Apple better give iPhone 4 owners free cases, say crisis experts

Company is 'perceived as arrogant,' says PR specialist, needs to come clean

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Lukaszewski agreed that Apple could most easily reverse the negative publicity over the iPhone 4 failings by giving away cases. But a full product recall, which some have speculated might be the only way to appease consumers, is "totally silly, totally out there," Lukaszewski said.

"Apple does know how to solve problems," said Lukaszewski. "They've faced things like this before, but this one is really public. I think a greater concern customers should have is the lack of service by AT&T."

Apple met its previous most-notable iPhone public relations problem in 2007 when, less than two months after the introduction of the original model, CEO Steve Jobs announced a $200 price cut for the 8GB iPhone. Consumers who had already purchased the iPhone at the original $599 price were outraged, and flooded Apple's support forum with angry messages.

The next day, Jobs said that Apple would give a $100 credit to the company's online store to all current iPhone owners, and also acknowledged Apple's mistake. "We need to do a better job taking care of our early iPhone customers as we aggressively go after new ones with a lower price," Jobs said in an letter dated Sept. 6, 2007. "Our early customers trusted us, and we must live up to that trust with our actions in moments like these."

Consumer Reports, the product testing and rating magazine, joined Grabowski and Lukaszewski in urging Apple to stifle the newest iPhone brouhaha by handing out free cases, which it said will solve the reception issues.

"We insist that Apple pays for the fix, not consumers," said Mike Gikas, a senior editor with the publication in an interview Tuesday. "The best solution would be for Apple to issue a case with the iPhone 4, or give consumers a credit at its online store for one."

Several Wall Street analysts, worried over the impact the continuing complaints may have on Apple's stock price, have also chimed in.

"We think that Apple's most appropriate response would be for it to issue rubber (or any other non-conductive material) cases to all iPhone 4 owners, and on all new iPhone 4 sales," said Toni Sacconaghi of Bernstein Research in a Wednesday note to clients. "It could be done immediately, would directly address the Consumer Reports concern, and would be financially immaterial."

Sacconaghi said that it would cost Apple no more than $1 per unit to hand out Bumpers, significantly less than his estimates of $75 per iPhone 4 for an in-store fix or $250 per unit for a full recall.

By all accounts, the iPhone 4 has been a huge hit. In the first three days of availability, Apple and its carrier partners sold 1.7 million devices, the most of any of its annual models. Currently, the iPhone 4 is back-ordered three weeks at the company's online store.

But the company also faces multiple lawsuits over the iPhone 4's reception, including a case filed just days after the smartphone's launch by a pair of Maryland residents who charged Apple with knowingly selling defective phones.

"Apple's been in holes like this before," observed Grabowski. "If there's any company that can bounce back, it's Apple. I'm not saying that this won't have an impact, but the reports of their demise are premature, to say the least."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@ix.netcom.com.

Copyright © 2010 IDG Communications, Inc.

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