Yoshikami: Apple Not Perfect? Shocking!

It is hard to live up to expectations when your every move is expected to be a success. That's a pretty high bar to hurdle.

The enthusiasm of those faithful to Apple’s products is the envy of many. It was a company that many thought could do no wrong, but it is now one on the defense and for good reason. Looks like innovation sometimes runs into bumps like inadequateley tested products.

And now Apple is paying the price for a phone with issues.

Apple’s press conference todaywas designed to reverse a public relations nightmare that began last month when it released its iPhone 4. It became the best-selling new technology gadget in Apple’s history when sales hit 1.7 million in just three days.

Unfortunately, some of these phones apparently aren't the best.....well.....phones.

Steve Jobs talking about iPhone4 customer satisfaction at news conference on July 16, 2010.
Steve Jobs talking about iPhone4 customer satisfaction at news conference on July 16, 2010.

First Jobs gave a spirited defense of the iPhone and took a swipe at other phones.

I see his point that other phones have issues but not the best start; bashing others can certainly be seen as justifying one's own problems.

But then again, he did say:

"........you know, we're not perfect. We know that, you know that. And phones aren't perfect either.............But we want to make all of our users happy. If you don't know that about Apple, you don't know Apple. We love making our users happy........."

".......it's hard to escape the conclusion that there is a problem........"

Well, turns out they are not in denial despite their silence these last few weeks.

But before the bashing of this company gets out of hand, let's stop for a moment for a reality check. Take a trip down to any Apple store now (as my analysyts have done) and you are likely to find that many of its best selling products are out of stock due to overwhelming demand. The wait time for an iPhone is still between two to three weeks. iPad sales continue to be strong with most versions sold out, while Mac sales continue to increase.

"As investors, it is important to place your bets on companies with leaders who are visionary, and who are willing to take responsibility for mistakes." -Founder, President YCMNET Advisors, Inc, Michael Yoshikami

What does this say about Apple?

Some will chalk it up to the "Jobs Cult".

But it is clearly more than just a belief in Apple's CEO. Bottom line, their products are good (albeit a bit buggy lately).

The success of its products continues despite the negative press. Granted that is not a permanent given.

But given today's initial steps, it is unlikely that the iPhone 4 issue will have a long-term impact on Apple’s brand.

It is easy and convenient to tear the company apart.

Apple did make a series of missteps; it tried to play down the problem. The net result was that until today, they managed the story in a fairly disastrous way. A poor strategy in addressing company problems happens to other companies as well. Microsoft had its own fair share of public scrutiny with Vista. Let’s not forget Toyota’s massive recall. And BP......welll...you know BP's issues.

In situations like these, the only way to successfully handle challenges is to face up to the problem, discuss how the issue developed, outline remedial steps, and adopt an attitude of humility. Leadership, in this day and age (where stakeholders demand greater accountability), requires integrity and the willingness to make hard and unpleasant decisions. And to stand up and admit when high aspirations were not met.

Sounds pretty obvious but how many companies have the fortitude to follow that path? Few as the headlines will confirm on a daily basis. So while the anti-Apple contingent continue to vilify this company for its arrogance, stop for just a moment and recognize that at least Steve Jobs is accessible to some degree (albeit in sometimes, curt cryptic e-mails). And though late, they have begun to address the phone reception issue beginning with todays press conference.

Some may argue that Jobs was pushed into a corner.

Consumer Reports, the magazine that had picked the new iPhone as its best-reviewed smart phone, last week no longer recommended the device due to the dropped-calls issue. The opinion of this non-profit magazine holds weight; it has eight million paying subscribers. So Apple needed to act and they did.

As investors, it is important to place your bets on companies with leaders who are visionary, and who are willing to take responsibility for mistakes. The executives and leadership that you want to follow are the ones that have the courage to be accountable and candid.

Jamie Dimon exibits this as he runs JP Morgan. Warren Buffet illustrates this perspective as he runs Berkshire Hathaway . Making things right and being open is the best and only way to diffuse problems.

Today, Steve Jobs and Apple are doing just that it would seem. Jobs closed with .........."we do this because we love our users, and if we screw up, we pick ourselves up and we try harder........"

Apple is not perfect but we should at least give them credit for trying to deal with Antennagate. Its a start.

Michael A. Yoshikami, Ph.D., CFP®, is Founder, President, and Chief Investment Strategist of YCMNET Advisors, Inc., a registered investment advisory firm (www.ycmnet.com). He oversees all investment and research activities of YCMNET. He is a respected lecturer speaking frequently on market issues, tactical asset allocation, and investment strategy. Michael and YCMNET were ranked as one of the top 100 investment advisors in the United States for 2009 by Barrons. He appears regularly on CNBC and CNBC Asia and can be reached directly at m@ycmnet.com.