Apple offers free iPhone 4 cases to appease users

A defiant Steve Jobs on Friday rejected any suggestion that the iPhone 4's design was flawed, but offered consumers free phone cases to address reception complaints that have hurt Apple Inc's image and shares.

A defiant Steve Jobs on Friday rejected any suggestion that the iPhone 4's design was flawed, but offered consumers free phone cases to address reception complaints that have hurt Apple Inc's image and shares.

At a rare, 90-minute press conference, the Apple chief executive asserted that reception issues were a problem shared by the entire smartphone industry, naming specifically rivals Research in Motion, Samsung Electronics and HTC Corp.

Jobs maintained that there were no problems with the iPhone 4's wraparound antenna design and accused the media of trying to "tear down" a company that had grown so successful.

After the June 28 launch of the iPhone 4, some users have reported drastically reduced signal strength when they held the touch-screen phone in a certain way, in what has come to be known as the "iPhone 4 death grip."

Apple has lost more than $16 billion of its market value since then, with at least some of that attributed by analysts to the iPhone snafu.

"This has been blown so out of proportion, it's incredible," Jobs, 55, told reporters and analysts in an auditorium at Apple's Silicon Valley headquarters.

"This is life in the smartphone world. Phones aren't perfect. Most every smartphone we tested behaved like this," he said, referring to the controversy as "Antennagate."

Shares of Apple climbed as much as 1.4 percent after Jobs offered the free case to users, but closed 0.62 percent lower at $249.90 in an overall market sell-off. Some analysts said they had expected more from Apple to address the issue, and thought that Jobs should have taken full responsibility.

"Apple is held to a much higher standard. You don't want to compare yourself to the competition," said Ashok Kumar, an analyst with Rodman & Renshaw. "He did a disservice by comparing the Apple quality to Motorola and HTC."

Others, however, lauded Jobs -- who apologized to users only after he was asked specifically if he was sorry -- for offering a free fix.

Jobs said Apple will offer the free cases through Sept 30, when the company will reassess the situation. "Maybe we will continue it or maybe we will have a better idea," he said.

If iPhone 4 users were not satisfied, Jobs said Apple will offer a full refund within a month.

A CROCK?

HT Image

Jobs admitted that Apple and the phone were "not perfect" and said he first heard about issues with the wraparound antenna -- which some experts had hailed as an innovation -- 22 days ago. He called media reports that he had known about the issue before the June launch a "total crock."

The high-margin iPhone is Apple's single most important product line and yields 40 percent of its revenue. The company is embarking on an ambitious push to drive iPhone growth in overseas markets. Jobs said Apple has sold well over 3 million units of the iPhone 4 in the three weeks since launch.

"Jobs was a little bit defensive, and Apple has a tendency to do that," said Gartner analyst Van Baker. "I think they'll be criticized for that. But at the same time, the position that they outlined about their product relative to others is fair, and their offer is generous."

But some shoppers who were interviewed by Reuters at an Apple store in New York were not impressed by the offer of a free case. "I probably wouldn't buy one still. It's expensive and the calling plan is restricted, and now the case is restricted," said one shopper, Nathaniel Johnson.

Another shopper, Jason Slab, said, "The fix doesn't make much sense; it just seems cheap."

In a Reuters online poll, 52 out of 92 respondents said Apple's offer of a free case was not the right response, and 49 out of 84 said the entire controversy made them less likely to pick one up.

Analysts and communications experts say the "Antennagate" controversy was less about a flaw in the iPhone than Apple's tone-deaf response to it.

Its first public statements advised consumers to hold the phone differently. Then, earlier this month, it blamed the problem on a software glitch that overstates signal strength.

The controversy followed Apple's very nasty public spat with Adobe Systems Inc and the imposition of new restrictions on app developers, which many viewed as onerous.