How should Apple manage its throttling scandal?

Discussion
Photo: RetailWire
Dec 27, 2017
Matthew Stern

Apple has attracted an ardent fan base that few other brands enjoy. But a controversy that has emerged in the last week may be doing some damage to that brand equity.

In the days before Christmas, Apple confirmed that the company implemented an iOS update last year which slows down older phones in some cases, according to CNN Money. Apple claims that the update was implemented to prevent sudden shutdowns users were experiencing and to make more efficient use of older batteries and keep the phones running optimally.

But some customers and critics aren’t sold on the explanation. At least five iPhone owners are suing Apple over the issue, according to NBC. Their contention is that Apple defrauded them by slowing their phones to make them believe they were malfunctioning, leading them to buy entirely new iPhones. They contend that, had they been informed that the battery was the problem, they could have bought a replacement battery rather than a completely new device.

Smartphone manufacturers have successfully dealt with major PR hiccups in the recent past. In 2016, for instance, there were reports that Samsung’s then-new Galaxy Note 7 was prone to bursting into flames because of a battery problem. Samsung moved quickly to address the problem, issuing a full 2.5 million-phone recall despite there only being about 35 reported instances of fires. Despite a brief hit to the stock, the company recovered and the issue quickly disappeared from the news.

But Samsung’s exploding batteries were unintentional, whereas customers are accusing Apple of planning the throttling of its phones to push new sales.

This isn’t the only problem Apple has been facing lately. The company’s new iPhone X has not been as popular as expected, according to USA Today. Apple was expected to ship 30 million devices this quarter but only shipped 25 million, and may be lowering its target sales next quarter from 50 million to 30 million. Some are citing the device’s unusually high price of $999.

And Apple’s other new iPhone, which was released in September, the iPhone 8, did not manage to generate the usual customer enthusiasm associated with new Apple product releases. 

DISCUSSION QUESTIONS: Will Apple’s slowed-iPhone controversy leave a major or minor blemish on its reputation? What steps should the company take to minimize damage from the controversy?

Braintrust
"Whatever the PR excuse may be, this is going to be a tough one to sweep under the rug..."
"Dealing with the issue openly, honestly and quickly is always best."
"Crisis management is all about how you handle the issues. In Apple’s case I have not heard that the company has done any significant damage control."

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14 Comments on "How should Apple manage its throttling scandal?"


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Mark Ryski
BrainTrust

Apple fans are so ardent, I suspect that Apple will ultimately get a pass over this issue. However, an issue like this can seriously damage a brand and Apple is well advised to be very careful in how it manages this issue. Dealing with the issue openly, honestly and quickly is always best.

Michael La Kier
BrainTrust

While Samsung could weather the storm of spontaneous combustion and the resulting hits to their brand (how many times did you fly and hear specifically that the Samsung Galaxy Note 7 was prohibited by the FAA?), this could be different for Apple. Obviously Samsung did not intentionally create phones that burst into flames just to sell more. In this case, Apple has broken consumer trust. We all get that technology is built for obsolescence, but when the manufacturer does things to hasten their own products’ demise it certainly leaves a bad taste in consumers’ mouths.

Brandon Rael
BrainTrust

Apple has always stealthily mitigated any bad press over the years. Their fan base has always stayed very loyal to the brand not only due to their outstanding products, but due to the trust and transparency the brand has built over the years. This particular public relations issue could be resolved by an open an honest statement coming from the top of the Apple organization.

There are plenty of incentives for consumers to upgrade to the latest iPhone, however, being forced systemically is something that is concerning to say the least.

Max Goldberg
BrainTrust

Apple is at an inflection point. It has a devoted consumer base, but no new blockbuster products headed through the pipeline for that base to buy. When coupled with the throttling issue, the company has the makings of a PR nightmare. Apple needs to come up with a fix to restore full speed to older phones and perhaps a low-cost battery replacement program to restore consumer confidence, while focusing on a next big thing. As an Apple user and shareholder, I’m concerned.

Ian Percy
BrainTrust

Well said Max, I totally agree … to the point where I’m considering backsliding to a PC. A thumbs-up from me!

Lee Kent
BrainTrust

I too agree with Max. It is time for Apple to start looking at new offerings. The throttling is not the only thing that is getting customers riled. How about when your personal ring tones disappear with a new version and Apple does nothing to fix the problem? I could go on but it’s safe to say that this is not the way to win friends and new customers. For my 2 cents.

Dr. Stephen Needel
BrainTrust

Apple should fess up and move on. And perhaps not introduce so many new versions so quickly.

Ian Percy
BrainTrust
First, a sad reminder that we’ve come to a point in society where it has become the norm to not trust anyone or anything. It is pretty well impossible to name an institution that is beyond reproach. Apple has, arguably, the most loyal fan-base of any retail entity, but it looks like even that has been shaken. Here’s the thing. ALL big successful corporations (and individuals) eventually die from outside forces or from inside forces. When it’s an externally caused death it’s because they became irrelevant to the changing world around them. Their past success becomes the biggest barrier to innovation. As we’ve seen in a current TV commercial, “Why should I get a new phone when my flip phone still works?” When it’s an internally caused death it’s usually because of unchecked ego and greed. As even ancient kingdoms learned, you can tax the peasants only so much until they rise up in revolt. The innovation and design that many of us love about Apple is not bullet proof. Incidents like this one cause… Read more »
Camille P. Schuster, PhD.
BrainTrust

The battery problem is one of having employees that were not well-trained. I know of people who have gone to the store and were told it was a problem with the battery, were sold batteries or had batteries replaced. None of these people were told to buy new phones. If the employees did their job correctly no one had to buy a new phone and they would have had batteries that kept their phones from shutting down.

In terms of iPhone sales, can the number of units sold really be calculated separately since they were announced at the same event and made available a few weeks apart?

Dan Frechtling
BrainTrust

Some tech writers are excusing the issue by saying this is a lithium-ion chemistry issue, not an Apple issue. Nothing could be further from the truth.
Before the launch of the iPhone in 2007, mobile phones and PDAs (personal digital assistants, as they were called at the time) typically allowed users to swap in new batteries similar to the way a remote control works.

For design aesthetics or other reasons, Apple chose to seal the case completely. Now it takes a professional or a new phone to do what users used to be able to do themselves.

Pre-2007 batteries were replaceable because they wear out. And they still wear out. Apple may have placed a bet that battery technology would advance fast enough or software would smooth out power use so that users wouldn’t notice. The secret is now out, and Apple needs to do the right thing and offer free replacement batteries in retail stores.

Steve Montgomery
BrainTrust

Crisis management is all about how you handle the issues. In Apple’s case I have not heard that the company has done any significant damage control. Had they announced that they were offering an update to slow down the phones to prevent the sudden shutdowns people might have elected to install it and thanked them for it. This could have made what turned into a negative into a non-event.

Will the Apple faithful get past this? Of that I am certain. However, this combined with the lack of appeal of the iPhone 8 and the cost of the iPhone X does seem to indicate a trend of missteps for Apple. This may impact the phone purchase decisions for the rest of us.

Jasmine Glasheen
Staff

From a consumer perspective, it’s disconcerting to see an admission that a company in which so many of us have invested is intentionally interfering with older models. Whatever the PR excuse may be, this is going to be a tough one to sweep under the rug … especially when Google seems dead set on manufacturing viable alternatives. Frankly, I’ll be doing quite a bit of research before my next iPhone upgrade.

Craig Sundstrom
Guest

Minor…very minor. Indeed, there’s not even a consensus that they did anything “wrong.”

Min-Jee Hwang
BrainTrust

Apple is in a tough place right now. With their HomePod launching after the holidays (at a price point much higher than established products on the market) and lackluster sales of iPhoneX and 8, this is the last thing they needed to do. A genuine apology that offers solutions instead of excuses is in order to help them rebound from this. And I agree with others that launching new products and revolutionary features will also improve consumer confidence.

wpDiscuz
Braintrust
"Whatever the PR excuse may be, this is going to be a tough one to sweep under the rug..."
"Dealing with the issue openly, honestly and quickly is always best."
"Crisis management is all about how you handle the issues. In Apple’s case I have not heard that the company has done any significant damage control."

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