Thomas Tanker, Whole Foods, Apple iphone launch

June 22, 2007

A few random comments.

It really sucks when a favorite toy gets recalled. Thomas and Friends wooden rail cars are being recalled. There’s a boat load of them, and no wonder, because they are made in China. Seems there was some lead paint used. The ABC News story is interesting. First, you can see the anger of parents in some of the comments and the immediate knee-jerk reaction to get a class action lawsuit going. Within the same news story you can see that while the trains with the bad paint are only about 4% of what they sell in the US and have been isolated to one rogue plant in China, the company RC2 is advising parents to take all Thomas Tanker toys away from their kids to be safe. The Consumer Products Commission is loudly proclaiming the danger–even though there are no reports of injuries or any impacts. Now, I am not downplaying the potential dangers of lead-based paint, but it is also possible that the real story here is hidden deep inside the news reports. It talks about the huge increase in recalls in products from China. A recent article in Economist strongly suggested that the US crackdown and China’s exports has to do with the ongoing dispute with that nation over intellectual property protection and other globalization issues. China is responding by starting to turn back US food imports at the border because they are not “safe.”

I’m only guess here, but what if a company like RC2 and an innocent and sweet little train like Thomas are actually caught up in a much bigger battle over fair and free trade on a global scale. What do you do about reputation management then? How can you possibly fight back. It sounds like the old saying, when the elephants dance, the ants had better run for cover.

Whole Foods has a growing reputation problem. It’s the same problem we’ve talked about here in relation to Microsoft. The reputation of the giant suffered hugely when it was viewed as an unstoppable giant with a near monopoly. My theory is the emergence of Google as not just a rival but a potential additional near-monopoly has taken the heat off Microsoft and made them also likeable again if not loveable. Now Whole Foods is loudly, according this article anyway, proclaiming its intention to be the only real player in the organic food retail business. Dangerous ground. Beware of what you ask for.

So, AT&T is gearing up for a huge rush of new business when the iphone is released next week. Apple has done a great job of hyping this including the front cover article in a recent issue of The Economist.

But of course, there is the danger of overhyping. What if the lines don’t materialize at the AT&T store? Is buying a phone really like buying a video game, or will many of us be willing to wait and see how things emerge? It will be interesting to watch, but one thing seems certain, by failing to manage expectations, unless it is an absolutely rip roaring success, Apple’s stock will go down and its reputation will be harmed. I think I would have opted for a little more caution.

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