What's the bug up Apple's @$$?

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Seriously, what's gotten into Apple?

For the past decade of Steve Jobs' second go-around as CEO at Apple, the company has secured a strong following of loyal customers by playing the role of the David in a world of tech Goliaths. You can see it in the famous Mac vs. PC ads: Apple is the everyman, and its competitor (Microsoft) is the stuffy, out-of-touch "Man."

But recently, Apple (AAPL, Fortune 500) has either lost touch with its customer base or just has a bug lodged up its data port.

In late February, Apple purged 6,000 apps it deemed "too sexy." Late last month, Jobs posted a scathing 1,700-word essay on Apple's Web site about why he hates Adobe Flash.

More recently, the company made Ellen Degeneres apologize on national TV for airing a spoof commercial that suggested the iPhone was difficult to use. And Apple threw an epic hissy fit when a Gizmodo blogger leaked photos of a new iPhone prototype.

The Gizmodo fallout prompted "Daily Show" host and admitted Apple lover Jon Stewart to label the company's execs "Appholes."

"Apple, you were the rebels, man, the underdogs, people believed in you," said Stewart. "But now, are you becoming the Man?

In reality, Apple hasn't been an underdog for years. Its iPod and iTunes' success helped the company grow out of its "niche" status. And Apple really took off after the iPhone became an instant hit in 2007.

Apple's market value is now about $245 billion -- just shy of Microsoft's (MSFT, Fortune 500) $270 billion. And Apple's revenue this year is expected to be on par with Microsoft, at around $61 billion.

Consumers still love Apple

It's highly unlikely that Apple's newfound status as "tech giant" and the associated attitude-copping will be a turn off for consumers.

"It's going to take a lot more that a few controversies with Gizmodo, Ellen, or Adobe to halt the Apple momentum," said Jason Schwartz, author of Apple Revolution: The Religious Tech Wave of Decade 2010. "If anything, all the media attention adds to the appeal."

Apple did not respond to requests for comment, but most analysts agree that Apple's products speak for themselves.

"People don't care that Apple has been defiant -- they're used to Apple getting on its high horse," said Laura DiDio, principal analyst at ITIC. "As long as it keeps producing good products, consumers' love fest with the company will continue."

This isn't the first time that Apple has demonstrated a bit of arrogance. The company has stared down the music industry, created a notoriously tough admissions process for its App Store and maintained high prices on its Macintosh computers despite every other computer company slashing prices.

There are some skeptics out there who think Apple may have gone too far this time.

"We're clearly seeing a backlash brewing against Apple, analogous to the backlash against Facebook," said Adam Hanft, CEO of marketing firm Hanft Projects. "Think back to the famous 1984 commercial -- in a way the tables have turned. Apple is now in control much more than IBM ever was."

The comparisons to "Big Brother" IBM are perhaps apt, but there is a big difference. IBM (IBM, Fortune 500) and Microsoft made computers and software that were built to support business customers, and eventually those products trickled down to consumers. Apple, on the other hand, has always put consumers first, which has bought it a whole lot of good will with its customers.

"Apple's close attention to consumers gives it more latitude to play some of these dominant games than Microsoft or IBM ever had," said Christopher Collins, consumer research analyst at Yankee Group. "But that doesn't mean if you rub people the wrong way, it won't affect customer behavior in the long run."

Collins said Apple's strong stance against Adobe Flash could lead people to other products, namely Google's Android platform, which will support Flash in its next release. Flash support is needed to view a significant amount of content on the Web, including a large share of online videos.

ITIC's DiDio, who recently conducted a survey of 500 Apple users, found that customers are clamoring for Flash support, but said they would continue to buy Apple products even without it.

IPad sales quickly topped 1 million in a matter of weeks, and the iPhone shows no signs of fading.

"People will vote with their feet," said Hanft. "Will they punish Apple? It's doubtful. Do you know anyone who moved their accounts when there was all that populist outrage against the banks?" To top of page

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