How the iPhone 4 could be Apple's Waterloo

A return to blind arrogance is a greater threat than Android or Windows Phone 7

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As I said, Apple has been here before. In the mid-1980s, the Mac was a cult product, despite several issues, and its aficionados lapped up whatever Apple dished them. But by the mid-1990s, Apple had gotten drunk on its own Kool-Aid, believing its customers would accept whatever it delivered. For a variety of reasons, Apple began producing shlocky products, epitomized by the Performa family. The Mac faithful became a dead-end cult, attracting no new members, and the company soon found itself at the edge of death by 1997.

Jobs returned to the company and did an amazing job in restoring the company's magic -- this time, creating products that became megahits beyond the Mac faithful, first the iPod, then the iPhone, and perhaps now the iPad. It also resurrected the Mac and set it on a course of growth unseen for nearly two decades.

But with all that success came arrogance and an attitude that Apple didn't need to explain itself to anyone. That made some sense in the late 1990s and early 2000s when nearly everyone had written Apple off, and explaining itself to an unreceptive audience would have been a waste of time. But Apple is now a megastar company that has defined the music and mobile markets and may be redefining the computer market. It has a position of authority and influence that demands it take the high road.

Instead, Apple is saying nothing, circling the wagons with a cone of silence. It is even deleting posts on its support website that refer to the Consumer Reports tests. That shows Apple to be in denial at best and executing a cover-up at worst.

Not even a year ago, Apple pulled the same stunt -- twice.

First, when iPhone OS 3.2 came out and fixed a flaw in the previous iPhone OS, thousands of users lost the ability to connect to Microsoft Exchange servers. It turns out that iPhone OS 3.0 and 3.1 falsely reported to Exchange that they supported some security policies, so users who should not have been granted access to corporate systems gained access. Apple didn't bother to tell anyone, leaving its business customers at risk. Only when the fix appeared and the older iPhones truthfully reported their security support did the issue become apparent. Apple stayed quiet through this whole scene, without so much as an apology.

Then, after its new 27-inch iMacs shipped around Thanksgiving 2009, users began having screen-flicker issues. Apple said nothing. It did, however, quietly halt production while it investigated the issue, then released a software patch by year's end. That didn't work for many users, so Apple went back to the drawing board and issued another fix after another month of quiet.

I fear the same pattern will occur with the iPhone 4: denial and/or silence, one or more belated fixes, and never an apology. This "strategy" is likely to hurt Apple, even if not immediately. Already skeptical corporate IT will have one more reason not to trust Apple or its products. Consumers will be less trusting of the Apple brand. Worse, the feverish iPhone 4 buyers who've created such a large back order for the new devices will eventually move past their puppy love phase and evaluate the iPhone 4 based on their day-to-day experience. Dropped calls and data connections will leave a sour taste that will make them think twice about getting a new model later or a Mac or an iPad. And these influential users will have other choices eagerly awaiting them.

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