User communities are powerful. They can be the silent minority or the loud majority and they cause an impact to the bottom line of a business. Apple is a fine example of why supporting their user community could have saved them $10 million, preserved their image and provided stellar customer service. I’ve previously criticized Apple for their smoke and mirrors press release and the non-existent customer communication at the time (and thereafter) the iPhone 4 Launch.
For publicly traded companies, investors often listen to the buzz, market news and analysis as to whether they will invest more or bail out while its good. It’s not rocket science, it’s a measurement of trust and confidence. It’s not personal; it’s business.
Apple’s (AAPL) stock performance and public events are listed below:
June 24, 2010 — $271 — Launch Day for the iPhone 4. A number of issues began trickling in from about 6AM on launch.
June 25, 2010 — $270 — The next day following widespread attenna and production issues reported by users.
June 28, 2010 — $268 — The media (and more users) report about the launch day issues with the iPhone
June 29, 2010 — $264 — Apple states the are researching the reported issues and gracefully tries to smother the validity of the reports.
June 30, 2010 — $256 — Users (in unison) begin requesting relief for the antenna issues. I and many others have long suggested they issue free bumpers.
July 1, 2010 — $254 — Apple’s CEO Steve Jobs continues to respond ad-hoc to user’s complaints via email by dismissing the issue and the severity of it. The blogs eat it up.
July 2, 2010 — $250 — Apple’s official response is provided about the iPhone 4 antenna issues. Believe it or not, the only fix was to change a few images on the Signal Strength (increase the picture) in the upcoming software update, 4.0.1.
July 2 – 5, 2010 — The blogs scoff at the press release. More media reports, industry chatter on the solution, competing devices continue. Essentially, no other upcoming phones appear to have signal issues.
July 5, 2010 — $246 — This is the lowest the stock price reaches as it’s clear many investors are managing their gambles on the launch. Rumors of a mass exchange/refund surface. In addition to the beginning of class action litigation.
July 6, 2010 — $251 — Apple remains silent, the blogs marginally let go of the complaints since the solution is to wait for the iOS 4.0.1 update to give Apple the benefit of the doubt.
July 7, 2010 — $250 — Consumers, investors and the media wait patiently.
July 8, 2010 — $262 — The blogs share advice from users for “free” fixes such as using duct tape as a solution to prevent antenna issues. Continued critcism about the upcoming software update mounts as RF engineers state it’s physically not possible.
July 9, 2010 — $256 — The issue is wearing thin of the blogs and it subsides a bit. Nothing breaking for one camp or another. Apple remains mute.
July 12, 2010 — $258 — Consumer Reports publishes a report that the iPhone 4 is not a phone they could recommend due to the flaws in the antenna. As a form of validation, the blogs eat it up and the media is very receptive to the rather traditional organization. At this point, Apple has no choice but to respond. Deep breath . . .
July 13, 2010 — $256 — Apple loyalists go on the offensive and dispute that the Consumer Reports still rated the iPhone 4 as the highest in their rankings and reiterate the solution of buying a Bumper or another case. The media syndicates the original story.
July 14, 2010 — $249 — Consumer Reports responds to the criticism, validating that the Bumper absolves the antenna issue. The blogs affirm this as well including Apple. Apple invites top-dog industry bloggers to their Cupertino headquarters to address the issue.
July 15, 2010 — $248 — The short notice press conference piques the interest of their critics citing something “big” will be announced. (Steve Jobs is known for dropping bombshells). The press conference spread through the media as a step the company is taking to address the issues.
July 16, 2010 — $253 — Apple hosts press conferenced and even provided tours of their RF range testing lab (to refute the claims that they didn’t test the phone). The bombshell is Apple will provide Bumpers at no cost to customers — and those who purchased are eligible for refund. He provides insight on the overall success of the launch, but it’s clear at this point sales have slowed.
There you have it. Apple’s user community was correct in their analysis of the device and their projected solution. Some analysts have considered Consumer Reports as the “last straw” that Apple had with this. I disagree; the CEO’s responsibility is to perform for his or her investors. This would make for a very abysmal quarterly earnings call, more unloaded stock. I don’t have to tell you that Jobs could have been told to walk the plank on this launch.
A user community can serve as a wealth of intelligence for a company to listen to. Likewise, if untamed or ignored, they band together and come to the front door with pitchforks and and Molotov cocktails in hand. The catalyst in all this is good communication and the ability to manage expectations and handling concerns at the first moment crisis strikes, not three weeks later.
So, how much money did Apple lose? Assuming a launch is the biggest spike, it would be expected to climb naturally at a reasonable pace. This? It lost $18 per share, which is about 7% of the company. From one of my financially-sound friends, that’s like approximately $10 million of the company’s value. Ouch.
I don’t know how much each Bumper costs to provide, but I imagine no more than $2.00 each. Multiply that by three million units, that’s $6 million. If Apple committed to providing the Bumpers on day two, they could have retained another $4 million dollars, not to mention their user’s, the industry’s and their investor’s confidence.
My math could be wrong – so correct me if needed. The whole point here is to show the importance of listening to customers. Successful companies need to take a stance of leadership and advocacy in solving problems — not disproving them. And for the record, I love my iPhone 4. Only wish Apple didn’t have to drag everyone through this.
[Image credit: BenM.at]