Existing owners may get modifications

Apple likely does have a permanent hardware fix for iPhone 4 reception under its sleeve, new shipping notifications suggest. E-mails from Apple are said to be going out to some iPhone 4 buyers, according to AppleInsider, informing them of an "unexpected delay" in delivery. RBC Capital Markets analyst Mike Abramsky points out that estimates for online orders have stretched out from 7 to 10 days to three weeks, which may hint that a changeover is happening in production.

Both Abramsky and another analyst, Piper Jaffray's Gene Munster, argue that instead of handing out free bumper cases, Apple is choosing the permanent route to boost its reputation. "It is increasingly likely that the company will make an investment in the brand and calm the PR storm by offering current iPhone owners an in-store fix free of charge," says Munster. Whatever the decision, Apple is expected to announce it tomorrow.

Munster comments that in terms of financial impact, a hardware fix could disrupt sales for about a month, since Apple would have to modify the phones it already has in order to sell them. An earlier forecast of 9.5 million iPhones is likely to be off by 12 percent, the analyst says. The hit may still be preferable to a full recall, which could cost over $1 billion.

UBS analyst Maynard Um suggests that a recall is unlikely to happen at this point, as it would be more immediate, and involve Apple and the company's partners suddenly halting new orders. A question raised, however, is why Apple has organized a press conference instead of just sending out a press release. Um proposes that a release would not be enough to quell what has become a significant uproar.

by MacNN Staff