Apple's perfect image, broken?

Apple CEO Steve Jobs holds the new iPhone 4 after he delivered the opening keynote address at the 2010 Apple World Wide Developers conference

TEXT OF INTERVIEW

Kai Ryssdal: Mighty might Apple is getting a lesson in public relations humility this week. Consumer Reports came out yesterday and told people not to buy Apple's latest version of the iPhone. Seems it doesn't actually work all that well as a phone. There's an antenna glitch that drops calls when you touch the lower left corner.

But, there is some good news if you've already dropped a couple of hundred dollars on the thing. The ever-helpful folks at Consumer Reports suggest this fix: All you have to do is cover the corner of the phone with duct tape.

Marketplace's Steve Henn on the line from our outpost up in Silicon Valley. Hey Steve.

Steve Henn: Hey, how are you?

Ryssdal: I'm alright. So listen, Apple has its own explanation right, for these dropped calls?

Henn: Yeah, that's right. You know, a little over a week ago, Kai, Apple issued a statement blaming the sudden dropped calls on a software glitch. They claim the phones were really displaying more reception bars than they should be showing. So people who were standing in really weak signal areas thought that they had a fine signal, and they were dropping calls just because they lost their signal -- not because of where their hand was on the phone.

The problem is that Consumer Reports put these phones in this radio-wave proof box, tested them and found out that that just wasn't the case. The antenna just doesn't work the way it should when you put your hand on that magic spot in the lower left hand corner.

Ryssdal: Obviously you have done your due diligence. You called Apple. What are they saying?

Henn: Well that's the thing, you know, not much. Apple's press folks didn't return my calls or e-mails, and as far as I know, they haven't issued any kind of public response to the Consumer Reports review at all.

One public relations expert I talked to who's dealt with the company a little bit in the past said Apple's always been arrogant, but they've gotten away with it because they've always also made really excellent products. But right now, it's a little harder to get away with that attitude, you know, if your phone doesn't work just not responding isn't a viable option. So this is pretty quickly becoming a bit of a PR nightmare for the company. Earlier today CNET, the gadget review site, called on Apple to issue a recall, and at one point I think the stock was trading down more than 2 percent today.

Ryssdal: Yeah and it struggled back a little bit today approaching the close, but are we now at the point where -- and I don't know if this will fly with the Apple true believers -- but the blinders are off and people are really thinking about Apple as a regular company now?

Henn: Well maybe. You know they do have just a huge number of fanboys and fangirls who will probably never think of it as just a regular company. But the way the company's responded has begun to chip away at that magic image. For example today, company moderators on Apple's support pages were apparently deleting messages that pointed to the Consumer Reports article. And that's become a pretty big story of its on. And it just has this sort of Orwellian feel that you find yourself thinking about that 1980s Super Bowl commercial with that woman wielding a sledge hammer for digital freedom. And that image I think is just gone. So the PR hits keep piling up.

Ryssdal: It is worth pointing out though that Apple at the close today was still a $250-plus stock. It's up there in, you know, Amazon.com days of the boom sort of territory.

Henn: That's true and I think the real question is: Will consumers really care about this Consumer Reports brouhaha? And Apple seems to be betting that they won't. People keep buying the phone, the phone offers video chat, it's being backed up by this brilliant marketing campaign. Commercials featuring kids being adorable. And this isn't the first time iPhones have been dissed by reviewers and sales have done just fine. So you know, it remains to be seen if this is really going to cause lasting damage for the brand. But lots of companies -- Verizon and Google among them -- are hoping it does and it's worth noting that the Droid X, Google's new phone launches Thursday, so we'll see.

Ryssdal: Marketplace's Steve Henn talking about the Apple iPhone saga. Steve, thanks a lot.

Henn: Sure thing.

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