An Apple Story

Insignia wrote a post on apple. From that post, I got an idea to write a post on apple too. Thanks Insignia. You are always my inspiration. But this is different apple. The Apple Company.

Apple, Inc. has been in the news a lot for the past 3 months. Their IPad and IPhone 4 have suddenly become attractive products all over the world. Apple’s profit has skyrocketed. They have become the largest technology company in the world (replacing Microsoft) through market capitalization. The stock is at $253 now and estimated to go over $390 in a year.

Now comes the problem. From day one IPhone 4 has antenna problem. When the phone is held in a certain way the signal drops. At first Steve Jobs, CEO of Apple, brushed aside telling that the customers are holding the phone in a wrong way. Then they came out and said there is a problem with software algorithm used to define the signal bars on the phone.

Immediately, the stock plummeted from $279 to $242. Apple still has not fixed the software problem.

Since announcing the sale in late June, they have so far sold approximately 2 million Iphone 4. Now experts are suggesting different solutions. Some experts suggest that users buy a case ($30) to eliminate the issue. Some others suggest that Apple should issue a free case to those who bought their IPhone4. Apple is sitting on a cash of $42 billion (that is billion) in their checking account with no debt. The cost of giving away free case will amount to $60 million only. This is nothing for Apple.

Some people have suggested that Apple should refurbish all the phones that were sold. This would cost Apple about $200 million. No big deal for Apple.

Then why they are not doing it? If they do anything like this (issue case or refurbish) it would mean admitting that they made a mistake.

Some people are demanding total recall. This is not likely. This is about how you hold the phone and not whether this phone will blow up or not. Experts on crisis management and public relations say that Apple handled the situation very badly. Even if there is nothing wrong, acknowledging the problem is key. Steven Job’s flip remark (holding the phone the wrong way) did not help. Apple had a chance to dictate how this story will be developed. But by ignoring and giving unsatisfactory response to the customers, they have a potential recall on their hands.

PS: I am long on Apple with heavy investment. Hope Apple handles the situation well and come out of this.