by Tom Kaneshige

Apple Suffers Bruising Week

News Analysis
Aug 02, 20133 mins
AndroidComputers and PeripheralsConsumer Electronics

From labor issues that span the globe to flat retail store earnings to momentum-grabbing competitors to pressure from the Feds (and the list goes on), this is one week Apple executives, investors and fans would like to forget.

From internal strife to competitors hitting their stride, Apple is having one of the roughest weeks of the year. This comes on the heels of a nasty hack to its developer’s site that Apple is working to restore, although developers said earlier this week that it’s still down.

Bad Week for Apple
  • Apple had to respond to a China Labor Watch report alleging abuses of workers at key supplier Pegatron. You may recall Apple facing labor abuse accusations more than a year ago. It seems to be a thorn in Apple’s side that won’t be going away anytime soon.
  • The China Labor Watch report was entitled “Apple’s unkept promises: cheap iPhone come at high costs to Chinese workers,” which seems to support rumors of a cheap, plastic iPhone coming to market. Such leaks ahead of product announcements have hurt Apple’s earnings in the past.
  • Apple’s labor troubles weren’t confined to overseas suppliers, either. Two former Apple Store employees filed a complaint claiming that Apple shortchanged them . Apple requires store employees to punch out of their shift and then stand in line and go through a security check to make sure they aren’t stealing products. The complaint claims this takes 15 to 30 minutes–time they’re not getting paid for, which equates to $1,400 to $1,500 annually per employee.
  • The Apple Store employee lawsuit follows bad news about Apple Stores themselves. Retail store revenue in Apple’s most recent quarterly earnings was flat compared to the same quarter last year, even as revenue grew overall. The Wall Street Journal reported that Apple is nickel-and-diming basic supplies such as paper and pens at the stores.
  • Google’s Motorola unleashed a new smartphone, the Moto X, that will no doubt pose a serious threat to Apple’s iPhone, as well as Samsung phones. A new competitor in the market, especially from hated rival Google, is the last thing Apple needs right now.
  • Speaking of competitors, Samsung Galaxy S3 and Galaxy Note 2 ranked higher in customer satisfaction than the iPhone 5 and iPhone 4S in the American Customer Satisfaction Index (ACSI) released earlier this week. Apple had led in the May ACSI. “If the Galaxy S4 performs well-or even better-in the eyes of customers, Samsung could threaten Apple’s dominance in overall customer satisfaction,” says David VanAmburg, ACSI director.
  • In the tablet market, a new report from U.K.-based Strategic Analytics found that Apple’s share of the global tablet market is 28.3 percent in the most recent quarter, a dramatic fall from 47.2 percent in the quarter the year before. Android’s share climbed to 67 percent .
  • After a federal judge ruled last month that Apple colluded with publishers to raise ebook prices, the feds and states are now looking to press Apple to revamp its ebook practices. Not only do they want Apple to tear up existing contracts, the AP reports, they want Apple to let rival ebook sellers like Amazon provide links inside their iPhone an iPad apps to their own book stores.
  • This week, Apple dropped top executive Bob Mansfield from the leadership team to work on special projects.
  • One more thing: Georgia Tech researchers have developed a proof-of-concept attack called Jekyll . It uses Trojan horse-style apps to sneak malware past Apple’s app review process, in order to infiltrate iPhones and iPads.

TGIF, Apple.

Tom Kaneshige covers Apple, BYOD and Consumerization of IT for Follow Tom on Twitter @kaneshige. Follow everything from on Twitter @CIOonline, Facebook, Google + and LinkedIn. Email Tom at