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Created: February 4, 2006
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Index of Topics on Site Backup of Good Luck With That Broken iPod
By Jope Nocera
SOURCE: New York Times
Copyright: Source Copyright.
Included here under Fair Use Doctrine for teaching purposes.
This backup copy is to be used only if the original site on the Web is not accessible. It is meant to preserve the document for teaching purposes, when sometimes the URLS are changed when sites are updated, or sites are eliminated. Please be certain to give credit if you refer to this to the original URL: http://select.nytimes.com/2006/02/04/business/04nocera.html. Original URL, consulted: February 4, 2006.

February 4, 2006
Good Luck With That Broken iPod
By JOE NOCERA

MY iPod died.

It happened right after Christmas a Christmas, I hasten to add, in which I gave my wife the new video iPod, making it the latest of the half-dozen iPods my family has bought since Apple began selling them in October 2001. We also own five Apple computers, and have become pathetically loyal because of our reliance on the iPod. To the extent that Apple is using the iPod to drive sales of other Apple products, the Nocera family is proof that the strategy works; we've probably spent more than $10,000 on Apple hardware since the iPod first came out. Alas, at least three of the iPods were replacements for ones that broke.

This time, though, I decided to get my iPod fixed. After all, it wasn't even two years old and had cost around $300. Like all iPods, it came with a one-year warranty. Although Apple sells an additional year of protection for $59, I declined the extended warranty because the cost struck me as awfully high a fifth of the purchase price of the device itself.

Anecdotal evidence like chat boards filled with outraged howls from owners of dead iPods strongly suggests that you can write the rest of this story yourself. You start by thinking: "I'll just call Apple!" But it's so hard to find the customer support number on Apple's Web site that you suspect the company has purposely hidden it.

Eventually, you find the number and make the call. Although the tech support guy quickly diagnoses your problem a hard drive gone bad he really has only one suggestion: buy a new iPod. "Since it is out of warranty," he says, "there's nothing we can do." You're a little stunned. But you're not ready to give up. On the Apple site, there's a form you can fill out to send the iPod back to Apple and get it fixed. But you do a double-take when you see the price. Apple is going to charge you $250, plus tax, to fix your iPod. There is no mistaking the message: Apple has zero interest in fixing a machine it was quite happy to sell you not so long ago.

Now you're reeling. You're furious. But what choice do you have? You can't turn to a competitor's product, not if you want to keep using Apple's proprietary iTunes software, where you've stored all the music you love, including songs purchased directly from the iTunes Music Store, which you'll lose if you leave the iTunes environment. So you grit your teeth and buy a new iPod. Of course since it's a newer machine, it has that cool video capability. But you're still angry.

You've read recently that Apple has sold 42 million iPods in less than four and a half years. Thanks to the iPod, Apple just reported its most profitable quarter ever. But you wonder how many of those 42 million units have gone to people who feel, as you do, that you've just been taken to the cleaners by Apple? You also wonder why do iPods seem to break so frequently? And why is Apple so willing to tick off people who spend thousands of dollars on Apple products by refusing to deal with broken iPods?

Or at least that's what I wondered as I went through the five stages of iPod grief.

CUSTOMER support is the ugly stepchild of the consumer electronics business. Companies like Dell and Palm and Apple have customer support centers not because they want to but because they have to. Computers, personal digital assistants and other digital devices are complicated machines. They break down much more frequently than, say, old analog televisions. And consumers expect the companies to deal with problems when they arise.

But customer support is expensive for gadget makers. "A phone call costs a company 75 cents a minute," said the writer and technology investor Andrew Kessler. "An hour call is $45." As prices have dropped sharply for computers and other digital devices, keeping those phone calls to a minimum has become supremely important to consumer electronics companies that want to maintain their margins and profitability.

That's why all the big tech companies try to force customers to use their Web sites to figure out problems themselves. It's why so many of them bury the customer support phone number. And it's also why, when you do call, companies like Dell teach its support staff to diagnose computer problems over the phone, and then talk you through some fairly complicated repairs. With its machines so inexpensive, Dell simply can't afford to allow too many customers to ship the computer back to the company to be fixed.

Consumers, though, don't really understand this. As much as they like being able to buy computers for less than $1,000, they don't realize that one of the trade-offs is minimal tech support. Nor do the companies spell this out; instead, they pretend that their service is terrific. Thus, there is a gap between what customers expect from companies that sell them complicated digital machines, and what companies feel they need do to ensure that those machines make money.

With the iPod, Apple has turned this gap into a chasm. On the one hand, because the price of an iPod is far lower than the price of a computer, Apple has even more incentive to keep people from calling; one long phone call turns a profitable iPod into an unprofitable one. Nor does it make economic sense to repair even the iPods under warranty. Instead, Apple simply ships you a new one.

On the other hand, an iPod is a very fragile device. The basic iPods are built around a hard drive, a device so sensitive that "if it takes one shot, that will pretty much kill it," according to Rob Enderle of the Enderle Group, a technology consulting firm. Its screen cracks easily. Its battery can't be easily replaced because an iPod can't be opened up by mere mortals. All of these were conscious design choices Apple made, some of them having to do with keeping the cost down, while others were done largely for aesthetic reasons. But given how much wear and tear an iPod takes the core market is teenagers, for crying out loud is it any wonder that they break? "If you get two or three years out of a portable device," Mr. Enderle said, "you're probably doing pretty well."

Which Apple doesn't tell you. Indeed, it doesn't say anything about how long you should expect your iPod to last. And so consumers buy it with the expectation that they'll put all their music on it and they'll carry it around for a good long time. And when that doesn't happen, they feel betrayed.

Steven Williams, a lawyer who brought a class-action suit against Apple a few years ago over the failed battery problem, told me that he was amazed to discover, as the litigation began, that Apple seemed to feel, as he put it, "that everyone knew iPods were only good for a year or two." Thanks in part to the lawsuit, the battery issue is one of the few Apple will now deal with: if your iPod dies because of the battery you can send it back and get a new one for a mere $65.95, plus tax. Of course, you then lose all your music.

"Apple has been willing to alienate a certain percentage of its customer base forever," said Chip Gliedman, a vice president with Forrester Research, the technology research firm. Why? Because Apple is an extraordinarily arrogant company. "Apple thinks it is special," is how Mr. Gliedman put it.

At this particular moment, of course, Apple is special, and it can get away with being arrogant. It has a product that everyone wants, and for which there is no serious competition.

But it seems to me that Apple is on a dangerous course. Yes, it has strong incentives to minimize tech support, but to say "Not Our Problem" whenever an iPod dies is to run the serious risk of losing its customers' loyalty. "I believe that the iPod is one of the most brilliant platforms ever devised," said Larry Keeley, who runs Doblin Inc., an innovation strategy firm. But, he added, he has long predicted that the "maintenance issue," as he called it, would be the product's Achilles' heel. "Consumers are just not conditioned to believe that a $300 or $400 device is disposable." Mr. Keeley, whose daughters all have iPods, has come to believe that their natural life "is just a hair longer than the warranty," and that Apple's level of service is "somewhere between sullen and insulting."

And, he warns, the day will come when the iPod has a major competitor. "There will be competing platforms, and they'll get robust, and other companies will figure out how to crack iTunes," he said. At which point, Apple will reap what it is now sowing.

A final note: You may have noticed there is no Apple spokesman defending the iPod or Apple's customer support in this column. When I called Apple, wanting to know, among other things, how long Apple believes an iPod should last, I got a nice young woman from the P.R. department. She said she'd try to find someone at the company to talk to me. That was on Wednesday.

I'm still waiting.

Copyright 2006The New York Times Company



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