Apple Will Learn that Secrecy Has Its Price

(MoneyWatch)  Dealing with customer problems is always difficult to one degree or other. But when you're in the land of pure consumer products, you need to learn to fix them without creating broader ill will in the process. An alleged recent attempt by Apple to silence one family about a serious product issue shows just how far the company will have to go if it wants to continue the successful move out of its own fan base into a far wider group of customers who may not be so forgiving when things go wrong.

The Times of London has the story an 11-year-old whose iPod literally exploded and Apple's attempt to make conditional a refund or replacement only if the family would agree to refrain from saying anything publicly.

Ken Stanborough, 47, from Liverpool, dropped his 11-year-old daughter Ellie's iPod Touch last month. "It made a hissing noise," he said. "I could feel it getting hotter in my hand, and I thought I could see vapour". Mr Stanborough said he threw the device out of his back door, where "within 30 seconds there was a pop, a big puff of smoke and it went 10ft in the air".

After speaking to a number of people at Apple, the company sent a settlement letter that would have required all family members to keep the agreement and matter confidential.

Trying to wipe away the existence of a problem may be a frequent reaction by corporations, but it is often a mistake, especially when the people involved refuse to sign and go to the press. This is part of what appears to be a history of Apple trying to cover up evidence of serious problems with some of their products overheating.

Just last month a Seattle reporter claimed that Apple was preventing her and others from getting information from the Consumer Product Safety Commission about cases of iPod batteries catching fire. "Apple's lawyers filed exemption after exemption" in an attempt to keep the Consumer Product Safety Commission from releasing any information, according to the reporter.

Back in June, I reported about an ongoing problem of iPhones overheating that appeared to stretch back two years, pretty much the entire life of the product. The overheating extended into the latest generation of the device, with the cases of some units actually discoloring from the heat. The only acknowledgment that I've been able to find on Apple's support site is that handsets can get warm when being used or charging.

Apple is probably the single most secretive and controlling company I've ever run across, and that includes times I've written about the defense industry. It has clearly served them, but the question is how well. As I reported in a story on the site How Online, which covers issues of ethics and values in business, trying to hush things up can be a big mistake:

"I think of corporate apologies as plan A or plan B," says John Kador, author of the upcoming book "Effective Apology." "Plan A is to hunker down and hope that no one notices; plan B is where you act on the basis of transparency, accountability, humility, and you turn the conditions of accountability and transparency to your benefit."

One of the problems from a corporate view is that people aren't just interested in the money. If they perceive that something is wrong, they often want it corrected, for others as well as for themselves. Many experts suggest that openly dealing with and solving a problem help the company, both ethically and economically. But open and Apple are two words unlikely to appear in the same sentence.

Apple's approach could make you wonder how widespread the battery problems in its mobile products are. There was the case earlier this year of the Ohio mother filing suit because an iPod allegedly exploded in her son's pocket, burning his leg. How long it will be before more cases come to light and the company begins developing a reputation of building dangerous products. Whether they actually are or not is almost beside the point. Damnation exists in perception, and secrecy fuels negative interpretation.

Not only does Apple reduce its own reputation for creating "quality" products, but it backs a truck of ammunition to the loading docks of its competitors. How difficult would it for another handset or device vendor to create a pretty cutting campaign? Heck, look at what Microsoft did, and it was just pushing the "product value" button. You have to bet that companies out to send Apple reeling are at this moment sending competitive intelligence teams swarming through legal research, finding as many examples of safety issues as they can.

Burning house image via Flickr user 111 Emergency, CC 2.0.