Apple Chief Executive Officer Steve Jobs says the company knew that the iPhone 4 can lose reception when held a certain way and didn't think it would be a big issue. He offered customers a case to fix the flaw.
Jobs apologized to users affected by the so-called Antennagate, saying Apple is ``working our butts off'' to correct it. Most smartphones have the same shortcoming as the iPhone 4, he said today at the company's headquarters in Cupertino, California.
Apple, the world's biggest technology company by market value, aims to burnish the iPhone's image after Consumer Reports opted not to recommend the device, blaming the antenna flaw. The iPhone accounts for about 40 per cent of revenue, making it a bigger moneymaker than the Macintosh or iPod. The company scheduled the event after users complained about losing signal strength when they held the lower-left corner of the phone.
``We care about all of our users, and we won't stop until every one of them is happy,'' Jobs said. ``This is blown so out of proportion, that this is incredible.''
Every iPhone 4 buyer will get a free rubberized case called a Bumper, and people who already bought the $US29 accessory will get a refund, Jobs said. Customers can return their iPhone 4 for a full refund within 30 days if they're still unsatisfied. That's ``everything we can do,'' he said.
`We are human'
Bloomberg reported this week that an Apple engineer warned Jobs last year that the antenna might interfere with calls, citing a person with knowledge of the matter. Jobs said today he didn't know about the antenna concerns early on. He called the article a ``total crock.''
``We are human,'' he said. ``And we make mistakes sometimes. But we find out pretty fast and we work to make our customers happy.''
The Bumper giveaway will last until Sept. 30, when Apple will revisit the policy. The company may have a better idea of what to do about the phone then, Jobs said.
``People don't see this as a long-term problem,'' said Kenneth Schapiro, president of Condor Capital Management in Martinsville, New Jersey, whose biggest holding is Apple. ``They're seeing it as something the company is going to solve.''
Shares drop
Apple fell $US1.55 to $US249.90 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have declined 7.8 per cent since June 23 - a day before the iPhone 4 went on sale. While Jobs apologised to customers, he said he wouldn't apologise to investors.
Apple has invested $US100 million in antenna technology, he said. The company has sold 3 million iPhone 4s, and it's still the ``best product we've made,'' Jobs said. Less than 1 per cent of iPhone 4 users have called to complain, he said. The new phone also drops less than 1 additional call per 100 than the older iPhone 3GS.
The iPhone 4 has a new design, with the antenna built into a metal band that surrounds it -- instead of going inside the device. Apple suggested last month that users either buy a case or avoid holding the lower-left corner a certain way.
Last year, Ruben Caballero, a senior engineer and antenna expert, informed Apple's management the device's design may hurt reception, Bloomberg reported this week. A carrier partner also raised concerns about the antenna before the device's release, according to another person familiar with the situation.
Engineering challenge
Apple's industrial design team, led by Jonathan Ive, submitted several iPhone designs before Jobs and other executives settled on the bezel antenna, said the person familiar with the company's design. Caballero, the antenna expert, voiced concern in early planning meetings that it might lead to dropped calls and presented a serious engineering challenge, the person said.
Jobs said today that return rates for the iPhone 4 are lower than for the 3GS. The early return rate through AT&T Inc., its exclusive US carrier, was 1.7 per cent, less than a third of the previous model's number.
The glitch also didn't prevent the initial inventory of iPhones from selling out. Salespeople at Apple retail stores in New York, San Francisco, Los Angeles, Houston and Seattle said yesterday that the iPhone 4 was out of stock and that customers should expect a two- to three-week wait for the device.
Apple has been telling visitors to its website that iPhone 4 models will ship within three weeks. The company sells a 16- gigabyte model for $US199 and a 32-gigabyte version for $US299. Those prices require US customers to sign up for a two-year service contract with AT&T. Users who opt to return their phones will be able to cancel their contracts, Jobs said.
Apple was stunned, embarrassed and upset by the Consumer Reports review, Jobs said today. The iPhone 4 remains ``the most advanced smartphone out there,'' he said.
Bloomberg News
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