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Fair warning

25 September 2014 By Rob Cox

Shareholders have given Apple boss Tim Cook about 25 billion reasons to worry. That’s how many dollars they have wiped off the company’s stock-market value in the past two days after a botched system update and reports its new iPhones can be bent. It’s a small hit for a $600-billion-odd company. But the 2012 Apple Maps fiasco is a reminder that one-off snafus can presage prolonged pain.

On their own, neither problem necessarily constitutes an impending disaster. Exerting pressure on the longer, thinner iPhone 6 Plus – say by putting it in a back pocket and sitting on it – smacks more of user error – or a YouTube dare – than anything else. It is, though, embarrassing that a software update to fix some bugs in Apple’s new iOS 8 operating system had to be pulled on Wednesday because it contained a flaw of its own.

All tech firms – even Apple – have launch problems at some point. And unlike automotive companies, they tend not to result in dead customers. Founder Steve Jobs dropped the price of the original iPhone by $200 soon after its 2007 launch, angering many who’d bought it already. Its iPhone 4 sported an imperfect antenna design that prompted the company to provide rubber bumpers free of charge. And Apple’s premature move two years ago to replace Google Maps with its own crummy version left people annoyed and, at times, literally lost.

That last blip prompted a $20 billion drop in Apple’s value within days. A speedy and robust fix could have stemmed the red ink there. Instead, an apology and an exhortation to use rivals’ apps had investors call into question new leader Cook’s suitability for the job – and whether Apple’s halcyon days were over. Within 10 months the stock had lost nearly half its value.

Cook has since succeeded in winning back the confidence of investors. The stock reached its pre-maps-fiasco levels with the latest product rollout. But if the goods he greenlighted aren’t up to snuff, Apple’s board will question whether an operating system is the only thing that needs recalling.


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