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iPhone 4 recall could cost Apple $1.5 billion

post #1 of 108
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A recall of the iPhone 4 could cost Apple as much as $1.5 billion, according to one investment research firm.

Toni Sacconaghi, an analyst for Bernstein Research, said in a note to clients on Tuesday that while a full product recall is "highly unlikely," it could theoretically cost the company up to $250 per phone. Sacconaghi estimates 6 million units sold or in transit, resulting in a recall price tag as high as $1.5 billion.

Another option is for Apple to offer an in-store hardware fix, which could cost $75 per phone. Giving away a free bumper case, which currently retail for $29, would be a much cheaper alternative for the Cupertino, Calif., company. Sacconaghi estimates this approach would cost just $1 per unit.

Examining the longer-term consequences for Apple, Sacconaghi turned to "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."

As some examples, the analyst noted Apple's "limited disclosure practices, its attack on Adobe's Flash, its investigation into its lost iPhone prototype (which culminated in a reporter's home being searched while he was away and computers being removed), its restrictions on app development, and its ostensibly dismissive characterizations of the iPhone's antenna issues (i.e., phone needs to be held a different way; a software issue that affects the number of bars displayed)."

Sacconaghi further speculates that "these issues may, over time, begin to impact consumers' perceptions of Apple, undermining its enormous prevailing commercial success."

The report arrives just a day after Consumer Reports -- the nation's largest and most trusted nonprofit product review organization -- warned that it could no longer recommend the iPhone 4. After conducting its own tests inside a radio frequency isolation chamber, the organization issued a statement on its blog reversing its previous recommendation of the phone.

For its part, Apple earlier this month released an open letter stating that the iPhone 4's reception issues were largely due to an inaccurate formula for calculating signal strength. The company assured that a free software fix would be available in the coming weeks. Consumer Reports' findings are in opposition to Apple's statement.

Another Wall Street analyst, Gene Munster with Piper Jaffray, estimated Tuesday that a fix from Apple could impact its operating income by 1 percent. Like Sacconaghi, Munster also suggested the possibility of issuing free bumper cases. Additionally, the analyst said that since only 25 percent of users are affected by the issue, the company could "weather the storm" by doing nothing.

Apple stock was down $5.49 (2.13%) at the market's close on Tuesday.
post #2 of 108
With $41B in its warchest, my initial reaction was... "That's it?" given operating margins, revenue, and its balance sheet, this would be a drop in the bucket.

So there are perhaps some real reception issues while holding it a certain way. But most everyone I know who has iPhones puts a case on. And from what I know, those who don't have hand sizes and natural positions that don't involve "bridging the gap".

So drop in the bucket + non-issue = an ever more profitable Apple.
post #3 of 108
post #4 of 108
A free bumper with your iPhone4 and be done with it!!!
Of coarse, Apple haters will never let it go, but who gives a f__k what they think anyway!
On the other hand, if a software fix is actually possible, that would be even better.
A full recall is not going to happen because the iPhone4 works great with a damn bumper on.
post #5 of 108
Non-profit? Don't you have to pay for a subscription to their site just to see their reviews?
post #6 of 108
They'd better get started, then.
post #7 of 108
I'd like to see Apple take more time testing their products before releasing them. Seems like a rash of problems with new releases of iPhones, 27" iMacs, iPads and 2009 release of MBP.

I've been lucky with Apple products--but I'm not one to be the first kid on the block to get the new Apple item.

Looking forward to the release of the iPod Touch in September--128 GB I hope--but will wait until sure that there's no problems.
無心 The idea of wilderness needs no defense, it only needs defenders., Wilderness is not a luxury but a necessity of the human spirit__Edward Abbey
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無心 The idea of wilderness needs no defense, it only needs defenders., Wilderness is not a luxury but a necessity of the human spirit__Edward Abbey
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post #8 of 108
Quote:
Originally Posted by AppleInsider View Post


As some examples, the analyst noted Apple's "limited disclosure practices, its attack on Adobe's Flash, its investigation into its lost iPhone prototype (which culminated in a reporter's home being searched while he was away and computers being removed), its restrictions on app development, and its ostensibly dismissive characterizations of the iPhone's antenna issues (i.e., phone needs to be held a different way; a software issue that affects the number of bars displayed)."

Sacconaghi further speculates that "these issues may, over time, begin to impact consumers' perceptions of Apple, undermining its enormous prevailing commercial success."

Nail. Meet head.

I say that as a shareholder (not just as a loyal consumer). I was hoping that Jobs's absence would be a great opportunity for Apple to discover a new way of being what it is without the attitude. Unfortunately, Jobs has come back more omnipotent, more irascible, more paranoid, and less appealing than ever.

No one else in the company seems to have the guts to say a damn thing. Not Cook, not Oppenheimer, not the Board.
post #9 of 108
Quote:
Originally Posted by anantksundaram View Post

Nail. Meet head.

I say that as a shareholder (not just as a loyal consumer). I was hoping that Jobs's absence would be a great opportunity for Apple to discover a new way of being what it is without the attitude. Unfortunately, Jobs has come back more omnipotent, more irascible, more paranoid, and less appealing than ever.

No one else in the company seems to have the guts to say a damn thing. Not Cook, not Oppenheimer, not the Board.

Yes, now that Jerome York is gone, the last remnants of the Old Republic have been swept away.
post #10 of 108
How are only 25% of the users affected? If it's a design flaw (and I'm not suggesting it is) wouldn't it be more like 100%?
post #11 of 108
The biggest danger for Apple is not a recall, it is the inevitable fall that pride and hubris bring. If Apple succeeds in eroding the enormous brand loyalty they currently enjoy, they will inevitably enjoy less success in the sectors they currently dominate. Pride and arrogance can undermine and destroy the biggest leads, and the greatest of accomplishments can be brought low through them.

41 billion seems like a lot of money, but express it in terms of yearly operational costs and it stops seeming so big.

This issue isn't really about an antenna anymore - its about the perception people have of Apple as a company, and ultimately that is much more important than a single product.
post #12 of 108
Quote:
Originally Posted by cvaldes1831 View Post

Yes, now that Jerome York is gone, the last remnants of the Old Republic have been swept away.

I was thinking the same thing!
post #13 of 108
I'll take a free Bumper, please.

GTSC
post #14 of 108
Quote:
Originally Posted by AppleInsider View Post

A recall of the iPhone 4 could cost Apple as much as $1.5 billion, according to one investment research firm.

Can we stick to reporting the news? As in facts? Stories that feature chatter about what could happen are speculation, even if coming from some Wall St. "analyst" (and by that I mean blogger).

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #15 of 108
One thing I agree with is regardless of how big the actual iPhone 4 antennae issue is, the even bigger concern is long term consumer perception of Apple. Tight control, secretive moves, and dismissing complaints might work well when things are going smoothly, but they only compound the problem when things are going badly. At the beginning the iPhone 4 antennae issue might have only attracted the attention of Apple fans, Apple haters, and tech geeks, but now I'm seeing the issue and Apple's handling start being mentioned at nightly news programs where the audience is the general public. This is going to be the freshest thing on people's mind the next time they think of Apple.

Apple really needs to clarify the hardware antennae issue. If it turns out to be an issue afterall, they need to be clear how they intend to fix it. If they still believe it's a non-issue, they should be upfront about why, such as percent of users complaining, which perhaps is actually very small, specific usage conditions which they feel is unreasonable, data to show that % dropped calls on the iPhone 4 is actually lower than the iPhone 3G S, etc. Perhaps Apple was hoping that the issue will blow over, but that certainly doesn't look like it'll happen. They definitely need to reclaim control of the issue.
post #16 of 108
Them analyst can make a dinner date with a rusty spear!
You can't find the freaking iphone 4. And I went to my local Apple store and there were no iphone 4 cases.
There ain't going to be any recall. A revision ,IMHO, but no recall.
post #17 of 108
Well, considering they have 41 billion cash in the bank....
2011 13" 2.3 MBP, 2006 15" 2.16 MBP, iPhone 4, iPod Shuffle, AEBS, AppleTV2 with XBMC.
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2011 13" 2.3 MBP, 2006 15" 2.16 MBP, iPhone 4, iPod Shuffle, AEBS, AppleTV2 with XBMC.
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post #18 of 108
This “analyst” actually blames Apple for police investigating a crime? He should have the facts, not the sensationalist headlines, at his disposal. But he got some exposure for himself


Quote:
Originally Posted by maccherry View Post

Them analyst can make a dinner date with a rusty spear!
You can't find the freaking iphone 4. And I went to my local Apple store and there were no iphone 4 cases.
There ain't going to be any recall. A revision ,IMHO, but no recall.

I agree—and the revision won’t be soon. People will probably be given cases if they request one, and eventually, some may get a revised model if they ask for one (but that could be many months—or even next year’s update).
post #19 of 108
Quote:
Originally Posted by 8CoreWhore View Post

Well, considering they have 41 billion cash in the bank....

That cash belongs to shareholders. Not to be wasted on value-destroying payouts when it could be addressed much cheaper and faster.

Big corporate egos are usually the first symptom of "too clever to fail," and that rarely ends well.
post #20 of 108
Good apple deserves every bit of a loss finally!!!! I'm one of the 1.7 million who got scammed on a flawed device!!!! Heck with Steve jobs ya he is termally I'll maybe this will enhance more to pay him back haaaaaaaa what comes around goes round!!!!!!!!!
post #21 of 108
Quote:
Originally Posted by iLoveStuff View Post

A free bumper with your iPhone4 and be done with it!!!
Of coarse, Apple haters will never let it go, but who gives a f__k what they think anyway!
On the other hand, if a software fix is actually possible, that would be even better.
A full recall is not going to happen because the iPhone4 works great with a damn bumper on.

Bumpers don't fix the proximity sensor issue. Really tired of my cheek hanging. Not a Apple hater, just want my phone to work.
post #22 of 108
They don't need to do a full recall. They need to fix the iPhone antenna design going forward (could be as simple as moving the line down a few mm) and give free bumper cases to existing users who have the issue. My perceptions of Apple have been affected by this, not so much by the issue itself but by how it was handled. Telling people to hold it different was arrogant and asinine. My iPhone will consistently drop down to no service (and it will not communicate at this point) so it is not just incorrect signal strength being displayed. I never had this happen with the 3G or 3GS. The way that "open letter" was worded reeked of bs too.

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     197619842014  

     Where were you when the hammer flew?  

 

MacBook Pro Retina, 13", 2.5 GHz, 8 GB RAM, 256 GB SSD

iPhone 5s • iPad mini Retina • Chromebook Pixel • Nexus 7

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post #23 of 108
Quote:
Originally Posted by cvaldes1831 View Post

Yes, now that Jerome York is gone, the last remnants of the Old Republic have been swept away.

Quote:
Originally Posted by anantksundaram View Post

Nail. Meet head.

I say that as a shareholder (not just as a loyal consumer). I was hoping that Jobs's absence would be a great opportunity for Apple to discover a new way of being what it is without the attitude. Unfortunately, Jobs has come back more omnipotent, more irascible, more paranoid, and less appealing than ever.

No one else in the company seems to have the guts to say a damn thing. Not Cook, not Oppenheimer, not the Board.

I agree with above comments and has a shareholder as well, I am little annoyed by Apple's approach to this issue and if this hurts the stock because Steve does not know that "acting like Microsoft in late 80s early 90s" does not work, then he must know, pissing off shareholders is not good situation to be in,if this really affects the stock and overall dividends!
post #24 of 108
Quote:
Originally Posted by Glgbnaf View Post

Good apple deserves every bit of a loss finally!!!! I'm one of the 1.7 million who got scammed on a flawed device!!!! Heck with Steve jobs ya he is termally I'll maybe this will enhance more to pay him back haaaaaaaa what comes around goes round!!!!!!!!!

You suggest Apple acted without class but then post a comment like this? Shame on you.

You say you were scammed - how many scams do you know that offer you a 100% refund if you take your scammed item back to the store? If you feel that strongly about it why not return the phone then suddenly you've been 'unscammed'.
post #25 of 108
So Be It!
"Why iPhone"... Hmmm?
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"Why iPhone"... Hmmm?
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post #26 of 108
Quote:
Originally Posted by centparkrun View Post

Well, is Apple going to recall the iPhone4 or not? According to this article, the decision has been made.

Read this article, it is hysterical. VERY FUNNY.

Apple Recalls iPhone 4Very Fondly; Announces It Will Apply Same Rigorous Standards to Four New Product Launches

http://www.dailygoat.com/?p=1491

Actually, Apple has a different solution:
http://scoopertino.com/apple-introdu...d-your-iphone/

Quote:
Originally Posted by Glgbnaf View Post

Good apple deserves every bit of a loss finally!!!! I'm one of the 1.7 million who got scammed on a flawed device!!!! Heck with Steve jobs ya he is termally I'll maybe this will enhance more to pay him back haaaaaaaa what comes around goes round!!!!!!!!!

Then take the phone back for a refund and stop whining.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #27 of 108
Quote:
Originally Posted by Glgbnaf View Post

Good apple deserves every bit of a loss finally!!!! I'm one of the 1.7 million who got scammed on a flawed device!!!! Heck with Steve jobs ya he is termally I'll maybe this will enhance more to pay him back haaaaaaaa what comes around goes round!!!!!!!!!

I just can't understand your feeling of being scammed. If you bought an iPhone 4 and don't like it, there's a 30-day return policy. There are plenty of smartphones out there from which to choose. I can appreciate your being disappointed in the iPhone's performance and inconvenienced for having to return it for a refund but how have you been scammed. Apple isn't forcing you to keep their product.
post #28 of 108
I don't think it was arrogant and asinine as much as not well thought out. When Jobs (or one of his minions behind the scenes) wrote that, no one - including Jobs - know how big of a deal this would turn out to be. I have found it interesting that Jobs has not been e-mailing at all as of late. That may be good for Apple, so that they can control their message better. It is still sad though, because those e-mails did make Apple seem much more "different" than other stuffy, disconnected companies (AT&T, I'm looking at you.) But with $40 billion in the bank, maybe having the CEO e-mail random people at 3 in the morning isn't such a good idea anymore.

Quote:
Originally Posted by 1984 View Post

They don't need to do a full recall. They need to fix the iPhone antenna design going forward (could be as simple as moving the line down a few mm) and give free bumper cases to existing users who have the issue. My perceptions of Apple have been affected by this, not so much by the issue itself but by how it was handled. Telling people to hold it different was arrogant and asinine. My iPhone will consistently drop down to no service (and it will not communicate at this point) so it is not just incorrect signal strength being displayed. I never had this happen with the 3G or 3GS. The way that "open letter" was worded reeked of bs too.
post #29 of 108
I can't be sure because you write like a 2nd grader, but if you are making fun of Jobs because he is/was terminally ill, you have a sick sense of humor. I for one would be happy if you went away. I'll put $100 on the line that you don't actually own an iPhone 4 anyway.

Quote:
Originally Posted by Glgbnaf View Post

Good apple deserves every bit of a loss finally!!!! I'm one of the 1.7 million who got scammed on a flawed device!!!! Heck with Steve jobs ya he is termally I'll maybe this will enhance more to pay him back haaaaaaaa what comes around goes round!!!!!!!!!
post #30 of 108
Quote:
Originally Posted by BartBuzz View Post

I just can't understand your feeling of being scammed. If you bought an iPhone 4 and don't like it, there's a 30-day return policy. There are plenty of smartphones out there from which to choose. I can appreciate your being disappointed in the iPhone's performance and inconvenienced for having to return it for a refund but how have you been scammed. Apple isn't forcing you to keep their product.

I wonder how many people have returned their iPhone 4? If it's more than 10, I would be surprised.
post #31 of 108
Quote:
Originally Posted by starburst View Post

I wonder how many people have returned their iPhone 4? If it's more than 10, I would be surprised.

I agree. It would be interesting to see that data. BTW...in the spirit of full disclosure I don't have an iPhone. As a diehard Verizon customer I am patiently waiting. But I can say that from what I've seen and from my friends who have iPhones there is nothing about this antenna flap to keep me from buying the iP4. Especially since we know a bumper case mitigates the reception anomaly.
post #32 of 108
Quote:
Originally Posted by Gandalf the Semi-Coherent View Post

I'll take a free Bumper, please.

GTSC

I'll wait for the redesigned version and stay with my 3Gs for now.

From what I have read, Apple seems a little tone deaf on this one. i did read the open letter on their website and have been following it in the WSJ and here of course.

Sorry Apple, I've always been an early adopter, 2 original iPhones, 3Gs, original intel iMac, original intel macbook, MobileMe for over 5 years, always the latest and greatest OS, iwork, ilife and so on.

I don't like it so far, 'holding it wrong, a bumper will fix it, etc.' Not good!
post #33 of 108
Quote:
Originally Posted by mbarriault View Post

Non-profit? Don't you have to pay for a subscription to their site just to see their reviews?

Non-profit does not mean the do everything for free.
It simply means what they charge, covers their costs, to include salaries, studies (in this case also reports and magazine production) and leases, utilities, etc.
The company does not pay out to shareholders or owners.
post #34 of 108
Seems like Cult Of Mac has been chatting to several "crisis management" experts whose positions on the antenna issue are unanimous in that an iP4 recall is necessary to salvage Apple's reputation.

Haven't linked to it as I'm sure the interested will find it by themselves, and hopefully I'll avoid the roasting that the righteously enraged of both camps are likely hurl in my direction for having the gall to quote from their 'article'.

Made up my mind to buy a 3Gs tomorrow and look at a re-engineered iP4 later (if it happens), or the iP5 next year if it doesn't. I can wait either way. And the price on the 3Gs is looking mighty tempting... (free).

I'll check out the death grip on the 3Gs and report back.
post #35 of 108
My wife's iPhone 4 works just great for her.
Before she bought the Apple bumper I could do the death grip. No longer.

Who gives a crap about Apple and $1.5G USD?
This is pocket change to AAPL.
post #36 of 108
Quote:
Originally Posted by alienvenom View Post

How are only 25% of the users affected? If it's a design flaw (and I'm not suggesting it is) wouldn't it be more like 100%?

My guess is that since the antenna attenuation issue is more frequently noticed in poorer network conditions, the other 75% aren't noticing because loosing a few bars won't kill the connection completely.
post #37 of 108
Quote:
Originally Posted by Glgbnaf View Post

Good apple deserves every bit of a loss finally!!!! I'm one of the 1.7 million who got scammed on a flawed device!!!! Heck with Steve jobs ya he is termally I'll maybe this will enhance more to pay him back haaaaaaaa what comes around goes round!!!!!!!!!

Congratulations. That was totally classless. You must be very proud.
post #38 of 108
Quote:
Originally Posted by starburst View Post

I wonder how many people have returned their iPhone 4? If it's more than 10, I would be surprised.

At some point that fact (if it is so) will make a good sound bite for Apple. But it doesn't matter at this point point because there is a feeding frenzy going on. Right now a backlash against Apple seems to be happening. Apple is just becoming too damn successful for many people's liking. In my opinion Apple should quickly revise the build to eliminate or minimize whatever fault there is but keep quiet about it. Without making a public statement they should hand out a free invisible 'stick on' fix tapes for affected customers (but perhaps not made by Apple as that could be construed as admitting fault). They should also up their advertising effort as they seem to be doing. In a while this issue will be history and Apple can use the sound bite re the number of returned phones when news hungry journalists raise the question while at the same time pointing out how sales went up during this period. For SJ to open up and admit to a faulty product is ridiculous and would be a bad move. Its not like its a Toyota that inexplicably looses its breaks while careening down the highway. Arial issue? Not ideal but minor nonetheless.
post #39 of 108
I'm just curious about what cost there is to Apple if they don't fix it? I mean, the tarnished public image can do major financial damage. The best course is to investigate, and if it's real, fess up and fix it, IMO. If you deny it, and it's real, you could end up doing more harm. If it's truly not real, then investigate and make a public statement about proof that it's not real, and not because Steve says it ain't so.
post #40 of 108
Oh, please don't let it require a recall.
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