iPhone Example of Bad Tech Practice: Selling Beta

(MoneyWatch)  Ars Technica has what should be for Apple a daunting list of problems that appeared within the first month of the new iPhone. The company will probably address a number of these in time, but chances are that nothing fundamental will change with the way it does business now or when the next version comes about. That's because the entire technology industry wants to start in the new film, Selling Beta.

It's a story about companies that want to dazzle people and make money by the freighter load. How they achieve it is high concept: hype products insufficiently tested and developed, working out the bugs as people buy them and get locked in. It seems to have worked for many companies over decades, only there are a few problems:

• Companies and analysts point to "successes" and claim that short turnarounds for new products are necessary. But how many consider how well new offerings might have done with a different approach, like a solidly tested design without bugs? It's not as though a company doesn't thrash about for an extra month or two (or longer) as it deals with the fallout. You may never know for certain how an alternative would have done, but smart business means considering whether there are more better ways of making money.
• Every time you sell a product with problems, you create expenses for yourself as you are obligated to fix them afterward, or at least handle the customer complaint. Those expenses are separate from the cost of each unit, but they shouldn't be. Looking at lifetime costs of a product, just as you'd look at lifetime value and cost of a customer, is a worthwhile exercise. It doesn't take too many calls at $50 to $100 internal cost apiece to make not selling a product a more profitable activity than selling.
• Customers may like cool products, but they love cool products that work. Look at long periods of Japanese growth and eventual dominance in autos and consumer electronics. Companies there listened to American ideas about statistical quality control, improved their products, met and exceeded customer expectations, and attracted consumers. U.S. companies went out of business or lost market share.
• Bad word of mouth travels fast. You might sell a lot of products, but that doesn't mean you aren't losing even more sales to people scared off by horror stories. For all the gazillions of iPhones moving out the door, Apple doesn't even make the top five US-selling handset vendors, though it's not as though that Apple is non-existent. You could say that the company lags because of price points and not having lower end models, but I have a hard time believing that widespread negative press has no impact. And with R.I.M continuing to work at expanding its products appeal, Apple could face long-term market consequences.

I don't meant to pick on Apple alone because this is an endemic issue for the business culture in high tech. But consumers have become more discerning over time. That they continue to buy products says less about vendors' "clever" business practices than it does about the public's low expectations. If companies made some significant improvement and started to sell more products that were reliable, perhaps the industry could create a new story that leave people asking for a sequel.

Complaint department photo courtesy morguefile.com user pennywise through standard site license