Apple Siri Lawsuit: Is 'False and Misleading' Accusation A Sign of Growing Disenchantment With Tech Giant?

 @cavanshays on March 14 2012 10:51 AM
Apple Siri Lawsuit
Apple might have more cash than the U.S. government, but a wave of disillusion with the seemingly magical tech giant has gained momentum as of late. The latest example includes a class-action lawsuit over its "false and misleading" Siri ads. Reuters

Apple might have more cash than the U.S. government, but not everybody is enamored with the seemingly magical tech giant. Take the latest example of disillusionment: a class-action lawsuit over false and misleading advertisements touting Apple's voice recognition virtual assistant Siri.

Frank M. Fazio, who lives in New York, filed suit with the U.S. District Court in San Jose, alleging that Apple's claims about Siri, which is available on the Iphone 4S, are fundamentally and designedly false and misleading, according to Mashable.

For example, the suit reads, in many of Apple's television advertisements, individuals are shown using Siri to make appointments, find restaurants and even learn the guitar chords to classic rock songs or how to tie a tie. According to the plaintiff, the commercials for Siri drove him to buy the iPhone. However, Fazio has had trouble with the software and he alleges that Siri does not perform as advertised.

Fazio's specific problems include, when asking for directions, Siri either did not understand him or, after a long pause, responded with an incorrect answer. The lawsuit notes that Siri is a beta product and that the particular software is evolving, according to the Washington Post.

The suit raises an interesting question: Has Apple itself set its standards so high that a backlash against its products and promises is inevitable?

Prior Class-Action

This is not the first time Apple has faced a class-action lawsuit. In July 2010, users of the iPhone 4 filed suit against Apple for a faulty antenna. This legal entanglement, known among tech literati as Antennagate, began when two Maryland residents accused Apple and AT&T of negligence, fraud and deceptive trade practices, according to an article from PC Mag written at the time.

The lawsuit was settled in mid-February, combining the 18 different individual lawsuits against Apple that claimed the company misrepresented itself by concealing material information in the marketing, advertising, sale, and servicing of its iPhone 4-particularly as it relates to the quality of the mobile phone antenna and reception and related software, reported PC Mag. The resolution includes $15 in cash or a free bumper case for 25 million affected iPhone 4 users.

Apple's Marketing Magic

As CEO, the late Steve Jobs had one primary strategic goal -- show the world that Apple products were not just good, but magical. From production, to packaging to promotion, Jobs seemed to have the ability to cast a spell on consumers.

But what might appear to be pixie dust to some consumers is over the top marketing to Fazio. In his lawsuit, he says: Notwithstanding Apple's extensive multimillion-dollar advertising campaign showcasing the Siri feature, and the fact that the iPhone 4S is more expensive than the iPhone 4, the iPhone 4S's Siri feature does not perform as advertised, rendering the iPhone 4S merely a more expensive iPhone 4. Though the advertisements might make Siri seem like something otherworldly, in reality it does not live up to the hype, he claims.

Overhyped buzz is something Apple has had to struggle with since the release of the original iPad in April 2010. After the unveiling of the latest version of the iPad last week, many Apple watchers lamented that all the build up for this new machine was unwarranted -- all it has is a better display and updated camera.

By and large, the new guy is the same as the old guy (Home button included), but with a few nice amenities that could very well convince OG iPad owners to upgrade. Upon touching the HD variant, it's not the overall form factor that grabs us -- it's the screen, critiqued Engadget's Darren Murph.

The first thing you should know, and also the reason there aren't many pictures, is that as far as weight and shape, it's almost exactly the same as the iPad 2. They wouldn't allow comparison shots -- probably because the new iPad is a little thicker -- but the dimensional differences are minor and the overall feel is near-identical, commented TechCrunch.

One problem for Apple going forward is getting by with the loss of Jobs, who died last year. The Globe and Mail referred to Tim Cook as the company's less charismatic new CEO. Though he attempted to whip up a frenzy of free advertising and buzz, he is no Jobs.

Nobody whipped up the Mac faithful like Steve Jobs did. It would be unfair for Tim to even have to try to play that exact role, Tim Bajarin, an analyst with California-based Creative Strategies Inc., told the paper. Rather, he presents a very stable corporate message and image ... He was at ease, in control.

They've lost that chief salesman ... but it's quite smart, during this tumultuous period, not to deviate radically from their strategies, said Arthur Fleischmann, partner and president of Toronto agency john st. You watch [Mr.] Cook onstage, and it's a clear extension of the brand strategy.

The Apple Analyst Who Says 'Sell'

On Monday, Apple's stock sky-rocketed, closing at $552 a share, an all-time record for the tech giant. Apple's market cap is now over $514 billion, exceeding Exxon's - the No. 2 company with a $403 billion standing - by more than $100 billion.

Yet one bearish analyst continues to hold to his sell rating, no matter how high the stock climba. According to Bloomberg News, Edward Zabitsky, an analyst with ACI Research in Toronto doubts Apple will be able to maintain the margins of its top product, the iPhone. He's betting that a new web standard called HTML5 will overcome some of the deficiencies of web apps that led to the rise of so-called native apps, the type sold in Apple's App Store.

Zabitsky expects Apple iPhone prices to drop in order to better compete with the likes of Android and Windows. Then, he predicts, the gross margin on the iPhone will fall from over 50 percent to just 25 percent, according to Bloomberg. If a price war breaks out in Android phones, Samsung wins hands down, he said. He also noted how carriers are already shifting some weight, such as Verizon's offer of more data per month to Android owners.

Zabitsky is not alone. A chorus of analysts are voicing similar opinions on the AAPLinvestors blog post, iPhone Death Watch. Reasons for their sell ratings include the illusion of hypergrowth, a fading cool factor and cost.

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