Apple iPhone 4 Will Not Be Recalled: Analyst

 
 
By Nicholas Kolakowski  |  Posted 2010-07-16
 
 
 

Apple will not announce an iPhone 4 recall at its July 16 press conference, predicts one analyst, although the company could be preparing an extensive mea culpa that includes monetary compensation.

Although the iPhone 4 proved a considerable sales success in its early days of release, it has been wrestling with reports of dampened reception whenever the device's exterior antenna rim is touched. With Apple staying largely mum on the actual content of the press conference, speculation abounds that executives will take the stage to address the issue, as well as propose a solution.

In a July 16 research note, Brian Marshall, an analyst with Gleacher & Co., wrote that he expects Steve Jobs will host the event "and adopt a humble approach," that there will be no iPhone 4 recall, that Apple will offer to refund the full purchase price of the device for dissatisfied customers, and that it will focus on how the signal degradation issues are reportedly being experienced by less than 1 percent of users.

Marshall also believes that Apple will offer a verbal and monetary apology, the latter to the tune of either a free bumper that covers the smartphone's antenna rim or a $30 gift card, and will discuss the iOS 4.0.1 update from July 15. Either Jobs or another executive will also "explain minor tweaks to future production (external and/or internal) nonconductive coating to avoid short antenna issues."

When Apple pushed out iOS 4.0.1, the accompanying screen suggested the update "improves the formula to determine how many bars of signal strength to display." Apple had previously claimed in a July 2 statement that the formula it uses to calculate that signal strength was "totally wrong," and made an iPhone "liable to display four bars' worth of signal strength when it should, in actuality, be displaying as few as two bars."

Despite those claims of a software issue with the iPhone, outside groups-including Consumer Reports and a U.S. senator-have argued that hardware lies at the heart of Apple's current problems. Consumer Reports wrote on July 12 that it would be unable to recommend the iPhone 4 because of what it termed "signal strength issues" related to touching the antenna rim.

Marshall seems to feel that those complaints are somewhat overblown.

"We believe this topic has already garnered far too much attention," he wrote, "but the important part now is how Apple reacts from a public relations perspective. ... If we are correct in our preliminary assessment above, we believe [Apple] will rebound materially in short order."

Until the press conference at 1 p.m. EDT, though, it remains pure speculation what steps Apple will take.

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