Is Apple iPhone 4's Losing Its Cool Image Due to Droid Competition, Glitches?

News Analysis: Persistent discussion about problems with Apple's iPhone 4 antenna reception and more recently that the smartphone had caused Microsoft Exchange Server crashes could have a corrosive effect on iPhone image as the coolest mobile device on the market.

I have to confess that I hadn't actually heard about the problems with the iPhone 4 and Microsoft Exchange until I was answering questions on NPR's Kojo Nnamdi show, where Rob Pegoraro from The Washington Post and I were the in-studio guests for TechTuesday.

Toward the end of the show a caller asked about a problem with the iPhone 4 making Microsoft Exchange servers crash. I guess we were all so focused on the device's antenna problems that we hadn't gone looking for other issues.

In any case, I explained to the caller that he could use Exchange's policies to prevent access until a fix was available. I found out later that there was indeed a problem, that it could be fixed by a change in a configuration file (the fix is available from Apple) and that once the change was applied - it fixed a timeout setting - the problem would be gone. Not a big issue and apparently one that doesn't affect every Exchange server.

What's more important than the problem with the setting is the fact that its existence is showing up all over the Internet. At some sites, the fix is also reported, but more often what you'll see if you go looking are alarmed messages that the iPhone 4 is makes Exchange crash. This shows that following the heat that Apple has been taking for what Steve Jobs calls "Antennagate," the company has become a lightning rod for problems, real or perceived. For every other phone, a problem like this would be handled by the support team, and it would be otherwise unremarkable. But for a public sensitized by issues with the iPhone 4 and Apple's response, everything becomes news.

Apple should be worrying about this perception problem a lot. While the company has always been a magnet for criticism, the perception is growing that Apple's iPhone may be a flaky product. And remember, it doesn't matter what the reality is, nor does it matter how much Apple's current customers may love their iPhones, all that matters in this world is perception. Right now, there's a perception that Apple has problems.

Perhaps this helps explain why the Droid X got the reception it did when Verizon released it a few days ago. In a very iPhone-like event, Verizon Wireless stores were opening at midnight to satisfy demand for the phone. Stores were selling out of the device in minutes. Lines were around the block. Verizon Wireless employees were on hand from the corporate headquarters to help make sure that Droid X supplies were managed appropriately. Within a day or two, Verizon Wireless had sold every Droid X that Motorola could build, and thousands of people were waiting to get more.

Meanwhile, thousands more are waiting for Verizon Wireless' Droid Incredible which is also sold out. I understand that some of the potential Droid Incredible buyers ended up with the Droid X, no doubt making the Droid supply issue even more complicated.

I suspect, however, that while the iPhone 4 created a demand for high-end phones, there are a lot of people who never really considered buying one. What they really wanted was an Android phone (or at least a non-iPhone) that had the same or better capabilities. A lot of people found that with the Sprint Evo when it came out, but a lot more found it with Verizon's Droid series.

What's next? Well, Apple isn't likely to have an update to the iPhone for a while, but the makers of Android devices are relentlessly building ever faster, ever better phones, and releasing them through virtually every carrier on Earth. People who can't have or don't want AT&T service with their limited data plans and reception problems have a choice.

So on one hand, Apple's iPhone is starting to lose its luster, and demand for other devices, notably the new Android devices, is growing rapidly. While Apple's iPhone isn't about to disappear from the market, that's really not the issue. The battle in smartphones centers around perception, which may or may not have anything to do with reality. And the perception is growing that the iPhone may not be the best choice out there.

Worse, from Apple's perspective, is the fact that Verizon Wireless has significantly better coverage, a more robust infrastructure, and a lot of phones that are seen by many as being at least as cool as the iPhone, but without the perception of problems.

Where does this leave Apple? Right now, Apple is right where it always was. The iPhone 4 is popular, it sells well, and it still has a certain cachet. But when perceptions are negative, the effect can be corrosive. Apple may well find that if it doesn't do anything to boost its image in public perception, the biggest lines will be at the stores selling Android devices.