What's Behind Antennagate

At first glance, the dust-up about the antenna issues surrounding the new IPhone 4 appears to be all about a serious design gaff on Apple's part. However, it really has more to do with the media and Google. The two have joined forces in an attempt to tar Apple's image. Meanwhile, a third ally, the federal government, may be about ready to jump into the breech.

This tidy drama began shortly after the introduction of the new smartphone. A few customers--no one knows the exact number--experienced signal issues which caused reception problems. At first, the blame was placed on a certain way consumers held the phone. Then accounts began circulating that the problems went deeper. After initially being hailed as a game-changing smartphone, The Four quickly became embroiled in controversey.

The media and the blog-a-sphere pounced. Press accounts painted a dire picture of Apple's antenna problems. Some suggested a product recall. Consumer Reports refused to recommend it. Apple's stock plummeted, shaving off $16 billion in market value. Hysteria was rampant. It forced Apple's CEO Steve Jobs to hold a news conference last week to address the issue, something he was surely loathed to do.

Jobs dubbed the whole affair, "Antennagate." He promised users free plastic "bumper" cases that would prevent a user's fingers from covering the antenna. The media wasn't satisfied. They characterized Jobs as "defiant" and "defensive." Apple was accused of being "secretive" in the handling of the whole affair. To these eyes, the media's reaction was overblown.

An analyst for Envioneering Group agrees. He has been trying unsuccessfully to replicate the signal problems on several of the new IPhone 4 models. His conclusion is that there is no science to support the reported antenna problems. "It may be just under 1% of the phones have the issue, less than 1 out of 100," he concludes.

But "Antennagate" is not about reality. There are other reasons that help explain the media's response. The business press, especially, has not taken kindly to the way Apple has chosen to eschew a cozy relationship with the media. Apple shrouds its announcements in secrecy and keeps the media in the dark so that the company can control the news about its new products. That chaps the media. They want unfettered access, especially when it's a high-profile company like Apple. Jobs doesn't play that game. As a result, there is a hate-hate relationship between Apple and journalists.

Moreover, when a publication or reporter prints unflattering reports about Apple, the CEO reverts to attack mode. Jobs doesn't sit back and let the media bash his company or its products. That's why the media should have expected Jobs to come out swinging last week at his hastily called news conference. He didn't disappoint.

Jobs lectured the audience, claiming the press and its competitors were trying to "tear down" Apple. He pointed out that antenna issues were common with most wireless phones. He even showed dramatic video to support his claim. Jobs capped off the event by saying the whole affair was "overblown." He called one media account of the antenna problems a "total crock." Jobs is absolutely correct.

First off, handsets have always had antenna issues since the inception of the wireless industry. True, manufacturers have gotten better over the years at addressing the problem. However, today's miniature models, when compared to the early bricks with huge antennas, are not designed for maximum signal strength. Network providers, like AT&T, often shoulder the blame, but handsets should share at least half of the responsibility for weak reception. There never has been a wireless handset sold that doesn't experience problems with dropped calls and weak signals.

If this is true, then why the media circus? Apple's competitors are feeding the media frenzy in hopes of destroying the image the IPhone has earned in the marketplace. The more doubt the competition can create, the better its chances to overtake Apple in the smartphone category. The company that stands to gain the most by Apple's misfortunes is Goggle, a relative newcomer to the smartphone market. The Mountain View, California, Goliath casts a big shadow over this whole episode.

Google has a lot at stake in this drama. The company's latest smartphone, the Droid X manufactured by Motorola and powered by the Google Android operating system, is flying off the shelves. In the race for market share, Droid is closing the gap with IPhone. Billions of dollars are riding on the outcome of this fierce competition.

Despite its carefully nurtured image, Google isn't above undertaking a stealth campaign to sink its competition. Behind the scenes, Goggle is prompting tech analysts, financial researchers and product evaluators to pile on. They are using their extensive contacts to prod the media frenzy that appears unlikely to abate any time soon. Unlike Apple, the folks at Goggle have cultivated a lovable image in the media, which has produced fawning coverage for a company intent on destroying competition.

That's why it was no surprise when Sen. Charles Schumer, a Democrat from New York, wrote an open letter last week to Jobs, urging him to be clearer with the public on the antenna problem. He called the "bumper" case offered by Jobs an "insufficient" solution. It would be wise for tech followers and Apple to take heed.

During the last presidential campaign, Google's managers and employees donated a reported $803,000 to President Obama's campaign. In addition, Google's CEO and other executives forked over another $25,000 each to help pay for the inaugural event. As a result, Google got a seat at the Washington table. A handful of ex-Google managers have joined the Obama administration. The most visible is Andrew McLaughlin, who serves as deputy chief technology officer for the administration. He is in a position to shape policy that impacts Google and its rivals.

Therefore, Schumer's outburst should not be dismissed as mere political grandstanding. He is tight with the Obama administration. You don't have to be a conspiracy theorist to wonder if perhaps Schumer was goaded into action by someone in the administration. A congressional hearing is the last thing Jobs and Apple need at this point. Even worse, regulators, such as the Federal Trade Commission, could step in and demand that Apple do more than offer a free "bumper" case.

With all the negative publicity enveloping the IPhone 4, you'd expect sales to tank. However, just the opposite has happened. Jobs said Apple has sold more than three million units since its introduction three weeks ago. The handset is on pace to break all previous smartphone sales records. Most stores that were contacted are quoting three-to-four week delivery time frames for the IPhone 4. Young people, in particular, are enraptured by the FaceTime video calling feature. Obviously, consumers aren't buying the smear campaign against Apple.


But don't expect the uproar to die down. The media smell Apple-red blood. New press accounts surfaced over the weekend about challenges faced by Apple's glass supplier. The report hinted there would be increasing delays in fulfilling IPhone 4 orders. The news heaped more negative publicity on Apple's new phone.

Apple must face the facts. This is an attack like none other that it has ever experienced. It is time to take off the gloves and go after Google. The Droid X is not without its problems, including a finicky touchscreen. If it waits too long, Jobs may find Apple looking up at Google's market share position in the smartphone category.