Power of Corporate Trademark Stupidity

Sometimes it's foolish to let the lawyers out without a nanny - particularly when your company has a reputation for being unreasonably litigious. And Apple may have taken its legal fierceness a few steps too far. The company has decided to mount a legal challenge over the GreeNYC logo. That logo belongs to the City of New York and is part of a campaign to have consumers go green by lowering energy consumption.

NYC registered a trademark on the green apple with stem that doesn't have a bite taken out of it. A few months later, Apple registered a challenge. Mind you, there is no reasonably way one could confuse reducing energy consumption in New York City with the computer and consumer electronics company. If they think that's a threat, why not go after Apple Records because they're involved in music, and that at least has some connection to the iPod. Oh, wait, right - Apple Records was there first.

So Apple Inc. thinks that NYC is competition and is taking action? Let's count all the ways this is about one of the most stupid things it could have done:

1. New York City isn't some kid in Harvard writing a blog and without funds. This is an economy unto itself, with lots of wherewithal to mount a legal challenge that will rattle the teeth of Steve Jobs.


2. This has got to be an incredibly stupid PR move. The company is essentially branding itself as anti-green.


3. New York City has used the Big Apple as a slogan far earlier than the first time Steve Wozniak cobbled together his first personal computer prototype.


4. Because there are so many organizations and businesses using apples in names and logos, as the City Room blog of the New York Times points out, Apple has very possibly fallen into the dangerous ground of selectively protecting its trademark, which could provide grounds for it to lose that bit of intellectual property.


5. The city realizes the potential weakness of Apple's position, because it responded to the US Patent and Trademark office that Apple used fraud to win overly broad protection.

In other words, because it decided to get heavy-handed this particular time, Apple's grasp on its apple could slip. How valuable is a brand logo if you no longer own it?

Apple Bails on iPhone Pricing

There are signs that Apple's long-held premium pricing approach may have gone over the top with the iPhone. The company is dropping a low-end model, cutting the price of the 8GB one by as $200 - and for those who bought early, missed the price break, and got angry with all the documented problems (non-replaceable batteries and others), there's a $100 store credit.

But you've got to wonder what's going on - at least, I do. Apple would never have cut the price if it thought it could continue to get the premium, particularly through the holiday buying. Particularly in high tech, you drop prices to clear out an old version and make way on store shelves for a new one, or because, somehow or other, you've really screwed up. I think it's clearly the latter, in this case. The move will tick off the early buyers - who might not mind if some significant period of time had passed and they had a chance to upgrade (and if a $100 Apple store credit could actually buy much of anything) - and it starts messing with Apple's positioning as worth the extra money.

This isn't going to batter Apple, but it does reveal that maybe someone took the old magic a step too far. Cool is fine, but you'd better also providing people with something of value. How do you think the sense of cool came about in the first place?

AT&T Shows Sometimes Success is Failure

In reading the New York Times article on Apple's whopping 73 percent jump in profits (guess a lot of people are willing to pay big to be cool), I noticed some interesting numbers. The profit jump, exceeding analyst expectations, was boosted by selling 270,000 iPhones. But the company's stock had recently taken a 6 percent hit when AT&T told its investors on Tuesday that it had activated 146,000 iPhones in the day and a half between when the phone came out and when the quarter ended.

That means 124,000 people couldn't get service turned on. That's 46 percent - almost one out of two - being ticked off that they couldn't get phone service when they were told they'd be able to have it. Wow! What a massive pile-up and an abysmal failure. This would be like having the last Harry Potter book come out but with only 4 million copies available instead of the 8 million that sold. It's one of the worst examples I've seen of operations falling that far behind marketing.

BIG Problem with iPhone and Battery Replacement

According to an Associated Press story, a consumer advocacy group has just noticed some unpleasant fine print on doing an iPhone deal: you can't replace the iPhone battery yourself, as it's soldered into the unit! If you do need it replaced, it's $79 plus $6.95 for shipping and takes three business days. Oh, and while it's out at the shop, you can get a loaner - for another $29.

What in the name of all that is holy were these people thinking? Let's tally it: You pay either $500 or $600 for the phone, you have to get a $60 per month AT&T service plan, and now you've got to pay for someone else to replace the battery? And to bury that information so it took some careful deep reading by some technology bloggers and a consumer advocacy group to learn of the scheme is simply trying to distract people long enough so they can get stuck.

Now let's look at some of the other idiosyncracies of this battery replacement process that I didn't see in the AP story:

• The total of $85.95 is subject to local tax, which, I'm guessing, means that if there's an Apple office or store in your state, you're paying.


• "Service may not be available if your iPhone has been damaged due to accident or abuse." I wonder what "abuse" can mean? Oh, so sorry, but there's a scratch on your iPhone and we think you may have abused it (you bad, bad person), so we can't replace the battery. Have you considered buying a new one? Does this seem a bit too Machiavellian? Absolutely - but then, I never would have thought that a glorified cell phone would have a battery soldered into the case. Oh, and if Apple decides, according to its service policy, that iPhones "that have serial numbers altered, defaced or removed or that are damaged due to accident, abuse, neglect, misuse (including faulty installation, repair, or maintenance by anyone other than Apple or an Apple Authorized Service Provider), unauthorized modification, extreme environment (including extreme temperature or humidity), extreme physical or electrical stress or interference, fluctuation or surges of electrical power, lightning, static electricity, fire, acts of God or other external causes," it can send them back and charge a $100 "Diagnostic Fee."


• The replacement process is going to wipe all the data off your phone! So if the battery dies before you get a chance to back everything up, you're out of luck.

Apple has shown signs of incredible arrogance in dealing with other companies, the press, and even with its users over the years, demanding draconian conditions, generally keeping prices artificially high by not licensing hardware or software, and in some cases (like the iPhone) offering fewer features than competing products for more money because, I'll admit it, they're great at marketing. But this is ridiculous. I have a question for Steve Jobs: how long does this servicing really take, and how much profit will Apple make from it? Isn't locking people into more expensive hardware from your company enough? Oh, I think he already answered that.

Apple Not Universal-ly Liked

Back in April I mentioned how EMI was going to license non-protected music to Apple. Now, according to the New York Times, it looks as though Apple isn't on Universal's play list - and that the reverse could be true at a moment's notice. Apparently Universal Music Group isn't going to renew its annual contract to sell music through Apple's iTunes service. Instead, it has chosen an at-will arrangement which would let it pull its wares on short notice, should the companies not agree about something or other. Or, as the story says:

In particular, Mr. Jobs’s stance on song pricing and the iPod’s lack of compatibility with music services other than iTunes have become points of contention.

Sony has recently renewed a one-year agreement, but this shows some significant resistance to Apple's insistence on not letting the iPod work with any service other than iTunes as well as on pricing issues.

It seems that lots of music industry insiders are warning the labels against antagonizing Apple, as it has such a huge market share. But I'd point out that the danger ultimately faces Apple. Should Universal walk, that would still leave other large labels, but they'd all be paying attention. Without content, iTunes is unimportant from a business view. People will go where they can find the music, and that's up to the labels, not to stores, whether online or real-world. Then there was this other point:

Mr. Jobs, in February, noted that less than 3 percent of the music on the average iPod was bought from iTunes, leading music executives to speculate that the devices in many instances are used to store pirated songs. (Of course, users can also fill their players with songs copied from their own CD collections.)

If less than 3 percent comes from iTunes, and since iTunes has overwhelming market share, you have to wonder whether music executives are wondering whether Apple is necessary at all. There is this factor:

The iTunes service accounts for 76 percent of digital music sales, and the contract talks come as it is on the rise — Apple recently surpassed Amazon.com to become the third-biggest seller of music over all, behind Wal-Mart and Best Buy, according to data from the market research firm NPD.

But there's something incongruous here. If Apple is so big in selling music, why do iPods have relatively so little? And do these figures count CD sales from people who want more than a few cuts of a given release?

If the labels walk, though, I think it would be bad judgment on their part - not becuase they make that much on digital music, but because when it comes to marketing, Steve Jobs is way smarter than any of the music companies. He is the one who insisted on low flat pricing to get people to start buying. That was smart. Unfortunately, the music companies want to be able to charge more for popular tunes. I can see the rationale - get what you can when the properties are hot. But consumers are already ticked at all the ways music companies have gouged them over the years. Jobs wants to build long-term relationships. That's smart marketnig.

Where Jobs misses the boat, I think, is that he also refuses to license the digital rights management scheme to other companies, which harkens back to how Apple has always approached business: be the sole supplier. Yes, it's built a viable company, and yet, at the same time, Apple's market capitalization is far lower than any of the PC-centric hardware companies, let alone Microsoft and its Windows juggernaut. Jobs and company never learned the lesson that sometimes letting go is the only way to get more, even though that's what he ironically urges the record companies to do - sell unrestricted music. His argument is that spreading the use of the DRM code would make it more likely that someone could crack the system. Please. People have been able to break virtually any digital protection scheme they've wanted to. Not putting it on other machines won't offer significant protection - other than market protection.

Hmm. Maybe even Steve Jobs could do well to listen to Steve Jobs.

iPhone Seeing Share of Problems

Most of what you'll see in the press about the iPhone seems to be raves. But to get a better rounded picture, it's informative to see what customers are saying in Apple's support forum. Some of the complaints:

• No support for AOL, Yahoo, and MSN instant messaging clients.


• No voice dialing support.


• One of the more "locked-down" phones you can find, which means that you're more than usually tied to the service provider - AT&T in this case.


• The headphone jack needs a special adaptor for most headphone sets.


• No support for custom ring tones.


• No to-do list in the calendar function.


• If you aren't careful with what features you leave on, a battery charge can last under half a day.


• Volume is less than on many phones and can require particular "technique" of use to hear.

There is even one person complaining on Slashdot that the phone won't work with the 64-bit version of either Vista or Windows XP and that a post on the Apple support forum about the issue was removed. (Apparently the incompatability is not listed on the iPhone specs, according to Engadget.) And reportedly AT&T insiders were saying to the blog Ethan Says/Homorific that the iPhone frequently drops calls. (Not something you want to support if you're trying to deal with customer perceptions that dropped calls are a carrier problem.) And this is just scratching the surface of the commentary you can find on the web.

Apple has had a good reputation in industrial design and engineering, but ultimately you need a product that works and doesn't just look good. The Apple die-hard group as a percentage is a tiny part of technology consumers and releasing something that starts making people angry is one of the best ways to damage a product line. Negative word of mouth travels faster and farther than positive.