Apple Fesses Up; J&J Changes The Subject

Steve Jobs revealed yesterday why Apple's public relations department went dark when all the controversy started swirling last week over iPhone and iPads "tracking" users' locations. And it makes perfect sense. It said nothing because it had nothing intelligent to add to the conversation at the time.

Rather than "run to the PR department," top executives set out to figure out exactly what was going on, according to Steve Jobs in Miguel Helft's story in the New York Times. "The first thing we always do when a problem is brought to us is we try to isolate it and find out if it is real," he continues. "It took us about a week to do an investigation and write a response, which is fairly quick for something this technically complicated."

And, Jobs adds, "Scott [Forstall, SVP of iPhone software] and Phil [Schiller, SVP of worldwide product marketing] and myself were all involved in writing the response because we think it is that important."



The result is a document that was posted on the Apple website yesterday morning, "Apple Q&A on Location Data."

That doesn't mean that Jobs was not typically "unapologetic," as the Wall Street Journal's Yukari Iwatani Kane and Jennifer Valentino-Devries deftly put it. "Your precise location is never transmitted to Apple," he tells them in an interview. Instead, Apple gathers information from the phone about nearby cell phone towers and local Wi-Fi networks, which it uses to supplement the Global Positioning System already employed on most phones. In recent days, it discovered "bugs" in the way the phones capture and store data.

"We were surprised by them and it took us a few days to figure out what was going on," Jobs tells the Journal.

The company does admit that it could have done a better job of educating the public. "We're going to start thinking about that right away, and the time to do it is when it's on people's minds," Jobs says, adding that the competition should do the same.

Amy Lee, meanwhile, gets to the nitty-gritty in a Huffington Postpiece, "Why Google, Apple Are Tracking Your Location." Very precise targeting.

"Smartphones have given us the ability to hone in on a potential customer at a series of co-ordinates on a street," Jonathan Marguiles, vp at advertising consulting firm Winterberry Group, tells her. "That is a very, very valuable piece of information."

Now here's another way to deal with controversy: Get people talking about something else. That is what Johnson & Johnson is basically doing by shelling out $21.3 billion to take over Synthes, a Swiss manufacturer of orthopedic devices, according to Reed Abelson and Natasha Singer's story in the New York Times. The acquisition follows an annus horribilis of "manufacturing lapses, product recalls and a disappointing share price," they point out, and gives J&J something positive to talk about at the annual shareholder meeting today.

"I don't think they would have done the deal if they didn't need a distraction," Erik Gordon, an assistant business professor at the University of Michigan and a frequent critic of CEO William C. Weldon's leadership, tell the Times, which, of course, reviews the various gaffes that have beset the company. But we'll play along here and accentuate the positive.

"The deal marks the biggest takeover for J&J, which has expanded rapidly through acquisitions in recent years," writesFinancial Times' Haig Simonian. "Combining the two businesses will create a big orthopedics player, combining J&J's existing activities with Synthes' dominant position in trauma surgery."

Orthopedics "is probably the largest opportunity in the whole medical device area," Weldon told analysts on a conference call yesterday. It expects global sales of hip screws, bone grafts and other trauma tools to grow at about 7% a year. Revenue for hip and knee implants, on the other hand, is only likely to grow about 1% a year, Leerink Swann & Co. analyst Rick Wise tells Bloomberg's Alex Nussbaum.

The deal boosts J&J's share of the $5.5 billion market for tools to treat bone fractures and traumatic injuries to 55% from 5% and doubles its presence in the $9 billion spinal-care segment to 22%, Wells Fargo & Co. analyst Larry Biegelsen says.

Admitting that recalls in 2010 were "a tremendous disappointment for us," Weldon tells the Wall Street Journal's Jonathan D. Rockoff and Jon Kamp that he has assumed accountability for fixing the issues, launching a companywide review of all of its manufacturing and revamping the operations.

And in a Bloomberg News brief published on, Weldon says that he understands why people would be critical and that he's ready today to talk about what happened last year, good and bad.

"I want to bring closure to everything. I want to give clarification about what we're doing,'' Weldon said, "and I want to let people know that we're making sure we do everything we can to make sure it never happens again.''

Can I hear you say "case closed" to that?

2 comments about "Apple Fesses Up; J&J Changes The Subject ".
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  1. Keith Trivitt from MediaWhiz, April 28, 2011 at 8:47 a.m.

    Enjoyed your reductions of the PR efforts both Apple and J&J are making in the wake of bruising reputational threats for both companies. While one can make the case that J&J is simply getting on with its business by making this aquisition (rather than trying to distract the public and shareholders from its ongoing product recall issues), I think Apple is still failing to realize that its lack of transparency is starting to hurt its vaunted brand. I believe I saw a recent YouGov poll showing that consumers are beginning to lose some trust in Apple and its products. Trust and reputation are hard earned, but can be lost quite quickly, even for the mightiest of brands.

  2. Paula Lynn from Who Else Unlimited, April 28, 2011 at 9:19 a.m.

    Fess up Schmess up. It's about business and profit. Period. They'll hire twits and twats to enhance a goody two "show" image. Blah Blah Blah. All in all, both companies have the ability to make incredible products that have integral parts of our lives. We, the people, are not independent folks. We, the people, are dependent upon other people's knowledge and skills. We, the people, are bound to be controlled. It's the degree we need to negotiate.

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