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Consumer Desertion, $28M Tax Bill, Fines For Misleading Consumers: Welcome To Apple OZ

By David Richards | Sunday | 02/12/2012

12 months on from the death of Apple's former CEO Steve Jobs, the US Company is facing the unthinkable: consumers are turning off their once cool gadgets. In Australia the Company is also facing a tax probe after already being slugged millions this year for misleading consumers

Now the Jobs magic has gone and the Company who has a reputation for being " arrogant" at the best of times is struggling to hold onto their brand image as companies like Google and Samsung eat into their once dominant market.

As the "cool" of Apple comes under pressure from the heat dished out by their competitors, one has to question whether the Apple marketing model is broken.

While the likes of Samsung, LG and Google run an open shop, Apple has chosen to run a closed shop with all local marketing controlled from the US by Apple.

 Local CEO Tony King now refuses to talk to the media and the Company's local marketing gurus, including the likes of Communications Manager Fiona Martin and Marketing Manager Rob Small have survived for the past five years on a diet of "no comment" or "We cannot comment on that issue" .

Whenever there is a local problem Apple goes all dumb, often refusing to comment despite there being legitimate grounds to offer an explanation on technical issues affecting Apple customers.

Patrick Lee, the CEO of iExpert, a Company that repairs thousands of faulty or broken Apple products in Australia, revealed to SmartHouse recently that Apple is "ignoring" a serious problem with the iPhone 4 microphone which cuts out due to a component failure on the iPhone 4 motherboard.

Lee, whose Company repairs both iPhones and iPads, claims that hundreds of customers come to him with faulty home switches or power switches.

Apple did not return our calls on the issues outlined by Lee.

This quarter the company's popularity is diving and rivals are scooping up disgruntled Apple fans running into the peak buying period.

ABI Research recently revealed that Apple's share of the tablet market fell to its lowest ebb since the iPad's launch in 2010.

There was a time when Apple held local PR events in Australia and actually engaged with the media. They even laid on Xmas parties for the media and analysts.

Often the briefings would take place at the Company's headquarters, but as soon as they became rich and famous their media briefings went out of the door replaced by arrogance and "no comment". Even the Xmas party bit the bullet.

Recently Apple also lost the title of smartphone king to Samsung due to supply problems and a tricky design that saw manufacturers struggling to deliver the volumes that Apple needed running into Christmas.

Experts say the trend could be part of an Apple backlash and another sign that gadget fans are "spoilt for choice'' this Christmas by competitive products which are hard to split.

Shortly after the iPhone 5 was launched in Australia problems emerged. Some users noticed their new handset was chipped right out of the box. Others found that the switch from a glass back plate to anodized aluminium made the iPhone — particularly the black model — more susceptible to unsightly scratches and blemishes.

Apple had incorporated an aluminium unibody construction for the first time in the iPhone 5 — similar to what Apple has used in MacBooks and the iPad, that is, a single piece of aluminium hollowed out with a CNC machine.

"The issue, though, is that aluminium is a fairly soft metal," said the expert with others saying it was "stupid of them to use such a material while expecting mass volume production. 

"It was a case of designer versus manufacturing expert, the designer won and Apple is paying the price" said a US Analyst.

Another problem was that at the launch of the iPhone 5, Apple raved on about the ditching of Google Maps in favour of a new mapping system from Apple. The only problem was that it was a dud with several Apple executives getting the chop at the once perfect Company since the problem was revealed.

The issue was so bad that Apple CEO Tim Cook actually issued a formal apology for the app. Local Australian management at Apple refused to comment despite the problem affecting hundreds of local customers.

 Some of the problems include 3D and satellite images being buggy (like bridges looking wavy, or dropping off in the centre); navigation directions sending people to incorrect locations; and out-of-date information on local businesses.

The Maps app also lacks transit directions, which Google Maps has.

Mid last month the Australian Tax Office hit Apple Australia with a $28.5 million bill for back taxes.

You guessed it, Apple has refused to comment.

Details on the $28.5 million bill are unknown, as it is illegal for the ATO to comment on individual cases.

The tax minimisation scheme goes something like this:

Apple's Australian arm is owned by Apple Operations International, which is a subsidiary located in Cork, Ireland. They in turn operate the Australian business. Questions are now being asked as to whether Apple has engaged in transfer pricing in an effort to minimise their taxes.

Last year, Apple earned $4.87 billion in revenue from Australia. Its total tax bill for its 2011 fiscal year was $94.7 million.

In August Apple Australia was  fined $2.29 million by the Federal Court after it was accused by the Australian Competition and Consumer Commission for labelling its new iPad as compatible Australia's 4G mobile data networks when it was not.

The court ruled that Apple implied "that an iPad with WiFi + 4G could connect directly to the Telstra LTE mobile data network, which it could not do". Apple offered to refund buyers and post a warning on the site that the devices were not compatible in Australia.

Again the local Company refused to comment.

Apple does not have a PR Company but they do employ at least four PR professionals to push out US press releases. They are experts at saying  "We cannot comment or no comment".

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