Every week Apple doesn't act on iPhone 4 antenna could cost $200M

Posted:
in iPhone edited January 2014
A new analysis has found that resolving the much publicized iPhone 4 antenna issues could cost Apple up to $900 million, and each additional week that Apple takes to resolve the issue could add another $200 million as sales increase.



Analyst Mike Abramsky with RBC Capital Markets said Wednesday that he is hopeful that Apple will address the concerns of users over the iPhone 4 reception by providing customers with free protective cases. But he also acknowledged that the Cupertino, Calif., company could also face a "broad repair scenario, or even a full recall."



Despite the issues, Abramsky said he views the situation as a potential buying opportunity for investors. He believes that Apple may inevitably fix the problem, and even though a fix will impact the company's bottom line, he said "Apple can easily afford it."



He presented three potential outcomes for the issue, all of which assume that the problem affects 100 percent of iPhone 4 owners. Abramsky believes providing cases to 3 million people would cost $45 million, while repairing 3 million handset would cost $300 million. A complete recall of the product, in the most extreme scenario, would cost $900 million.



Even if bad publicity regarding reception with the iPhone 4 does reduce sales in the near term, he doesn't expect it to last.



"We expect iPhone 4 demand may rebound quickly, still outpacing supply and -- along with global channel fill -- may mitigate possible near-term slowdown in sell-through," he wrote. "The issue, in our opinion, is likely to blow over with media and consumers refocusing on iPhone 4's appeal, market opportunity and strong demand."







The issue gained steam this week when nonprofit group Consumer Reports said it cannot recommend the iPhone 4 due to a reduction in signal that is experienced when covering the bottom left side of the device with one's hand. That was a 180-degree turn from the publication's previous stance, when it noted that there was "no reason" not to buy an iPhone 4, and said it was unable to recreate the signal issues.



Consumer Reports changed its mind after testing three separate iPhone 4 handsets inside of a controlled radio frequency isolation chamber. The test found that the iPhone 4, and not the iPhone 3GS or Palm Pre, experienced signal loss when held improperly.



Apple has argued that any mobile phone loses reception when held incorrectly. It has also said that using a case, like the company's own official "bumpers," prevents users from touching the metal band on the exterior of the phone, which doubles as the handset's antennas, and will resolve the issue. Consumer Reports offered its own solution, placing duct tape on the bottom left of the phone.



Apple has also planned a software fix to address the fact that the iPhone 4 reports signal bars incorrectly. However, that software error will not prevent the loss in signal experienced when holding the phone improperly.



The Consumer Reports update gained a great deal of mainstream media publicity. Most recently, the Associated Press filed a report noting that Apple has remained silent on the issue, not responding to requests for comment from the media. The report also spoke with analysts who, like Abramsky, do not believe that the issue will hurt sales in the long run.



Despite the signal issues, Consumer Reports found that Apple's iPhone 4 was the best smartphone available in all other categories, citing an "excellent" display, navigation, Web browsing, multimedia and battery life. The telephone and messaging capabilities were also ranked "very good," while voice quality was "good."
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Comments

  • Reply 1 of 227
    patspats Posts: 112member
    What BS analysis. OK if isuppli says the BOM is about 180 how does a return cost $300. Assume the redesign worst case uses all the existing parts except antenna. We have cost of shipping, chinese labor, and a new antenna part.



    The potential liability is people stop buying iPhones.
  • Reply 2 of 227
    jragostajragosta Posts: 10,473member
    Quote:
    Originally Posted by pats View Post


    What BS analysis. OK if isuppli says the BOM is about 180 how does a return cost $300. Assume the resign worst case uses all the existing parts except antenna. We have cost of shipping, chinese labor, and a new antenna part.



    The potential liability is people stop buying iPhones.



    This is just YAIAG (yet another idiot analyst guess).



    Ignore it.
  • Reply 3 of 227
    sandausandau Posts: 1,230member
    if people have issues with their phone bring it the fuck back. Can we get on with life? This is so lame.
  • Reply 4 of 227
    hodarhodar Posts: 220member
    If this were a TV that dropped TV shows without warning whenever you entered the room; or a car that randomly stopped while being driven - would you expect anything other than a re-call and the produce repaired?



    I paid an early termination fee to leave Verizon - that was my decision, based upon the belief that the 4th Generation iPhone would be a solid product. I then ordered my iPhone through AT&T, because Apple's website was woefully inadequate to handle the demand that the iPhone created.



    Now, I have a phone that does not operate as advertized, it drops calls in areas where the reception is poor (ie. where I work). On the desk, it works fine; but if I dare to pick it up - the signal goes from 4 bars to No Signal.



    I have since purchased a case, and disabling the 3G has given me improved reception - but this isn't what was advertized, and this is not what I was would think would be an acceptable product. If I try to return the product, I'm still out my early termination cost from Verizon (significant), a restocking fee from AT&T (minor, but irritating) and then will be forced into taking a phone I do NOT want (Apple 3GS) for the remainder of the 2 yr committment.



    I see no reason why this was not discovered during testing, and I'm an engineer with over 25 yrs experience, working in R&D, Manufacturing and Testing. I find it very suspicious that Apple would say that this came as a surprise, this indicates that either Apple's official stance is to have no integrity and give an outright 'Lie' as their official stance; or they are horribly inept at product test. I don't believe that they are inept.



    No one loves a liar.
  • Reply 5 of 227
    sandausandau Posts: 1,230member
    Quote:
    Originally Posted by Hodar View Post


    If this were a TV that dropped TV shows without warning whenever you entered the room; or a car that randomly stopped while being driven - would you expect anything other than a re-call and the produce repaired?



    I paid an early termination fee to leave Verizon - that was my decision, based upon the belief that the 4th Generation iPhone would be a solid product. I then ordered my iPhone through AT&T, because Apple's website was woefully inadequate to handle the demand that the iPhone created.



    Now, I have a phone that does not operate as advertized, it drops calls in areas where the reception is poor (ie. where I work). On the desk, it works fine; but if I dare to pick it up - the signal goes from 4 bars to No Signal.



    I have since purchased a case, and disabling the 3G has given me improved reception - but this isn't what was advertized, and this is not what I was would think would be an acceptable product. If I try to return the product, I'm still out my early termination cost from Verizon (significant), a restocking fee from AT&T (minor, but irritating) and then will be forced into taking a phone I do NOT want (Apple 3GS) for the remainder of the 2 yr committment.



    I see no reason why this was not discovered during testing, and I'm an engineer with over 25 yrs experience, working in R&D, Manufacturing and Testing. I find it very suspicious that Apple would say that this came as a surprise, this indicates that either Apple's official stance is to have no integrity and give an outright 'Lie' as their official stance; or they are horribly inept at product test. I don't believe that they are inept.



    No one loves a liar.





    I, on the other hand, HAVE ZERO issues. Bring yours back, get a 3GS in the interim until 'whatever' issue you're having is resolved.
  • Reply 6 of 227
    hodarhodar Posts: 220member
    Quote:
    Originally Posted by sandau View Post


    if people have issues with their phone bring it the fuck back. Can we get on with life? This is so lame.



    Do you have a iPhone 4? If not, I suggest you STFU. You have no skin in the game; you are background chatter. Somehow, I think if you had put your money where your mouth is, you'd be singing another song.



    Some of us paid money for a defecive product, some of us face fines (re-stocking fees) and will then be forced to take another unwanted AT&T product for the remainder of our 2 yr committment - so having an ignorant Apple fanboi telling us to return the product is not helpful, or particularily intelligent.
  • Reply 7 of 227
    hodarhodar Posts: 220member
    Quote:
    Originally Posted by sandau View Post


    I, on the other hand, HAVE ZERO issues. Bring yours back, get a 3GS in the interim until 'whatever' issue you're having is resolved.



    This is a design defect, noob. If you have an iPhone, it works great around Mommy and Daddy's house - oh, goody for you.



    Now travel with it. You will soon find that your shiny new iPhone will drop calls in areas where there is not a tower around the corner. This is why it's a HARDWARE DEFECT. Guess what, if you have an iPhone - you too have the problem - you just are not smart enough to realize it yet.
  • Reply 8 of 227
    maxtoshmaxtosh Posts: 16member
    Quote:
    Originally Posted by Hodar View Post


    Do you have a iPhone 4? If not, I suggest you STFU. You have no skin in the game; you are background chatter. Somehow, I think if you had put your money where your mouth is, you'd be singing another song.



    Some of us paid money for a defecive product, some of us face fines (re-stocking fees) and will then be forced to take another unwanted AT&T product for the remainder of our 2 yr committment - so having an ignorant Apple fanboi telling us to return the product is not helpful, or particularily intelligent.



    There is no restocking fee (waived). If it's less than 30 days you can leave AT&T at no cost.
  • Reply 9 of 227
    patsfan83patsfan83 Posts: 156member
    Quote:
    Originally Posted by Hodar View Post


    I see no reason why this was not discovered during testing, and I'm an engineer with over 25 yrs experience, working in R&D, Manufacturing and Testing..



    Well when your field testers have it in a case so it looks like the original 3G (see Gizmodo), their fingers never actually touched the antenna.



    That being said, my iPhone 4 is doing pretty well. I haven't changed my holding pattern and it never drops. I've had more problems with the proximity sensor turning the screen on while it's against my ear causing erroneous input.
  • Reply 10 of 227
    hodarhodar Posts: 220member
    Quote:
    Originally Posted by pats View Post


    What BS analysis. OK if isuppli says the BOM is about 180 how does a return cost $300. Assume the redesign worst case uses all the existing parts except antenna. We have cost of shipping, chinese labor, and a new antenna part.



    The potential liability is people stop buying iPhones.



    Assuming that the product cost is indeed $180 as you suggest. Let's take that as the unmitigated truth. Now add the logistical costs of labor to this and you have a budget of $120/phone.



    Customer A goes to store, talks to AT&T employee for 15 minutes, ordering replacment, getting temporary phone - then we have yet other employees who track the replacment phone (which costs something) and the tracking that goes along with it. Now we add the logistics of new iPhones going out, old iPhones coming in, shipping, ect. Do you think that AT&T is going to eat these costs? No, they will be passed on to Apple.



    You have only $120/phone budget to work with - it will be consumed far faster than you would think.



    The rule of thumb is take your manufacturing costs and double it - that is the MINIMUM you can sell it to a store to make a profit. The store then adds it's markup and sells it. So, the iPhone would theoretically sell to AT&T for $360, and AT&T would add 10-20%.



    The doubling of manufacturing costs pay for distribution, warranty, advertizing, packaging and the assorted logistical costs you will need to keep your factory running. Apple is opting to sell the iPhone for closer to $600 - thus their profit per phone is inflated by ($600 - (2x160)) or $240/phone.
  • Reply 11 of 227
    justflybobjustflybob Posts: 1,337member
    Quote:
    Originally Posted by Hodar View Post




    No one loves a liar.



    I couldn't have said it better.



    Now return your iPhone and STFU.
  • Reply 12 of 227
    patsfan83patsfan83 Posts: 156member
    Quote:
    Originally Posted by Hodar View Post


    This is a design defect, noob. If you have an iPhone, it works great around Mommy and Daddy's house - oh, goody for you.



    Now travel with it. You will soon find that your shiny new iPhone will drop calls in areas where there is not a tower around the corner. This is why it's a HARDWARE DEFECT. Guess what, if you have an iPhone - you too have the problem - you just are not smart enough to realize it yet.



    I don't think it is a defect. I'm pretty sure Apple engineers have heard of attenuation and were aware of placing two antennas within contact of each other. These people aren't idiots. Let's see how the software update deals with it before we cry wolf.
  • Reply 13 of 227
    blastdoorblastdoor Posts: 1,742member
    Quote:
    Originally Posted by Hodar View Post


    If this were a TV that dropped TV shows without warning whenever you entered the room; or a car that randomly stopped while being driven - would you expect anything other than a re-call and the produce repaired?



    All true... except that all cell phones drop calls. So the appropriate comparison here isn't to cars or TVs, it's to other cellphones. Turns out that everyone who uses a cellphone will eventually experience a dropped call, if they actually go places with their phone.



    So, how does the iPhone 4 compare to an iPhone 3GS or to a Droid phone in terms of reception and dropped calls? That's the real comparison.



    From what I've read, the iPhone 4 actually is better than the 3GS in terms of dropped calls / reception, with the caveat that if you hold it in a particular way, the advantage disappears.



    in my case, I almost never hold the phone when I'm talking -- I usually have it in my pocket, and I use the apple in-ear earphones with built-in mic. So this issue will not be an issue for me at all. As soon as the darn thing is available, I will definitely buy it.
  • Reply 14 of 227
    eddieteddiet Posts: 3member
    I do have reception issues with my new iPhone 4.



    I am in Japan and cannot simply return the phone. I would have to break my contract, which would result in me not being able to ever get a cell phone in Japan again.



    Also, I bought a slightly expensive pouch for the phone. If I get a bumper to address the antenna problem, the phone probably will not fit in the pouch anymore. And it is not clear that the bumpers really address the problem, anyway. I'll probably give it a shot, though.



    I'll keep my iPhone. I'll even enjoy it. But I DO have reception problems here. I was an Apple fan, and I suppose I still am, just a little less enthusiastic. And I probably will not enthusiastically recommend the iPhone.
  • Reply 15 of 227
    hodarhodar Posts: 220member
    Quote:
    Originally Posted by PatsFan83 View Post


    Well when your field testers have it in a case so it looks like the original 3G (see Gizmodo), their fingers never actually touched the antenna.



    That being said, my iPhone 4 is doing pretty well. I haven't changed my holding pattern and it never drops. I've had more problems with the proximity sensor turning the screen on while it's against my ear causing erroneous input.



    Field testing is fine, it's a good thing to do. But, any RF Engineer knows that touching an antenna is NEVER a good thing - it introduces parasitical resistance (you can work with that) and a 10-40 pF capacitance (Very Bad). The capacitance issue is what will de-tune your antenna. This is why adding electical tape really has a minimal impact - you need distance between the antenna and your body - just a few millimeters is all it takes.



    Apple opted for cosmetics over RF Antenna design. This is an intentional design flaw. A concesssion was made for function vs. pretty. It was a poor decision. You have probably seen the Diagnostics Toolbox in the earlier OS. Why was this removed? They had the software, and they intentionally removed it .... why?



    Consider, for the first time ever ..... ever! Apple made an accessory for the iPhone, and what an amazing coincidence that the product doesn't work well without this accessory!! Why, it's almost beyond belief.
  • Reply 16 of 227
    zindakozindako Posts: 468member
    Quote:
    Originally Posted by Hodar View Post


    This is a design defect, noob. If you have an iPhone, it works great around Mommy and Daddy's house - oh, goody for you.



    Now travel with it. You will soon find that your shiny new iPhone will drop calls in areas where there is not a tower around the corner. This is why it's a HARDWARE DEFECT. Guess what, if you have an iPhone - you too have the problem - you just are not smart enough to realize it yet.



    Why not just return your phone and get an Android device then?
  • Reply 17 of 227
    dul3728dul3728 Posts: 1member
    Consumer report earlier said that the phone has overall great features and is one of the best, but what is the use of all the great features if the signal is weak or if there is no signal. It would be just a iPod touch and not an iPhone. I am a fan of Apple products and iPhone, but Apple fans and Apple need to accept the fact that the iPhone 4 has an issue with signal by holding it in a certain way and needs to be rectified. I want to hold the phone as i like and not as Apple wants. Apple needs to accept the problem with the phone and needs to provide a solution to its customer.
  • Reply 18 of 227
    Quote:
    Originally Posted by pats View Post


    The potential liability is people stop buying iPhones.



    Or people start returning them, as they are being advised to do in this forum.



    Quote:
    Originally Posted by sandau View Post


    if people have issues with their phone bring it the fuck back. Can we get on with life? This is so lame.



    Quote:
    Originally Posted by sandau View Post


    Bring yours back, get a 3GS in the interim until 'whatever' issue you're having is resolved.



    Quote:
    Originally Posted by justflybob View Post


    Now return your iPhone and STFU.



    As a stockholder, I am very worried. Everybody knows the AI forum steers public opinion of technology. I fear that...are you ready...wait for it....



    The iPhone is DOOMED!
  • Reply 19 of 227
    mutantmutant Posts: 12member
    Quote:
    Originally Posted by Hodar View Post


    No one loves a liar.



    I highly doubt that Apple intentionally did this. Why would they release a flawed product that would have a negative impact on the company? I don't know if it's a design or software issue so I'm holding out on my judgement for now. Remember when the first 3G came out? People were yelling an screaming about the battery and reception problems.



    I've only had my i4 for a few days and haven't noticed anything better or worse with reception in or out of my home so it's just too early for me to pass judgement just yet.
  • Reply 20 of 227
    Quote:
    Originally Posted by Blastdoor View Post


    As soon as the darn thing is available, I will definitely buy it.



    Really?



    Come on now, clearly there are some issues with this product. Maybe it's the end of mankind or maybe not, but don't you want to wait and see what Apple comes up with first?



    Mine is going back on the 29th day if I don't hear SOMETHING from Steve Mobs. I'm afraid after all these years of being an Apple customer, I expect their products to "just work." Got that idea in my head from someplace.
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