Apple: Nicked, Chipped, and Bruised

Consumers have spoken. Or more accurately, tweeted, grumbled, blogged, and whined. After Apple (Nasdaq: AAPL  ) riled iPhone owners with its own maps application that lacked ... direction, new reports of scratches on brand-new iPhone 5s are bolstering arguments that Apple dropped its standards for its latest product.

It may just be coincidence that it's the furthest product out from Steve Jobs' reign, but it also shows Apple may not have the intense, almost spiritual, adherence to quality that it once had.

Maps
By now, you've heard the opinions against Apple's Maps. Google's (Nasdaq: GOOG  ) Android phones now have a clear competitive advantage in mapping over iPhones. This is important because Google Maps is the second-most-popular application across all smartphones, behind the leading application, Facebook (Nasdaq: FB  ) . On iPhones specifically, Google Maps' popularity only drops to third behind iTunes, according to Nielsen.

Nokia (NYSE: NOK  ) and Microsoft (Nasdaq: MSFT  ) , on the other hand, have both already invested heavily in mapping. In 2007, Nokia made its largest acquisition ever and spent $8.1 billion to purchase mapmaker Navteq to help build its map database of over 200 countries. On the company's new Lumia 920 phone that runs Windows Phone 8, a user can point the camera at businesses and see reviews overlaid on the screen, a feature they call City Lens. And even though Facebook's Zuckerberg claims it "wouldn't really make much sense" for his company to build a phone, the social network has piles of location data built upon business pages.

Many claim that, because it's a software issue, it can easily be fixed with an update. I would argue this particular mapping software takes a lot of time and data to code correctly, especially to build it to Apple standards. For evidence, Google Maps has been out for seven years. But, let's be optimistic and say Apple can issue an update in the short term. Well, now we have a hardware issue.

Scratches
Apple's packaging is superb marketing. The consumer just feels that an Apple product is special because of its well-designed exterior. Unfortunately, like a recent restoration of a painting of Jesus Christ, the new iPhone is a little rough around the edges. Literally.

iPhone 5s, made with aluminum instead of previous versions' stainless steel, are arriving in the hands of customers with nicks and scratches. AllThingsD reports that out of 1,000 people responding to a poll on the MacRumors website, "45 percent claim some sort of visible scuffing to their black iPhones, with the vast majority of those being damaged directly out of the box." Walt Mossberg of The Wall Street Journal questioned "Scuffgate?" in a tweet. The allure of new iPhones is marred by scratches.

It's not a terminal problem: A lot of cases will be sold, Apple will be exchanging a lot of phones, or customers will just accept their imperfect purchases. But it does harm the brand Apple has so meticulously built.

What's going on, Apple?
Let's hope Apple wasn't too focused on its Maps that it forgot to test the durability of the new case material. If so, Apple is focusing on the wrong things that made them great, like designing stellar hardware. Maybe Apple needs to follow Google's recent "More wood behind fewer arrows" strategy -- meaning regaining focus on a few initiatives and away from a myriad of other tangential projects. It was this extreme focus that Steve Jobs brought back to the company when he returned as CEO in 1997.

Planting another seed
For Apple investors, it's important to know that iPhones are only one part of Apple's revenue stream, and Apple still sold 5 million new phones this weekend. For a more in-depth look at Apple's potential future, along with three reasons to buy and sell, grab your copy of our new premium report. Click here to get started now.

 If you prefer to see Microsoft's chances, read up on its threats and opportunities listed in our premium report on Microsoft.

Fool contributor Dan Newman hopes Apple fans aren't as nicked and chipped about this article asis the new iPhone 5. He does not hold shares of any of the above companies. Follow him @TMFHelloNewman.

The Motley Fool owns shares of Google, Apple, Microsoft, and Facebook.
Motley Fool newsletter services have recommended buying shares of Google, Apple, Microsoft, and Facebook. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft and a bull call spread position in Apple. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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