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Mixed signals surround Apple over iPhone antenna

Apple's iPhone 4, which has dazzled critics and consumers, is being eclipsed by what has to be the world's most famous antenna — the wraparound signal receiver that is creating an uproar because some users say it causes dropped calls when the device is held a certain way.

Apple plans a news conference today to talk about the iPhone, although bloggers who received calls inviting them to the event said Apple wouldn't specify what would be discussed.

The company is also rumored to be quietly making a hardware fix to the latest iPhone — the biggest product launch in the company's history, with 1.7 million devices sold in three days last month — by applying a new nonconductive coating on the stainless-steel smart phone to reduce the reception problems.

Apple's position as the king of consumer tech innovation has elevated concerns over the antenna.

"Apple is the most interesting company to talk about," said Ben Bajarin, an analyst with Creative Strategies, "so there is a giant magnifying glass on everything it does."

Analyst Mike Abramsky of RBC Capital Markets said Apple could face a massive repair campaign, or even a full recall, which could cost the company as much as $900 million. And each additional week Apple takes to resolve the issue could add $200 million to the bill, he wrote in a note to investors.

Numerous new iPhone 4 owners say they cannot make or receive calls if their hand covers the lower-left corner of the device's wraparound stainless-steel antenna — a hold facetiously known as the "death grip." However, many users say they have no reception problems when their phone is in a case, and some analysts think Apple might eventually give cases away.

Some analysts believe the antenna is a significant problem, even as others say it's not. Bajarin said he has 50 to 60 percent fewer dropped calls on his iPhone 4 than he did with the previous model.

But independent wireless analyst Chetan Sharma said, "There is no doubt there is a problem with the antenna. It is creating an embarrassment for the company."

All mobile devices experience reception difficulties. But experts say devices with an external antenna are more prone to reception problems because users touch the antenna, which can interfere with calls.

Initially, Apple CEO Steve Jobs was dismissive. He told a customer who e-mailed him to complain about the loss of phone reception when he held the iPhone a certain way, "Just avoid holding it in that way." Then the company said the problem was that the phone mistakenly displays two more bars than it should for signal strength, giving a false indication of reception strength.

Consumer Reports, which otherwise raved about the iPhone 4, said this week that it confirmed a reception problem and could not recommend the new model. Tuesday, comments about the review posted on Apple's tech support forum were reportedly deleted.

"Their response to this whole issue has not been encouraging," said Mike Gikas, senior electronics editor at Consumer Reports.

Apple, which has long enjoyed a love affair with consumers and is known for excellent customer care, should be able to weather the storm, said Steven Addis, chief executive of Addis Creson, a brand strategy and design firm in Berkeley.

However, Apple's reputation has taken a hit, he added. "I've been really disappointed by the way the company has handled this. You don't want to put out a product in which you have to have workarounds, like holding it differently. That's absurd."

A possible fix

Some Apple watchers are speculating that the company might give iPhone 4 buyers its "bumper" case, which costs about $30 and wraps around the phone. The case appears to resolve most signal problems by insulating the antenna — built into a steel band around the phone — from human contact. Apple blames the woes on a software bug; Consumer Reports said its research points to a hardware flaw.

Mixed signals surround Apple over iPhone antenna 07/15/10 [Last modified: Thursday, July 15, 2010 9:45pm]
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