iPhone return rates - reflecting on a SquareTrade study

SquareTrade Inc released a perceived reliability study of iPhone versus Blackberry versus Treo smartphones. The study is designed to draw attention to SquareTrade to sell more extended warranty and insurance products. However their role in receiving warranted product places them in a position to gather data that can be useful to the industry. Similar warranty players include Warrantech, Asurion and Assurant.

MarketWatch commented, "The study, based on data from over 15,000 phones, finds that only 5.6% of iPhone users reported a device malfunction in the first year of ownership, compared with 11.9% of BlackBerry owners and a staggering 16.2% of Treo owners."

While a proportion of failures may be genuine hardware failures, the number of no trouble found (aka. NTF) is usually the vast majority. By NTF, the industry means that upon inspection at the repair facilities, the smartphone had nothing wrong with it by reference to the specifications in the repair process. This does not mean that the customer has misperceived. The customer in most cases perceived a frustration or failure. The revelation of NTF is that products are not necessarily acceptable or supportible in a cost-effective way. This is a multi-million dollar puzzle that iPhone's creators seem to understand better than most. The carbon-footprint of all these returns and refurbishments is staggering. What a waste of materials and effort.

While I am not directly involved in NTF reduction, here is my perception of why iPhone is doing so well in customer acceptance (not returning the phone):

• Apple reliability is hard won through rigorous hardware design and testing.
• Apple has a true commitment to fix customer frustrations and bugs (primarily in the software)
  
• And the icing on the cake is an update mechanism that is mindlessly simple to execute.
• The tolerance level for a beautiful device is much higher than for one which is perceived as less stylish or outmoded.
• Apple is controlling the customer care experience in stores and at their call centers (not through ATT call centers and ATT outsourcers.) The Apple KM process extends to all those who authorize returns.
• There are few understanding gaps with iPhone - the complex has been rendered simple or omitted from view. No one needs to see an APN configuration dialog such as you see in Windows Mobile or Palm OS.
• The iPhone rarely causes user frustration. It has foibles but it generally behaves well. You can be certain that all products receive a usability audit.
  
• iPhone has unrivaled features you cannot get elsewhere - the web browser is still the best mobile browsing experience.
• Apple has re-engaged the enthusiasm once felt by Palm OS customers by creating a marketplace for applications to enhance the experience and raise the investment commitment level of its customers.
• Apple brand is both strong and aspirational. Who does not like the instant kudos of being associated with an aspirational brand. This is a double edged sword if Apple should misstep.
  
• Apple in my experience is good at creating reliability for the warranty period. The report also commented upon this. Second year reliability is a concern. If this is a conscious choice by Apple, it is not something to be proud of.

The culture of care

I admire products that subtly exude care; a caring about quality. Good parents are like this too - they abide courageously with the good and the bad from their child. In the context of a product, I regard care as responsible attention to detail. Many technology products have trendy feature-sets but they have foibles that were overlooked, ignored or missed. Usable, delightful, fit for purpose, non-abusive material, non-abusive manufacturing process, fairly priced, consistent and delivered in a timely way, these are the attributes of carefully designed products.

I have a Sangean WiFi radio in my home. It's a wonderful radio with rich tones and easy setup. I use it to listen to radio stations from home and BBC on-demand programs. I set up my favorite podcast on Reciva.com (the companion site to most WiFi radios - where you store your favorites). But when I play a podcast, the radio often resets or restarts the podcast 10 minutes into playback. My guess is that Sangean skimped on the buffer memory for streaming. It makes me feel bad about the whole radio but I have resigned myself to streaming the podcast from my PC using the PC-share feature.

Consistency is one of the main factors of care. To maintain intrinsic quality, demonstrates grit and intelligent stubbornness. Apple is one of the brands that comes to mind when I think of a high-level of care and attention to detail. Their success was hard won over a long period; it is not a 'flash-in-the-pan' success. Professional artists and academics require rigorous and consistent quality standards if they are to perform and feel willing to re-purchase. It may seem like you are buying just another laptop when you buy a MacBook but you get professional-grade audio and video playback facilities as standard. The reason Apple computers have an aura of cool is because professionals recognized this quality early on and continued to use these products. People who aspired to be like these artists noticed and followed suit without necessarily understanding the linkage.

To excel at technological choices, takes luck and takes careful tending of the supply chain. I like to think of any purchase as an act of drawing up material from the earth. It is like sucking water through a hose. By taking a plastic bag in Safeway, you are driving the bag supply chain to deliver more to that Safeway store. The bag manufacturer uses oil to produce the bag plastics, package the bulk materials and to deliver the bags to that store. The oil companies literally take the material from the earth. It all sounds obvious but it requires effort and care to think about it repeatedly. Being willfully grateful is the answer. Purchasing is a privilege and should not be indulged mindlessly.

The current downturn in economics can be viewed as a time for the supply-chain and the vacuum-hose of manufacturing to allow the earth to rest. Less money in your pocket means more care with selection of your purchases - by necessity. The same economics drove Toyota Prius sales when petrol prices skyrocketed in the summer of 2008. This change in demand also drives manufacturers to supply goods that are appropriate to a more selective customer base. In reality, lower price goods or high-quality mid-tier goods will sell. For my next post, I plan to research how spending patterns changed in former deep recessions to see how it affected product quality and environmental impact.