Today, Apple announced on its tech page that it shipped some iPODs with an unwelcome pest nesting inside.
Apple said [that] . . . less than 1 percent of Video iPods — pocket-sized devices that can play music files and video clips — left its contract manufacturer carrying the virus RavMonE.exe, which affects computers running Microsoft Corp.’s Windows operating system.
‘So far we have seen less than 25 reports concerning this problem. The iPod nano, iPod shuffle and Mac OS X are not affected, and all Video iPods now shipping are virus free,’ the company said on the site.
A few thoughts.
First, it’s always fun to see Apple take a shot against the guys at Redmond. Said Apple:
As you might imagine, we are upset at Windows for not being more hardy against such viruses, and even more upset with ourselves for not catching it.
In standard L&E talk, the question here is who is the cheaper risk avoider of viral infection through portable music devices. There is at least one book on the law and economics of computer security, but I’m not sure how the analysis would play here. Putting liability on Microsoft for viral problems would produce broader social benefits, but might produce solutions that are inelegant. Apple, by contrast, can solve this problem with better monitoring. Which leads me to…
Second, the reference to a “contract manufacturer” suggests that Apple outsourced its software package integration outside of the States. I wonder what kind of policies (failed to) exist to deal with quality control at the contract plant? This issue reminds me of the agency cost problem with outsourcing that concerns George Geis.
Third, in case you were worried, Jobs’ lawyers have tried to immunize the company against this very scenario. According to the contract that Apple sent me with my (now defunct) mini, using iPOD software, my only remedy for software defects is a “refund of the purchase price”. Apple sternly warns that:
“TO THE EXTENT NOT PROHIBITED BY LAW, IN NO EVENT SHALL APPLE BE LIABLE FOR PERSONAL INJURY, OR ANY INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES WHATSOEVER . . . ARISING OUT OF OR RELATED TO YOUR USE OR INABILITY TO USE THE APPLE SOFTWARE . . . [More confusingly] In no event shall Apple’s total liability to you for all damages . . . exceed the amount of fifty dollars ($50.00). The foregoing limitations will apply even if the above stated remedy fails of its essential purpose.”
I think it’s fair to say that clauses like these are likely to be enforced by a small number of judges, but that it seems unlikely that were a virus to do real damage to a user’s computer, Apple woudl easily escape with a refund + $50.00 remedy. Unlike, say, the purchase of ordinary software, end users buying iPODs don’t reasonably expect the product to cause infection – they believe (rightly or wrongly) that the major component they are buying is the hardware. To protect itself from damages, Apple should try to push viral protection to its Microsoft users through iTunes, if that is a technically feasible solution, rather than relying on users to remedy the problem themselves through self-purchased (and additional) software.
[Regular readers will know that I’m mildly obsessed with the economics of iPOD’s disfunctionality. I should disclose that I’ve had my nano for four or so weeks now, and it is working well. I suppose. The last week I haven’t been able to use it because the iMAC died for lack of power. Luckily, I’d bought the extended warranty. That will show you, Mr. Jobs.]