Apple’s iPhone 4 Reception Problem and Subsequent Response – A Recipe for Organizational Crisis?

Iphone4 Unboxing

The dynamic and extensive history of Public Relations practice is replete with cases of organizations who have, as scholars Heath and Millar write, “lost brand equity, suffered damage to products, services, and lost issue positions because of inept handling of crisis preparation and response.” Is Apple fated to join these mismanaged cases of yore?

Apple’s now well-known iPhone 4 reception issue first surfaced hours after the phone’s release on June 24th and only recently (8 days later) has Apple seemed to acknowledge the legitimacy of the complaints and offer a murky explanation (apologia?) for the highly publicized problem in a posted open letter.

Apple claims it is not an antenna problem but instead a flawed software formula that displays the handset’s signal strength, so that in most cases the phone shows two more bars than it actually should. A software fix is due in a couple of weeks according to the company. But has the damage already been done?  Does the signal and reception issue itself constitute an organizational crisis for Apple? And if the actual product flaw doesn’t, what of Apple’s response to the issue thus far? Taking all this into account, is this then an organizational crisis?

To provide some clarity and context to these questions before we precede, here is the definition of crisis that Millar and Heath provide:

An untimely, but predictable event that has actual or potential consequences for stakeholders’ interests as well the reputation of the organization suffering the crisis.

Also, if you look at the rhetorical definition of crisis and its approach you see that the responsibility for a crisis, its magnitude and its duration are in fact contestable – by both the organization and its publics. This gives the organization, such as Apple, an opportunity to effectively manage the crisis before, during and even after the crisis event occurs. This approach stresses the role that message development, framing, people’s interpretation and information provided to publics play in organizational preparation to crises and the subsequent response. Therefore, is this indeed a crisis for Apple, and if so, has Apple appropriately regained control and managed the crisis through its communications response?

Apple’s Response to Antenna/Reception Complaints

First, I would venture to say that this is indeed a crisis for Apple. The poor reception and dropped call problem is untimely (no time is good for a crisis quite frankly) but it could have been predicted. Design flaws happen, it’s not unheard of – that’s why a specific crisis communication plan should be in place beforehand. Also, and more importantly, stakeholders (e.g. consumers who bought the phone, stockholders, vendors etc.) have been harmed and Apple’s reputation has certainly been damaged. Apple now has to spend time, money and energy on issues (such as a lawsuit) that it normally would not have to during a time of normal organizational narrative and business – this signals a crisis.

But what really has stoked the fire, and is even more unforgivable and damaging in terms of reputation, has been Apple’s dismal initial and continuing response to the firestorm. Most recently, the Letter from Apple regarding the troubled iPhone 4 and its reception was posted on their company site, but only after a poor attempt by Apple and CEO Steve Jobs to respond to the growing complaints concerning their flagship product by telling consumers to “avoid gripping it in the lower left corner in a way that covers both sides of the black strip in the metal band.” Apple also initially refused to drop the restocking fee (%10) for customers returning the phone within the 30 days after purchase. Worse still, they had offered a $29.00 “bumper” case as a solution to gripping the side of the phone and therefore causing the phone to not hold a signal and drop calls etc. It’s the end users problem. Nice.

Ethical and Effective Crisis Communications

Getting back to the questions I floated above. The manner or form of an ethical and effective crisis response is truthful, timely, sincere, and voluntary. Initially, Apple glibly responded that some loss of signal from gripping a handset is “a fact of life for every wireless phone.” Before publicly responding to this issue, did Apple in fact know that there was indeed a bigger problem involved besides this “fact of life”? Computerworld reports that in the Maryland lawsuit, mentioned above, Apple is accused of knowingly selling a defective product and breaking its warranty promise. If it comes out that Apple did know something was wrong with the phone it could be damaging and definitely doesn’t constitute a truthful response.

Also, sincerity and understanding of the customers plight seems to be lacking here. For example, many customers felt that by being told they were “holding it wrong” Apple was patronizing them, and therefore, that Apple didn’t have a true intention of making it right. This is a problem. A leaked Apple internal memo has also contributed to people’s sense that the company isn’t concerned with “appeasing” their customers.

Moving on. The content of an ethical and effective crisis response includes fully accepting responsibility, expressing regret, asking for forgiveness, fully disclose information related to the event and offering to perform an appropriate corrective action. Apple thus far has done a poor job on all counts. But among other things, please consider the offering of appropriate corrective action. Is making your customers buy a rubber case after spending hundreds of dollars an appropriate corrective action? Also, in the letter released on Apple’s site it fails to explain why holding the phone with your left hand even causes dropped calls. Many people have reported that they were able to replicate the terrible reception. Therefore, these specific complaints should be addressed and taken seriously for it to be an ethical response and effectively managed crisis. I would also venture to guess that this isn’t fully disclosing all that Apple knows about the issue – another strike.

In conclusion, I offer that Apple’s overall crisis communications response and proposed remedy for the iPhone 4’s obvious flaws have made its key publics even madder and the magnitude of the crisis more serious. I also predict Apple’s latest response with their “apology” letter won’t return the organizational narrative to normal anytime soon. Therefore, their ineffective crisis response will extend the duration of the crisis. What do you think?

Photo credit: denharsh

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2 comments on “Apple’s iPhone 4 Reception Problem and Subsequent Response – A Recipe for Organizational Crisis?

  1. David Lurie says:

    Great article Adam.

    There’s a quote I love about Watergate: “It wasn’t the scandal, it was the coverup”. If Apple pull off making this the consumers problem, that’ll be incredible. But if not, by delaying their response, the inevitable damage will get worse and worse.

    This type of thing destroys a company.

    And worse, as Apple have become dominant, and Steve Jobs has become ever more arrogant, there are many Apple users like myself that do, a little, wish to see the company suffer over this. It’s a little BP-esque.

  2. adampcoulter says:

    Good points David. I agree that by delaying their response and then finally offering an unethical & ineffective one “the inevitable damage will get worse and worse.”

    Great quote too!

    Thanks,
    Adam

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