iPhone 4 Antenna Problem Needs Apple's Attention: Analysts

Consumer Reports' announcement that it can't recommend the Apple iPhone 4 is the latest installment in a saga relating to the phone's antenna. To make good with consumers, analysts say Apple needs to act quickly.

A year ago, Consumer Reports put the Apple iPhone 3GS at the top of its smartphone rating list. The advertisement-free publication has been a champion of consumers' interests since 1936, and so while a significant accolade, it was a surprise to few, if any, that the can-do-no-wrong Apple once again came out on top.

The iPhone 4, however, is creating a new narrative for Apple.

While Consumer Reports reviewed the iPhone 4 highly-commending its display as the very sharpest, its video camera as the best it has seen on any phone and its built-in gyroscope as succeeding in turning the phone into a "super-responsive game controller"-when it came to recommending the phone, the magazine felt forced to stop short.

"When your finger or hand touches a spot on the phone's lower left side ... the signal can significantly degrade enough to cause you to lose your connection altogether if you're in an area with a weak signal," Consumer Reports' Mike Gikas wrote on the site's blog. "Due to this problem, we can't recommend the iPhone 4."

The position is a new one for Apple officials, who went from denying there was a problem to announcing, to their "stunned" surprise, that there was an issue, but that it simply had to do with a bad software formula. On top of customer complaints and disappointments, what kind of fallout should Apple expect from losing the backing of such a respected and trusted publication?

"I don't know if the person usually so adroit at handling these types of matters is on vacation, or what," Charles King, an analyst with Pund-IT, wryly told eWEEK. "Until now it's been a company that could bend the news cycle to its will, but it's just gotten hammered on this day after day. [Apple CEO] Steve Jobs is definitely gritting his teeth somewhere."

King added that it was a mistake for Apple to suggest that people buy buffers-rubber covers that ring the iPhone 4 and reportedly help to resolve the antenna issue. "If it's a technical error, it's the company's responsibility to do that. They should be sending out [bumpers] in large numbers," he said, explaining that the fewer steps Apple takes now, the greater the mess, and expense, it's likely to face later. "They've got to move quickly to address this."

Analyst Ken Hyers, with Technology Business Research, agrees. "I think that Apple is at a crossroads with the iPhone 4," Hyers told eWEEK. "The device has moved well beyond the Apple fan-boys and tech-geek cognoscenti and is truly a mass-market device. That's great news for Apple (and AT&T) because it means higher sales, but it means that Apple needs to recognize that its customer base expects the device to be an exceptional phone, not just an exceptional platform for running mobile applications."

Hyers, too, said that Apple "needs to do something concrete," such as begin sending out bumpers to the millions of people who have already purchased the smartphone.

Consumers have also made their frustrations known with more than simple complaints. Early this month, two iPhone 4 owners filed a class-action lawsuit in a Maryland District Court on behalf of all iPhone 4 users, accusing both Apple and AT&T of deceptive trade practices, intentional misrepresentation and fraud by concealment, among other unsavory practices.

In a San Francisco District Court, two other iPhone 4 owners filed a similar suit, accusing Apple alone of "perpetuating a massive fraud upon hundreds of thousands of unsuspecting customers" by releasing a phone it knew to have antenna issues. The suit also called for Apple to send each iPhone 4 owner a bumper free of charge.

Neil Mawston, an analyst with Strategy Analytics, calls the antenna issue the "first major chink in Apple's armor since the iPhone launched in 2007." However, he told eWEEK, his firm doesn't expect the Consumer Reports article to impact Apple's established fan base-though it will make consumers on the margins think twice before purchasing.

"The iPhone brand remains gold-plated," Mawston said, "but the company has probably lost some heart-share among consumers during this episode, and its attempts to explain and fix the problem have so far been less than convincing."