What will Apple say about the iPhone 4?

A case giveaway? A recall? Duct tape? Analysts say any of those options, and nothing, is possible

By now, the entire civilized world knows that Apple Inc. has called a press conference for tomorrow, presumably to address the antenna and reception problems experienced by some iPhone 4 users.

There is speculation that Apple could announce a program to give away a $29 Apple-branded iPhone 4 Bumper case that would fix the wireless signal reduction problem. The disruption occurs when a user holds the lower left side of the phone and covers the gap in the antenna that encircles the exterior edge of the phone.

Consumer Reports recommended that Apple give a plastic-and-rubber bumper or some other type of case to iPhone 4 owners, since its testing showed that a bumper would help prevent the reduction in the wireless signal.

Consumer Reports had issued an earlier finding that it could not recommend the iPhone 4 because of the reception problem. Even putting duct tape over the gap on the lower left side can help, as can holding the phone differently, the magazine said, but it noted that those solutions put the burden for a fix on the user.

Apple did not respond to requests for comment.

Since Consumer Reports is a respected, independent testing authority, its recommendation to give away a bumper has considerable weight, as several financial analysts have noted. Bernstein Research analyst Toni Sacconaghi, for example, pointed out that an Apple-branded iPhone 4 Bumper costs the company $1 or less, so a giveaway would be "financially immaterial" and would cost much less than a full recall.

While a bumper giveaway might sound like a logical move, several analysts today said Apple still could appear at the Friday event and obfuscate the issue and then give away nothing. Some have even suggested that Apple might just use the event to announce the release of an update to the iPhone operating system -- indeed Macrumors has said that iOS 4.0.1 will ship today with a new signal strength indicator for the phone. Apple first described the need for the update in a July 2 letter on its Web site.

Successful as it is, Apple can be stubborn for many reasons, analysts said, and it might avoid a hardware fix, a recall or a bumper giveaway because it wouldn't want to admit that it made a mistake in the design or testing of the iPhone 4 before it went on sale.

"They need to acknowledge there is a problem, which they probably won't do very effectively," said Jack Gold, principal analyst at J.Gold Associates LLC. "They should say they've heard their customers and take the complaints very seriously, even if just a small minority of customers are experiencing problems. I suspect they will downplay this and say how many happy and loyal customer they have."

Gold and others said the signal indicator fix (which basically makes the bars bigger on the interface) is a red herring for the overall reception issue. "It's a lame excuse saying they were stunned that their software calculations on signal strength were wrong," he said. "The question is, will they step forward and take some responsibility and the do the right thing for customers and their credibility or just continue to obfuscate and make excuses?"

Gartner Inc. analyst Ken Dulaney basically agreed. "There are two things going on -- a software [signal strength] bug and an antenna design problem," Dulaney said. "Apple has left it very easy for users to conclude that the antenna issue could be overcome by software."

But Dulaney said a software fix is not enough, a position bolstered by the Consumer Reports testing and his own insights. Telling customers to hold the phone differently in order to improve signal strength, as Apple has suggested, "would not be acceptable to most, [meaning] Apple criticism on the issue would continue," he said.

Dulaney went so far as to say that Apple might actually come up with some kind of "aesthetically pleasing tape" to fix the problem, but he agreed that a free case would be the best option. And customers should be offered refunds if a free case doesn't work, he said.

Dulaney said he would be surprised if Apple issued a recall because of the reception problem, since processing the units during a recall would prove to be an "enormous task."

Whether the reception problem is due to a software glitch or, more likely, a hardware problem, "Apple should just fess up and do what they need to do in order to get customers a phone that works properly," said Zeus Kerravala, an analyst at Yankee Group Research Inc. "Their obligation is to give customers a working phone, not just skirt the issue continually."

Matt Hamblen covers mobile and wireless, smartphones and other handhelds, and wireless networking for Computerworld. Follow Matt on Twitter at @matthamblen, or subscribe to Matt's RSS feed. His e-mail address is mhamblen@computerworld.com.

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