Speculations abound after Apple’s plan to hold a press conference on Friday to discuss the iPhone 4 was revealed today. This is probably Apple’s attempt to address the mounting complaints over the signal loss problems with the iPhone 4. This comes two weeks after a “stunned” Apple announced to the world that it had found a major software glitch in the iPhone’s signal-strength display.
Customers who have reported the antenna issue with the iPhone 4 are still waiting for the software update that Apple promised to release “within a few weeks” to address the way iPhones display the bars used to measure signal strength.
Earlier this week, Consumer Reports’ product testers issued a scathing report concluding that the iPhone 4 has a hardware design flaw that can cause calls to drop, and said it would not recommend the phone until Apple released a free solution for the problem. Apple has refused to comment on Consumer Reports’ findings, and has previously denied that the iPhone 4 has any hardware flaws.
Backlash from the antenna problems and less than forthright ways the company has addressed them to date have contributed to a loss of billions of dollars in market cap valuation.
Apple has a few options to pursue. The company could:
- Hand out bumper cases to all iPhone 4 buyers so far;
- Do a full recall (highly unlikely);
- Or have a press conference just to tell Consumer Reports and all of its customers to just hold the phone differently (again).
Analysts have been calculating the costs of a recall or providing a bumper case free of charge:
Piper Jaffray’s Munster says Apple could give away bumper cases that it sells for $29. Giving away a case for free at $5 each would run about $178.5 million for every iPhone 4 over the next year. That equates to 1 percent of operating income.
According to CNet News, Bernstein Research analyst Toni Sacconaghi pegs a recall at $1.5 billion. Like Munster, Sacconaghi says that a recall isn’t likely.
The cheapest option for Apple is to do nothing. Munster explains: “…we estimate that only 25% of iPhone users are periodically affected by the issue, and Apple could weather the storm by letting the current demand for the iPhone speak for itself.”
Delivering bumper cases would be an effective and easy option, allowing Apple to keep customers and Consumer Reports happy. The issue is that Apple would have to admit that there is a real design problem with the iPhone 4.