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50,000,000 iPhone Fans Can't All Be Wrong

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Some critics have been complaining since the iPhone first turned the mobile world upside down, but Apple keeps proving them wrong. Which side are you betting on?

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If you follow the tech blogosphere, you may believe that Apple's (AAPL) new iPhone 4 is the Ford Pinto of smartphones -- built like crap and ready to explode at any time.

Now if I serve any purpose for Minyanville readers, it's to cut through hype to deliver insights that will help you invest better.

And I'm here to tell you today that the tech media's barrage of complaints about iPhone 4 won't amount to a hill of beans in the real world.

To be fair, let's recount the problems from which Apple's latest supergadget suffers:

1. Poor reception when holding the phone left-handed;

2. Yellow blotches/tinting on the screen;

3. Mixed-up volume buttons;

4. Glass not scratch-proof enough; and

5. Dead pixels on screen.

Now let's list everything that was supposedly wrong with the original iPhone, which incidentally celebrates its fourth birthday tomorrow:

1. Not 3G;

2. Only available at AT&T (T);

3. No keyboard;

4. Too expensive; and

5. Screen attracts smudges.

Just for fun, remember the complaints common to nearly every previous iPod and iPhone model ever released: the screens crack and scratch way too easily, the devices cost too much, and that any number of features (app multitasking, camera flash, copy and paste, etc.) isn't included.

Finally, no one can ignore the lousy performance of AT&T's network. If not for this issue, I'd be holding an iPhone 4 myself right now.

Now, let's look at what happened in the real world in the face of a set of phones that have been supposedly flawed in design, quality control, tech specs, and network performance:

IDC indicated that Apple held 16.1% smartphone market share in the first quarter. That's despite having the smallest product line in the industry, and only one US carrier.

The result is Apple's stock being up 119% since the first iPhone was released. Shares of the old guard -- Motorola (MOT), Research In Motion (RIMM), Palm (PALM), and Nokia (NOK) -- are down an average of 67% over the same time period.

The lesson to be learned here is that Apple will never release a product that's absolutely perfect, and that's okay, because Apple always nails the two things that actually move product: user interface and design. Internal engineering problems can always be fixed later on, but the human touch must always be nailed on the first try.

Haters Gonna Hate

Negative news spreads very quickly online -- especially when the topic of conversation it hot stuff like the iPhone. That's just the nature of the Internet.

Since iPhone 4 has sold in such huge numbers, there are bound to be problem units. The manufacturing and component-sourcing kinks will get worked out, and life will go on. Every major company produces flawed products at one time or another; it's how they deal with those problems that makes the difference.

One thing every Apple customer out here in the real world knows is that Apple doesn't jerk people around. I've spent enough time eavesdropping at the Genius Bars in various Apple stores to know that they don't hesitate to swap out problem products -- even when the customer is clearly being unreasonable.

Apple is long-term greedy, so they'll always make you happy today to keep you coming back.

But Are Apple Customers Really Happier?

If you want stats, let's look at what The American Customer Satisfaction Index said about Apple in 2009:

The satisfaction of Apple PC customers retreated slightly (down 1% to 84), but the small decline has done nothing to hurt the large lead Apple has enjoyed for six straight years over the Windows (MSFT)-based PC manufacturers. In fact, Apple's customer satisfaction lead is the second largest of any industry in ACSI -- only Southwest Airlines' (LUV) advantage over its closest rival is bigger.


And what does Consumer Reports say about Apple tech support?

For laptop computers, Apple scored 86 out of a possible 100. That's 23 points above its nearest competitor, Lenovo, which scored a 63. In fact, Apple scored the highest in each of the Consumer Reports categories.


So which side are you betting on?

The critics, who have been complaining nonstop since the iPhone turned the mobile-phone world upside down? Or the company that can't stop proving them wrong?

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Position in AAPL.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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