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.