Apple: Free cases for iPhone 4 owners

During a high-profile press conference today, Apple (NASDAQ:AAPL) CEO Steve Jobs defended the performance of the company's iPhone 4, citing a range of statistics on the gadget's return rates and dropped call figures, but said Apple would offer the more than 3 million customers who purchased an iPhone 4 a free case that Jobs said would improve the phone's reception.

According to media coverage of the event, Jobs spent much of the press conference defending the design and performance of the iPhone 4. Perhaps most interesting was his contention--and evidence--that other phones suffer from the same reception problems that have been so well-documented in Apple's latest iPhone. Specifically, Jobs offered videos showing similar antenna issues affecting Research In Motion's Bold 9700, HTC's Droid Eris and Samsung's Omnia II.

Earlier this week, Consumer Reports engineers said they found that when a users' hand or finger touches the lower left side of the iPhone 4, it can cause the phone to lose its connection, particularly if it's already in a weak signal area. (During the press conference, Jobs said he was "stunned and upset by the Consumer Reports stuff that came out this week," according to a Wall Street Journal live blog of the event.)

Representatives from HTC, Samsung and RIM did not immediately respond to requests for comments.

Jobs said all smartphones suffer from similar antenna issues. He said the problem is due to physics, and argued that the iPhone 4 antenna issue--dubbed "antennagate"--has been blown out of proportion by an overzealous tech media. For evidence, Jobs said 0.55 percent of iPhone 4 users have called Apple's customer care department about the phone's antenna or reception. Further, he said the iPhone 4's return rate is 1.7 percent--far lower than the iPhone 3GS' 6 percent return rate.

Finally, Jobs discussed perhaps the most important statistic related to the device: dropped calls. He said he couldn't provide specific dropped call rates, but said the iPhone 4 drops less than one additional call per 100 than the 3GS--a figure Jobs said he suspects is due to the larger percentage of iPhone 3GS devices being shrouded in a case. He said 80 percent of iPhone 3GS owners left stores with a case, while only 20 percent of iPhone 4 owners encased their device on leaving a store.

"We think this has been so blown out of proportion," Jobs said, according to a live blog from Engadget. "So here's what we're going to do to make our users happy. The first part is the software update, that fixes the way the bars report and other bugs, that's out now. Second, people said the bumper fixes everything ... ‘Why don't you give everybody a case?' Okay--we'll give you a free case."

"Though free bumpers come at a cost, we see it as relatively immaterial (~$0.03 impact next quarter) and helps to put a little shine back on Apple's customer-centric focus," wrote UBS analyst Maynard Um in a research note issued immediately after the Apple press conference.

During a question-and-answer session following Jobs' presentation, Jobs described a Bloomberg article that reported he knew of the antenna issue before the release of the iPhone 4 as a "crock."

"We have a community at Apple of great engineers and scientists that debate everything," Jobs said, according to the WSJ. "The best ideas win, not the person highest on the org chart. What was portrayed in that article never came across my consciousness."

Another question centered on whether Jobs should apologize to investors and customers. To the customers who are having problems, "I apologize to them," Jobs said.

Earlier this month, Apple admitted that a flawed formula it uses to calculate the number of bars available for cellular service may be causing some iPhone 4 customers to experience reception problems. Apple yesterday released a software fix for the issue.

The dust-up comes weeks after Apple and AT&T (NYSE:T) were both sued in federal court by iPhone 4 customers who claim the companies knowingly sold them a defective product. The separate suits, filed in U.S. District Court in Maryland and in San Francisco, claim the two companies violated their warranty policies. The Maryland suit alleges the companies committed a host of other offenses, including general negligence, fraud, deceptive trade practices and misrepresentation.

For more:
- see this Engadget live blog
- see this WSJ live blog

Related Articles:
Apple to address iPhone 4 problems Friday
Consumer Reports recommends duct tape for iPhone 4 antenna problem
Apple blames iPhone 4 reception flaws on software glitch
Apple, AT&T slammed in lawsuits over iPhone 4 antenna issues
Apple blows past record, sells 1.7 million iPhone 4s in debut
Apple addresses iPhone 4 reception issue
Apple debuts iPhone 4 to long lines, but white version is MIA

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