updated 07:10 pm EDT, Tue July 13, 2010
Recall still viewed as highly unlikely
Following a variety of criticism surrounding the iPhone 4 antenna design, Bernstein Research analyst Tony Sacconaghi has distributed a note detailing a cost estimate for a full recall. Although he considers a product recall to be "highly unlikely," it could cost the company $1.5 billion.
Sacconaghi believes Apple is more likely to begin handing out free cases to minimize signal attenuation when the phone is held a certain way. Such a move is said to be much more affordable for the company, as each of Apple's own bumper cases is believed to cost $1 despite its $29 price tag.
"It could be done immediately, would directly address the Consumer Report's concern, and would be financially immaterial," Sacconaghi wrote, referring to recent CR tests that found the antenna design to be a significant problem.
Apple has yet to admit any problems with the hardware design, arguing that signal attenuation is common to all mobile phones held in the hand. The CR report, however, found that the level of signal loss, at 20dB in certain situations, was much more extreme than that of many other mobile phones including Apple's own iPhone 3GS.
"While it would force Apple to 'acknowledge' a design issue with the iPhone, we believe that consumers are increasingly aware of the antenna issue, and remedying it rather than dismissing or ignoring it appears most appropriate," Sacconaghi wrote. "Perhaps the bigger, longer-term concern for Apple investors is the emerging pattern of hubris that the company has displayed, which has increasingly pitted competitors (and regulators) against the company, and risks alienating customers over time."
An internal memo allegedly distributed to AppleCare employees instructed support staff to not hand out free bumper cases to "appease customers." The company is still working on a software fix, however this action has already been criticized as an improper solution that might show more signal bars but without improving call quality or minimizing dropped calls. [via CNET]