The interwebs are abuzz over Jon Stewart calling out Apple as “The Man” for the search warrant that was executed on Brian Chen’s house. I love The Daily Show and normally agree with a lot of what I hear. On this topic, we happen to disagree.
Consider things from Apple’s perspective. Their secrecy is part of the appeal. Everybody wants to know what they’re going to do next, and the company does an excellent job of controlling the flow of information. They have a right to do this. They work within regulations and their shareholders are obviously happy.
So you’ve got this brand new iPhone in the works, and it’s impressive. It’s made of higher quality materials, build quality is going to go way up, the new CPU is much faster and more power efficient, it has a bigger battery and a higher resolution camera in addition to the new camera on the front. If you’re Apple, you want to keep these details secret. Less people want to buy this year’s model if next year’s is a couple months away. This is in contrast to cars, where the current model often becomes more attractive to a large segment of buyers, because it’s available at a discount. Apple doesn’t do discounts like that. The price on today’s model normally doesn’t change in the lead-up to new product. When new models are released, Apple will pay you the courtesy of upgrading your order (if you ask) if you placed it in the preceding 10 days, but if it’s day 11 you’re probably out of luck. This is also perfectly legitimate. The result is less overstock, which means less discounting after the new model is out.
Leaking the new iPhone probably cost Apple millions in revenue. While it isn’t really a secret that Apple has an annual release cycle for iPhone, the previously-described effect is so strong that Apple is selling more iPhones today than it did during the holiday quarter. Think about that. Now that the forthcoming iPhone is common knowledge, I’m expecting that we’ll see a more pronounced dip in sales over the next month or so.
The evidence to date suggests quite clearly that after the device was left at the bar, none of the people who handled it afterward did the right thing. The original finder didn’t make enough effort to return the device directly to Apple. He took money from Gizmodo, and handed it over. Gizmodo knew what they were getting, and they didn’t return it until Apple legal counsel asked for it back.
Leaving aside the lost sales from the current model, that prototype was assuredly one of a relatively small number of units. One-offs like that are normally costly to produce, on top of untold millions in research and development.
The long and short of it is that a crime occurred, and the police are obligated to investigate. Apple could probably intervene, but at this point in the game it isn’t fair to say Apple is going too far. Better to make an example of these fools as a warning shot to anyone else who might consider acting similarly. You can guarantee whatever money Gizmodo made from ad sales premiums when the story broke is but a drop in the bucket relative to what Apple lost by Gizmodo’s irresponsible behavior.
You might think Apple’s behavior is certainly reminiscent of The Man, but Cult of Mac made a rare good point about how things work at 1 Infinite Loop that lead me to think otherwise.
On the topic of AT&T, Mr. Stewart and I are one. Despite my overall disagreement with his arguments, the bit was hilarious.
* This post is a response to a comment by my good friend Josh Bernstein, on Facebook. I decided it was a little long to stick in a comment.