There are times I admire Apple and there are times when I wonder if the folks there have lost their collective minds.
The story of the lost iPhone 4.0 product has been fun to watch up and until a bunch of police officers broke into the bloggers home who broke the story and had bought the lost phone without first subpoenaing (a requirement in the State of California) the information.
Excessive violence is a significant problem in the area and recently a citizen was accidentally shot to death by an officer who may have accidentally drawn his gun rather than his taser so the sensitivities are high. In addition, this is an election year here in California and that means little mistakes can become big election issues and the idea that Apple has somehow bought local law enforcement could be a catalyst for the right aspiring politician. Has Apple become Big Brother?
I'd like to be able to say this is an Apple problem but every company I've ever watched get massive power has misused that power. IBM, AT&T, and Shell Oil I studied as I went through college as companies that misused the power they had acquired and got pounded by the government as a result and none of these firms are what they once were. AT&T is actually a new company having failed and then been reborn under the same brand. In the years I've been an analyst I've seen Microsoft make the same mistakes and it appears Google crossed over as the stories of citizens in Europe chasing Google cars out of neighborhoods and Google's hypocritical approach to privacy surfaced.
Steve Jobs has always had power issues. You may recall he was fired from his own company for trying to misuse his power to remove a CEO improperly. He misused his power again in having his options backdated and was the only CEO I'm aware of that kept his job and one of the few who didn't go to jail.
The practice of being "Steved" applies to his practice of firing employees on a whim and I've been told that he has an HR guy that shadows him and hires people back he has fired when he is in a bad mood. This is not a guy who does well with excess power.
Apple is clearly at the top of their game and appears untouchable competitively. They are control focused and do more to control and encourage positive news coverage around their products than any other company I follow. They probably, on a daily basis, do more things right with regard to image and product than most other companies likely do in a year (ok that may be an exaggeration but likely not as big as you think).
I was with Stan Lee last week and his famous saying is "with great power comes great responsibility.” That is something firms should learn and apparently do not because here we are again.
Apple has a unique security problem. Because of the way the control the information surrounding their products while building a massive amount of demand for that information they effectively create something called an Attractive Nuisance for reporters. If we were talking about dogs this would be like getting them ravenous by holding raw meat in front of their faces and then punishing them when they broke the fence down.
In effect there is a mad rush to find out information about Apple's unannounced products because Apple intentionally creates that mad rush. Apple is at the cause level of the problem and it generally works for them fabulously. However, from time to time, someone is going to break through the fence.
The Lost Phone
Apple is having a problem recently keeping information contained. We had an employee who lost some Apple prototypes commit suicide (with implications that he might have been driven to do that). We had the iPhone that was left in a bar and even more recently several iPod Touch prototypes showed up on eBay. The only common link is Apple.
Gizmodo, by reporting on the device they acquired, rubbed Apple's nose in the problem and Apple apparently got REACT (Rapid Enforcement Allied Computer Team) to break down the bloggers door potentially without due process (the DA has recently suspended the investigation) and seize his personal property.
These kinds of break ins are dangerous because we have home invasion robberies in the area and the homeowner, or a neighbor, if they mistake the police for one of these could respond violently resulting in substantial additional death and destruction.
This is over a lost phone which had already been returned to Apple. How many people lose phones and how many times does law enforcement even care? We've had major demonstrations over police brutality in the area suggesting extra car should have been taken, not less care. As a result a lot of focus is suddenly being put on Apple and their relation to REACT during an election year and that won't be good for REACT or Apple.
The lesson here really is that power corrupts and that people with power often misuse it to their own detriment. This won't put Apple out of business but it will hurt them financially and it will make it far more difficult for them to get political support going forward. The cost to the company against the benefit they received by using REACT is unbalanced on the cost side.
This is a long way of saying that what they did was stupid and powerful companies that behave stupidly have historically stopped being powerful companies. In general, when you are in Apple, Microsoft, Oracle, IBM, HP, AT&T's class the only real danger is yourself.
Apple just demonstrated that again, it is a shame more executives don't feel they can learn this from others and feel they have to learn it themselves. Go back and watch that old Apple 1984 Ad, which side do you think Apple is on Today?
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies. The opinions expressed in this commentary are solely those of the writer.