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Analyst estimates iPhone 4 recall to cost $1.5 billion

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]




by MacNN Staff

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Comments

  1. blueskymactech

    Joined: Dec 1969

    +3

    Becoming another Microsoft?

    Hey Steve...

    Now that Apple Inc. has become so popular with its devices and computers more sought after than ever, let's not have the company become another Microsoft in attitude, and by rushing products to market before they are THOROUGHLY evaluated and tested.

  1. testudo

    Joined: Dec 1969

    +2

    Re: becoming...

    The odd thing here is one of the main reasons Apple got out of the MacWorld shows was because they didn't want to have their product launches dictated by a random third-party time line (as in "We need to not release new iBooks until January at the show!").

    But Apple has turned around and put themselves back into the same corner, except they're the ones with the random time-lines. Apple apparently feels it must stick to this arbitrary "iPhone release in late June" time frame. This then creates a need to rush final work on a product to meet this deadline.

    Then again, maybe this was all planned on Apple's part because they were tired of everyone complaining about ATT's reception issues. At least no one's talking about that these days.

    And are there really more lawsuits against apple over this issue then there are against BP and the oil spill?

  1. IxOsX

    Joined: Dec 1969

    +2

    Recall is the only solution

    " it could cost the company $1.5 billion." : And if Apple does not recall what it will cost in the future to Apple? In the current situation, I myself will never buy an iPhone4.

    And when my iPhone3G gets worst than it is with the new iOS4 (note: crashy and slow only on 3G model), I'll probably buy and Android phone and keep the actual iPhone 3G only as an iPod.

    So as a costumer my vision is if a recall does not happen, then they will be untrusted. As a costumer who just wants the best of success to Apple, I really think a Recall have to happen.



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