Apple faces $2.2m iPad 3 punishment for US-centric blindness

By Jonny Evans

Apple [AAPL] has agreed to pay $2.22 million for misleading Australian customers about the 4G capability of the iPad 3; the chastisement reflects the challenges the company is encountering in truly embracing international markets.

Apple must internationalize

Apple has traditionally always expressed a US-centric focus for its products and solutions.

This has been evidenced by the company's constancy in favoring release of its new toys in the US market first. This isn't a huge criticism, it's well-known the US market has been the company's heartland since inception, but things are changing as Apple grows and its markets become increasingly international.

The internationalization of the company makes it all the more strange Apple chose only to support 4G/LTE frequencies made use of in North America. That's strange partially because 4G networks are far from de rigeur in the US, and odd because 4G (of a different frequency) is already widely-deployed across key markets in the Asia-Pacific. In focusing first on the US, Apple immediately kicked its own ball into its own net. A poor plan.

It is quite natural that iPad fans (and by inference anyone interested in super fast mobile broadband) worldwide aren't yet expert in 4G/LTE deployment in their locations, nor is it widely understood just how fragmented the 4G market actually is. Indeed, some key markets -- including the UK -- don't even boast an active 4G network of any kind at this point.

Those networks that do exist exploit different frequencies, and while it's understandable Apple wouldn't want to reduce battery life by including 4G radios for all the available used frequencies, its down under chastisement reflects the company's abject failure to articulate the true state of the market to its customers.

Australia's Telstra offers 4G services using the 1,800MHz band. However, the iPad 3 only supports LTE on the 700MHz and 2100MHz bands, compatible with networks in the US and Canada.

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[ABOVE: "Designed with next-generation wireless technology, the new iPad connects to fast data networks around the world - up to 4G," states Apple's website. Perhaps it would be better if it put (US and Canada only for 4G) in brackets. This is a triumph of marketing above good sense.]

Ignorance is no excuse

It isn't as if Apple isn't aware of the problems bedeviling 4G support on an international basis. Apple's marketing chief Phil Schiller explicitly referred to all the different kinds of network supported by the iPad 3 during the product's launch. He didn't, however, use that moment to explain the 4G support in the iPad 3 extends only to the US and Canada.

While you can make an assumption that HSPA is more than sufficient for most needs, this wasn't clearly explained, leaving many of those millions of iPad customers who aren't remotely interested in trawling through mobile networking and technology sites on an inevitable trajectory toward disappointment.

Apple might have been able to address this problem within its iPad 3 advertising. It did not. Once again adopting its "one-size-fits-all" approach to such matters it promoted the device as the "iPad with WiFi + 4G", even in markets in which 4G networks didn't exist.

This failure to explain the truth surrounding 4G is the reason Apple is being fined by the Australian regulator. It's also likely the company will face similar punishment from regulators in Europe and the UK. That the company is offering refunds to disgruntled customers and paying compensation to regulators appears to me to prove the firm knows it messed things up.

What's the lesson?

Apple needs to recognize it's place as an international citizen. It needs to move away from its US-centric bias and embrace each territory on its own terms. More essentially -- particularly as it prepares to launch the 4G iPhone 5 -- it must be prepared to be openly transparent about how useful 4G (or any other new feature) is/might be in each market.

What can Apple do now?

The least the company should do is create a page on its website detailing which countries actually are supported by the iPad 3's LTE/4G connectivity. It should also explain what the problem is: the existence of different 4G networks in different countries with some not even offering such networks at all at this time.

It's possible Apple will adopt new breeds of low power 4G baseband chips capable of supporting a wider field of fast mobile broadband solutions, but only if these are available in quantity in time for iPhone 5.

To be fair Apple is improving in its US myopia. The company has a regional presence in most existing countries, employs local media representatives, has a growing international chain of retail stores, and now manages to introduce new products into most major international markets from the get-go. That's quite a bit step -- for example, purchasers in the UK had to wait a month before the original iPod shipped in that country way back in 2001.

However, in order to avoid disappointed customers and angry regulators in future, Apple will need to pay better attention to the unique situations of each territory it chooses to play in.

A company so well-equipped with strengths should allow such nationalistic tendencies to become a weak spot as it seeks to grow its business within international markets. If it fails to address these challenges, then it lays itself open to damaging its hard-won relationship with its global consumer base. And the only beneficiaries of such a step will be competing firms more able to meet such challenge.

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Copyright © 2012 IDG Communications, Inc.

  
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