its steadfast refusal to enable Adobe's Flash to work on its mobile devices, meaning popular website such as hulu.com can't play on iPods or iPads  Earlier this month, Apple also stunned techies by suing HTC, the mobile manufacturer that makes Google's popular Nexus One and Android phones, for patent infringement.

But one highly-publicized brouhaha some are citing as evidence of Apple's "arrogance" occurred after Jason Chen, the editor at tech blog Gizmodo, got his hands on the next generation iPhone after an Apple employee left it in a bar. Upon Apple's urging, police smashed down Mr. Chen's front door, ransacked his house and carted off computers and files. The incident became comedy fodder on the April 28 Daily Show in which host John Stewart also lamented Apple's quick reversal from its counterculture image.

"Remember back in 1984, you had those awesome ads about overthrowing Big Brother?" crowed Mr. Stewart. "Well, look in the mirror, man! ... It wasn't supposed to be this way! Microsoft was supposed to be the evil one. But now you guys are busting down doors in Palo Alto while Commandant Gates is ridding the world of mosquitoes!"

To some, Apple's moves are the reason Google's Android phones just jumped ahead of the iPhone to grab a leading share of the smartphone market.

But writing in the New York Times, Nick Bilton said some of the current anti-Apple sentiment can be tied to its success.

"Many consumers -- in opinions expressed on blogs and Web sites -- see Apple as a haughty and bullying company," he wrote. "In part, this may be because Apple is no longer an underdog in the industry. The company's market cap fluctuates between $230 and $240 billion, not far behind its big brother Microsoft."

He added that while the negative press hasn't stopped fanaticism over new iPads and iPhones, "as more options for competing products appear in the marketplace, if the company doesn't get its image back on track, that tide could change."

Discussion questions: To what degree is Apple's success at risk due to anti-Apple fervor? To what extent does Apple need to work on improving its reputation?

FINANCIALS:     [NASDAQ:AAPL]

Discussion Questions



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Comments:

Only a PC user would take this seriously. Apple is still head and shoulders above and beyond any of this or their competitors from store design, to product, to fans.

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Bob Phibbs, President/CEO, The Retail Doctor & Associates

Consumers kick back when the arrogance of tech giants results in poor product quality, like browsers and applications that are more exclusive than inclusive of third party features. I see Apple's rejection of Flash in this classification, but its stringent requirements for app developers probably results in a better (not more limited) experience for users. So consumers--those who bother to care about these mostly geek-centric issues--may have some slight reservations, but considering that the iPad is heading for the top grossing consumer electronics launch of all time, I don't think we're talking big image problem here.

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Rick Moss, President, Founder, RetailWire LLC

Apple does get second-guessed on why it approves some applications for its Apps Store as well as why it doesn't approve others, and many consumers do think it's an issue that Apple does not enable Adobe's Flash to work on its mobile devices. However, Apple remains extremely strong by most consumers for its ease of use and good quality. I view Apple a lot as I do Starbucks! Maybe it's not for everyone but it maintains a lock hold on what it is, and who buys it!

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates

Don't bet against Apple!

Reviews of the iPad were mediocre, yet the rate of sales has exceeded the iPhone.

Maybe Apple knows something about consumers that the techies don't care about?

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Gene Detroyer, Entrepreneur, Advisor, Consultant, Professor, Independent

Counter-culture has been replaced by "cool" and that's probably fine.

Apple makes some high quality products. No one outside of our little universe really cares about perceived arrogance...and on the subject of arrogance can we say the other OS providers are HUMBLE? Google? Microsoft? Nope.

Apple is still in ascendancy. On some level, I don't quite understand the allure of the iPad, except that it's the first time a tablet essentially ignored the paradigm of handwriting (and rightfully so, it turns out)...but I'm really impressed with products like Mac AirBook vs. Netbooks, etc.

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Paula Rosenblum, Managing Partner, RSR Research

The 'counterculture' characterization of Apple is common, but erroneously descriptive. They simply march to the beat of their own drummer...and they do an excellent job for many (and a growing number of) consumers in the meantime.

Apple's highest priority under Jobs is delivering superior products, and they continue to do so. There may well be a few PR bumps along the way, but if they continue doing what they've been doing so well, the rest will take care of itself.

Kevin Price, President, The Market Performance Group, Inc.

Apple has positioned itself by saying it's not Microsoft. I guess the interpretation to that is that we do not have the same baggage as the market leader. (I think they miss Google's looming impact). I get that. Apple has developed their own baggage of being too cool for school. I get that. What I think is old school is that their business has a cult following tied to the quirkiness of their founder. That appears to be a fragile handhold in their climb to the top.

What I do not not get is the quality level of their products both hardware and software that seems no better than the evil empire. Anybody buy a new battery for their iPod lately?

I like their innovation. I want to see their quality improve. Reliability and innovation will be the hallmark of the market leader and that's up for grabs every day in the marketplace.

Michael Boze, Principal, Retail and Marketing Strategies

Apple is suffering from market share. For years Apple was the underdog. They had a small share of the computer business and were hailed as heroes by their customers. Then something surprising happened and Apple got REALLY BIG! Now everyone looks at them differently, but they haven't changed.

The old advertisements were meant to accomplish the goal of turning Apple in to David vs HP/Microsoft's Goliath. They did the job and that mindset continued until the iPod/iPhone made Apple one of the most successful companies on the planet.

Now everyone feels entitled to [complain]. Note that everyone is buying Apple's products and then [complaining] about something, while they can't wait to buy the next new Apple product. If every American Company had this problem wouldn't it be wonderful? Can you imagine GM with people lined up outside showrooms? No, you'll never see this in your lifetime. Now ask yourself why? Why they will line up outside an Apple store to get a new product? The fact is, Apple products work well, though you might not like everything about them. But they work 10 times better than its nearest rival and Apple is so far beyond others in its field that by the time a rival catches up, the technology has moved on to the next level, making the catch-up product obsolete and populating the shelves of Overstock and other liquidators.

Throw all the bricks you want, they don't care. They provide a superior product, superior service and delight each and every customer. Who else does that?

Ed Dennis, president, Dennis Enterprises

I am typing on my iPad right now. I am still a huge Apple fan and I don't see that changing for or others.

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John Crossman, President, Crossman & Company

Apple knows their customer better than any other company. The products (entry products) lead to sales of laptops that are 2 to 3 times the cost of their closest competitors. Apple is a marketing powerhouse.

Mark Johnson, President and CEO, Loyalty 360

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