Apple faces the music on iPhone 4 flaw, unlikely to issue a recall
Apple Inc is likely to announce a fix for the iPhone 4's reception problems on Friday rather than recall the device, hoping to stem a growing chorus of complaints and avert any lasting damage to its reputation for quality products.business Updated: Jul 17, 2010 02:10 IST
Apple Inc is likely to announce a fix for the iPhone 4's reception problems on Friday rather than recall the device, hoping to stem a growing chorus of complaints and avert any lasting damage to its reputation for quality products.
Apple, which surprised consumers and investors when it said it will convene an iPhone 4 press conference, has kept mum on what it will do. But analysts are betting that — despite lawsuits, a poor review from Consumer Report and growing user complaints — it will not initiate a recall.
Investors will be looking for an explanation of what analysts call a minor issue, but which has managed to cause firestorm. A growing furor over iPhone 4 signal-strength flaws has hurt Apple's shares ahead of its quarterly results next week.
Since June 28 — days after the launch, when complaints about faulty reception began surfacing on Internet technology websites — Apple has lost about $16 billion in market value, with at least some of that related to the iPhone controversy.
"We do believe that Apple needs to be more proactive in identifying and addressing the issues for the iPhone 4," BMO Capital Markets analyst Keith Bachman said.
Some analysts suggest Apple could simply offer free protective cases for the device — which prevent the signal interference — at a cost of $1 to $2 each. That solution could cost $45 million, according to estimates. An in-store repair programme could run as much as an estimated $300 million.
Bloomberg and the Wall Street Journal on Thursday reported that engineers had warned Chief Executive Steve Jobs in the early design phase about the antenna design. Apple spokesman Steve Dowling said the Bloomberg report was "not true," while declining to comment on the WSJ report.
Some users of the phone complain that reception turns weak when the device is held in a certain way that has come to be jokingly called the "iPhone 4 death grip."
Apple has blamed a software glitch that overstates network strength, but others have said the antenna on the redesigned device is at fault.
Analysts noted that Apple has bowed to pressure in the past to mollify consumers. In 2007, after Apple slashed the price of the original iPhone two months after it went on sale, the company offered a $100 store credit to appease angry buyers.