They come off looking like complete fools at best, since their huge public spectacle was based on "only Apple can do this," and now that it turns out they could have done it themselves, it just looks like they're incompetent.
Meanwhile Apple comes off as fully committed to their customers' privacy even when it means standing up to the US government. The fact that the FBI was able to get into this phone doesn't really change much; the mere fact that Apple could have gotten into it already means that security was lacking on it, but it seems to me that everybody understood that this was an older model and newer ones are better. Which is funny, because I'm pretty sure both the FBI's proposed attack from Apple and whatever the FBI did themselves would work on the latest hardware too, but just about everyone is convinced that the Secure Enclave would prevent it. And then in September Apple will announce the iPhone 7 with Even Better Security, further demonstrating their commitment in this area.