Putting Profits Before People: Just How Much Bad News can Apple’s Brand Withstand?

The damaging news just keeps flowing out of Foxconn’s “employee barracks” in China, where Apple’s iconic products are made.

In August 2012, the Fair Labor Association released the results of an investigation it had conducted at Apple’s request after reports of employees rioting and committing suicide over excessive work hours, inadequate compensation and unsafe working conditions.

The FLA reported that Foxconn had addressed most of the problems regulators said must be fixed, including ergonomic breaks and equipment redesign to prevent repetitive stress injuries, cutting excessive overtime hours and updating safety and equipment-testing policies.

But new trouble at Foxconn is creating yet more bad publicity for the Taiwan-based manufacturer – and for Apple.

The Economic Policy Institute reported earlier this month that the FLA’s assessment of Foxconn’s progress was too “rosy,” that high demand for the much-hyped iPhone 5 has essentially undone what few improvements have been made and gave a sharp criticism of the most valuable company in history:

“The paramount issue remains whether Apple will ever choose to apply its legendary business prowess and spirit of innovation, and its enormous financial clout, to the goal of protecting the basic human rights of the people who make those products."

Ouch.

The news comes at a time when the gadget giant is dealing with several PR hits it has taken over the past few 

months.

• In early September 2012, during the run-up to the big announcement of the iPhone 5’s impending release, Forbes reported that Apple’s patent court battle with Samsung was drawing criticism even from its fans, many of whom felt Apple is filing frivolous patents and is afraid of Samsung’s competition.
• Shortly after that the Maps debacle that left many befuddled iOS 6 users “iLost” dominated tech media for several weeks.
• More recently, research firm Strategy Analytics released a report showing that iPhone owner loyalty is in decline, with 75% of Western European iPhone owners planning to buy their next phone from Apple, down from 88% last year. In the US, repeat purchase intentions have also declined since 2011, from 93% then to 88% now.
• On November 8, former Apple exec David Sobotta told CNet that Steve Jobs’ successor as CEO, Tim Cook, is a technological “lightweight.”

And now there’s the latest episode in the ongoing Foxconn saga. If human rights violations continue unchecked at Foxconn, it could mean a very serious hit for Apple notwithstanding the powerful halo effect I’ve written about that seems to protect the company’s reputation and bottom line.

So I am in full agreement with the sentiment the EPI investigators expressed in closing their report. If Apple were to use its huge economic and cultural clout to force Foxconn to truly improve conditions at its Chinese factories – and I mean improvements verifiable by independent investigators, not those acting at Apple’s behest – it would not only make worker’s lives better (the most important thing), it would have the side effect of being a great PR coup for the company.

Pushing to put people before profits could protect Apple’s halo and advance its once-untarnished reputation. Will the tech behemoth put aside shareholder pressure and have the guts to do it?  I don’t think Apple will, but in this case, I would love to be proven wrong.

What role do launch events play in a mobile device’s success?

The following article by Chantal Tode, Associate Editor of Mobile Marketer, originally appeared on Mobile Marketer on 10/23/12.

Apple is expected to launch the so-called iPad mini today at what will likely be a well-orchestrated event showcasing how the product impacts consumers’ lives. The company is the acknowledged expert at using such events to drum up excitement for its products although other manufacturers are increasingly copying the strategy.

Apple has nearly perfected the launch event, using them to drive anticipation and keep its name and the product in the news for months. More recently, the strategy has been adopted by Amazon, Samsung, Google, Nokia and Microsoft, among others, who are looking to drive product sales but have not yet perfected the strategy.

“Apple has been doing these events for many years – they were kind of a hallmark under Steve Jobs, who was a true impresario of these product introductions as theater,” said Noah Elkin, principal analyst at eMarketer, New York.

“Others have studied at the feet of the master and have begun to put on events of a similar caliber,” he said.

“The ones that we’ve seen in the past year from Amazon and Microsoft clearly read from a similar script in terms of how the product is being introduced, what the focus of the event has been and the similar cast of characters that appears at these events.”

The mobile experience

Apple’s events are successful for a variety of reasons, including that they focus on the mobile experience over the technology itself and they help build a feeling of community around the Apple brand.

The attraction of these events for manufacturers is that they can garner a lot of attention from analysts, the media and consumers and, hopefully, help drive sales.

For example, Samsung launched the Galaxy Note last year at the IFA in Berlin last year and sold 5 million units between the start of Q4 2011 and Q1 2012.

 Amazon held a launch event for the Kindle Fire HD in September

When well-executed, these events can play a key role in the success of a new product launch.

Some of the key characteristics of Apple’s events that can serve manufacturers well is dedicating a good amount of time to showing product details – more than is possible at a trade show – and bringing in guest speakers.

A key focus for Apple’s launch events is to focus on how a device will improve a consumer’s life over product specs.

“Other manufacturers are trying to follow Apple’s lead because they see how effective it is,” Mr. Elkin said. “Amazon at its recent Kindle Fire event listed relevant specs but really tried to emphasize its ecosystem of content, which is its key competitive advantage in the marketplace and probably the element that is most relevant and compelling for a consumer audience.”

Getting it right

Manufacturers are also following Apple’s lead when it comes to the script for these events and bringing on stage various members of the team who have been involved in some aspect of product development, who each have their own role in the event and who work well together.

For a successful launch event, it is also crucial to insure the presentation media are working perfectly and in sync.

“These things make for a great launch event – which not only garners attention for the product, it also boost the reputation of that company by making it look competent and efficient,” said Vanessa Horwell, chief visibility officer of ThinkInk PR, Miami Beach, FL. 

“Today’s tech bloggers and media are ruthless when it comes to imperfection or flaws,” she said. “Mobile companies should know this and must be prepared to deal with a media ‘assault’ if the launch of their product is premature.”

While manufacturers can reap many benefits from a big launch event, there are also some potential pitfalls.

For example, technical glitches during an event can undermine a brand’s attempt to present itself as a technology expert.

Companies can also run into trouble when they make claims that are not true.

For example, at an event in early September, Nokia showcased photos and a video that it said were captured by the brand-new Lumia 920 using its PureView camera.

However, bloggers quickly discovered that the video and photos were shot with other equipment. As a result, Nokia found itself forced to apologize and launch an internal probe to address the mishap.

“It is very difficult to conceal anything in today’s day and age,” eMarketer’s Mr. Elkin said. “Reporters and bloggers are going to turn the device inside out and are going to investigate every single claim about its superiority.

“In the case of Nokia, the images that were posted, which turned out not to have been shot with that particular smartphone camera, forced it to make an embarrassing retraction,” he said.

Maps mishap

In other cases, a feature talked up at launch event simply may not live up to expectations.

For example, at the recent launch event for the iPhone 5, Apple talked up its new Apple Maps, which is replacing Google Maps. When Apple Maps’ performance did not meet expectations, Apple CEO Tim Cook issued an apology.

“The one potential danger is that when you do one of these big launch events is that because you are bringing a lot of attention to your brand and the product, it sets the expectations of the audience at a very high level,” Mr. Elkin said. “If in the case the product fails to live up to expectations created at the launch event, it can put the brand in a very difficult position.”

Despite, the potential pitfalls, these launch events are likely to continue to proliferate because they can help a company make its executives seem more approachable.

The danger is to make sure the product represents a big enough advancement to warrant its own special event.

“It’s not easy or cheap to perfectly juggle all these elements and getting them to fall in the right place at the right time,” ThinkInk’s Ms. Horwell said. “Any part of this process going awry hurts the reputation of both product and company.

“And, of course, a company must make sure everything every function of the product – a complex process when you’re dealing with tech gadgets that have a thousand and one features – is absolutely ready for market,” she said.

The following article by Chantal Tode, Associate Editor of Mobile Marketer, originally appeared on Mobile Marketer on 10/23/12.