Learning The Lessons of `Antennagate'

Apple CEO Steve Jobs talks about the Apple iPhone 4 at Apple headquarters in Cupertino, Calif., Friday, July 16, 2010. (AP Photo/Paul Sakuma)
AP Photo/Paul Sakuma
Jean-Louis Gassée, a Silicon Valley veteran, is currently general partner for the venture capital firm Allegis Capital in Palo Alto.

Rewind the clock to June 7th 2010. Steve Jobs is on stage at the WWDC in San Francisco. He's introducing the iPhone 4 and proudly shows off the new external antenna design. Antennae actually, there are two of them wrapped around the side. Steve touts the very Apple-like combination of function (better reception), and form (elegant design).

And now we enter another part of the multiverse. Jobs stops…and after a slightly pregnant pause, continues: The improved reception comes at a price. If you hold the iPhone like this, if your hand or finger bridges the lower-left gap between the two antennae, the signal strength indicator will go down by two or even three bars. He proceeds to demo the phenomenon. Indeed, within ten seconds of putting the heel of his left thumb on the gap, the iPhone loses two bars. Just to make sure, he repeats the experiment with his index finger, all the while making a live call to show how the connection isn't killed.

It's not a bug, it's a feature! It's a trade-off: Better reception in the vast majority of cases; some degradation, easily remedied, in a smaller set of circumstances.

Actually, it's a well-known issues with smartphones. Steve demonstrates how a similar thing happens to Apple's very own 3GS, and to Nokia, HTC/Android, and RIM phones. Within the smartphone species, it's endemic but not lethal.

Nonetheless, adds Apple's CEO, we can't afford even one unhappy customer. Buy in confidence, explore all the new features. If you're not satisfied, do us the favor of returning the phone within two weeks. At the very least, we want you to say the iPhone didn't work for you but we treated you well. If you fill out a detailed customer feedback report, we'll give you an iPod Shuffle in consideration for your time.

One last thing. Knowing the downside of the improved antennae arrangement, we've designed a "bumper", a rubber and plastic accessory that fits snuggly around the iPhone 4's edges and isolates the antennae from your hands. The bumpers come in six colors-very helpful in multi-iPhone 4 families-and costs a symbolic $2.99.

The antenna "feature" excites curiosity for a few days, early adopters confirm its existence as well as the often improved connections (often but not always-it's still an AT&T world). The Great Communicator is lauded for his forthright handling of the design trade-off and the matter recedes into the background.

If you can't fix it, feature it.

End of science fiction.

In a different part of the multiverse, things don't go as well.

Jobs makes no mention of the trade-off. Did he know, did Apple engineers, execs, marketeers know about the antenna problem? I don't know for sure and let's not draw any conclusions from the way Jobs avoids holding the iPhone 4 by its sides while showing it off to Dmitry Medvedev:

Slide Show: iPhone 4

There's a more telling hint. Apple had never before offered an iPhone case or protector of any kind, leaving it to third parties. But now, for the iPhone 4, a first: We have the bumper…at $29, not $2.99. (And which, by the way, prevents the phone from fitting into the new iPhone 4 dock.)

As usual for an Apple product, the new iPhone gets a thorough examination from enterprising early adopters, and many of them discover the antenna gap "feature". As one wrote Jobs:

It's kind of a worry. Is it possible this is a design flaw? Regards - Rory Sinclair

Steve's reply:

Nope. Just don't hold it that way.

Steve, No! Don't diss your beloved customer. No tough love with someone who's holding your money in his/her pocket.

A customer complaint dialogue is structured around a two-position toggle: a) it's terrible, b) it's nothing. The first one to grab a position forces the other person to assume the only one left. When Dear Customer calls, "Canon Law" dictates the first words out of my mouth: 'This is terrible, how could we have let this happen to you!'. This forces the caller to concede: 'Well, it's not the end of the world, I just would like to…' A cooperative conversation ensues.

However, if I argue that it isn't the end of civilization, civility goes out the window. Dear Customer feels disrespected and insists things are awful. It'll take time to lower the temperature and hear one another.

Steve Jobs' cavalier dismissal worked as per the theorem: Dear Customer got mad. The media saw red meat, planted its teeth, and won't let go.

Steve is an habitual offender. In the Summer of 2007, Apple abruptly (and rightly) dropped the original iPhone price by $200, from $599 to $399. Consumers who had bought their iPhones a few weeks or days before weren't happy.

Steve Jobs' first response:

"That's technology. If they bought it this morning, they should go back to where they bought it and talk to them. If they bought it a month ago, well that's what happens in technology."

That pill didn't go down well. A couple of days later, Apple granted early adopters a $100 rebate and the issue went away.

Recently, when a poor blogger kept pestering Jobs about porn and censorship, Apple's CEO lost patience and lashed out:

By the way, what have you done that's so great? Do you create anything, or just criticize others work and belittle their motivations?

We can't help but pity the poor schmo who challenged Jobs to a verbal duel (full text here), although he should have known better. Sooner or later, Steve would call him an ankle-biter. But…now that Steve has risen to the very top of the world perhaps he could morph into a magnanimous sage-and a cautious one, knowing that these exchanges will be milked for all they're worth in page views.

As I was traveling, I watched the whole Antennagate mess go on and on, including a >longish letter from Apple ascribing the problem to the algorithm used to report signal strength. Too late. As in our sci-fi, the facts in that letter should have been part of the announcement.

With the advantage of hindsight, an obvious question arises: Why didn't anyone in Jobs' entourage-or on Apple's Board of Directors-take Steve aside to reason with him, to remind him of a few customer relations tenets?

Well-meaning but not realistic.

We have to take the whole Steve instead of futilely hoping that he'll shows us the "good parts" while suppressing his darker side. He's a genius like our industry has never seen. That's why, in January 2009, I wrote that we owe him seven statues.

With the possible exception of the Dalaï Lama, our highest achievers aren't the most pleasant of people. It's the darker side that fuels their creativity and their relentless pursuit of a vision.

If you want the life energy and the economy of his sublime drawings, you have to accept the real Picasso; you want Kind of Blue, make peace with who Miles Davis was; you want Saint-Laurent's calligraphs on the Great Wall of Fashion, allow his behavior.

[For good summer reading, get The Beautiful Fall, Alicia Drake's amazingly felicitous chronicle of the parallel Lagerfeld and Saint-Laurent years. The book is so "good" Pierre Bergé, Saint-Laurent's longtime partner, tried to quash the French translation.]

So, yes, I imagine Steve's lieutenants and directors wincing, but they stick with him because they've made peace with reality: Steve is Steve, he's leading us somewhere, with or without rationality and civility.

We're now at this past Friday's "surprise" press event in Cupertino. (You can watch it, minus the press Q&A at the end, here.)

Let's start with the bad news. Instead of coming out with a simple: "We screwed up, I screwed up. Please accept my apologies. We should have acknowledged the issue when we announced the iPhone…", Jobs went through a lame "We're not perfect, smartphones aren't perfect" routine. Make a clean breast of it and move on.

Second ugly mistake: Blaming the media. Claiming "this has been blown out of proportion", and whining that "after 34 years you'd think we would have earned some trust" throws more red meat to bloggers and journos. Steve needs to accept there's payback going on: You can't dismissively lord over the media and not expect them to kick you when you're down.

It was a welcome and disarming idea for Steve to play the Antenna Song at the beginning of the conference; less so to imperiously declare there was no Antennagate-that's for the media to conclude.

The Magnanimous Steve would have said: "We're proud to be held to higher standards, and we embrace them even if we sometimes fall short." Everybody nods and moves forward. Complaining about the media when they've done so much for Apple (and for themselves in the process-it's a codependent relationship) isn't a winning move.

Now, the good news: The numbers. Moving past the sales volume (3 million units, despite the media storm) there are the returns and dropped calls. According to Jobs, AT&T's retail operation reports a 1.7% return rate for the iPhone 4-compare that to 6% for the previous iPhone 3GS. The rate of dropped calls appears to be 1 percentage point higher for the iPhone 4, a statistically insignificant difference. (After the conference, a few reporters were invited to visit Apple's on-campus $100 million wireless testing lab.)

More good news for Apple, the iPhone carries features such as FaceTime. This is likely to be the great sales virus that infects families, as Apple very well knows. They hired Sam Mendes, the director of American Beauty, for their first FaceTime commercial, the fifth in the gallery here. Pulling at the heartstrings, shameless, effective. I like Mendes' last segment the best, two people using sign language over the videophone.

Eventually, Antennagate will be forgotten, leaving only a scar-or a bumper-on an otherwise accomplished product.

Let's end on a poetic note.

I used to think Apple folks were atheists…until the Jesus Phone. Then they saw the path and the light: only a divine creator could have had the iPhone in mind when iTunes was hatched to bestow upon the iPod its lasting market power. The iPhone comes out and iTunes becomes the godsend that begot the Apple App Store with its five billion downloads. Erstwhile heathens, now believers.

Did that same god just sting Steve to remind him of her existence -- and powers?

By Jean-Louis Gassée_Frederic Filloux
Special to CBSNews.com