Predictions: What Will Apple Do at its Friday Press Conference

| Editorial

Apple has announced that it will hold a press conference on Friday regarding the iPhone 4. Almost everyone believes Apple will say something about a proposed hardware fix to deal with the antenna reception issue that was verified by Consumer Reports. Here are my predictions.

I have written previously that Apple needed to buy time. Mr. Jobs’s open letter on July 2 served to buy that time. Apple had nothing to lose by identifying that calibration issue, and never constrained themselves from offering a future hardware solution.

That time was needed for SVP Bob Mansfield and/or Mark Papermaster and their teams to acquire a definitive technical understanding of the iPhone antenna reception issues. That includes reviewing the Consumer Reports report, technical videos that have been posted, how people hold the phone, the conductivity of people’s skin, pressure issues, laboratory testing … everything. Only after the hardware VPs could present those findings could the Apple executive team decide on a course of action. That’s what’s been happening for the past two weeks.

Any proposed hardware fix has to meet certain criteria. It would have to substantially solve the technical problem. Otherwise, class action lawsuits would continue. It has to have the perception that Apple has done The Right Thing. It has to be such that current iPhone customers would not be insanely jealous of new iPhones, in a modified production process, that seamlessly solves the problem. Finally, and this is lowest priority, it should minimize Apple’s cost.

Here are my estimates:

1. In a worldwide recall, completely replace the iPhone with a new one when it’s available. Estimated cost: US$1.5B. Few think that Apple will go this far. Probability: 5 percent.

But it would have the advantage of being an insanely aggressive and popular act that could gain Apple enormous benefits, good will. It would be a Mr. Jobs call of the decade to make it happen. But it would send AAPL stock tumbling based on the hit on Apple’s revenue.

2. A free case. A free case would achieve the same technical solution as a bumper, but only if the iPhone is in the case. It might be a challenge for Apple to round up a vendor who could supply two million cases in a timely fashion. Apple would also be hard pressed to manufacture that many cases quickly, and an Apple one-case-for-all solution wouldn’t satisfy a lot of people — let alone the 3rd party vendors. Estimated cost $10 x 2M = US$20M. Probability: 5 percent.

3. A free bumper. Apple could send an e-mail certificate to every iPhone 4 owner granting them a free bumper. Consumer Reports claims that a bumper completely solves the iPhone 4 reception issue. If a customer has already bought a bumper, they get their money back. If we assume that a half million people bought bumpers, then the estimated cost is: US$3 x 1.5M iPhones + $30 x 0.5M refunds = ~US$20M.

There are problems with this solution. First, the bumper is incompatible with the iPhone 4 dock. Customers who bought a dock would be upset. Second, iPhones with a bumper may not fit in some of the cases already purchased by customers. Finally, the bumper is out of sync with the rumored fix, at the factory, in which a special non-conductive coating is applied to the stainless steel ring. Current customers would be jealous of the new phones that don’t require a bumper. Probability: 20 percent.

4. A field upgrade or mail in. There is a belief that a special non-conductive coating applied to the stainless steel ring would solve the problem, just like the bumper does. That solution has the advantage of 1) Solving the technical problem definitively 2) not increasing the size of the iPhone 4, 3) the customer’s phone, after the fix, would be identical to all the new Phone 4s coming off the assembly line, and 4) the fix would be relatively cheap and done by Apple service people.

If a customer isn’t within, say, 50 miles of an Apple retail store, then the customer could mail the iPhone 4 in, with an Apple supplied post-paid box, for overnight service. This fix would be completely free of charge to the customer.

This last solution might cost Apple US$5 x 2M = US$10M. It’s one of the least expensive solutions, and it’s the one that meets all the desired criteria. It solves the technical problem. Apple takes the responsibility for taking back the smartphone and applying the fix, thus doing The Right Thing. Customers can still use their docks, and the fixed iPhone would still fit inside every shipping iPhone 4 case. And best of all, the fixed iPhone is identical to new iPhones (allegedly) coming off the assembly lines. Probability: 70 percent.

So that’s my prediction for tomorrow’s Apple press conference. It’ll be very interesting to see what Apple ends up doing. What do you think?

Comments

YodaMac

Your “field upgrade or mail in” could also apply to any sort of internal fix (if there is one) to the antenna insulation…

Of course, Apple could stand by their “its only a software issue” position.  And let it ride.

warlock

John great editorial well reasoned and I agree with your solution #4 as the most logical way to fix the problem as well as at the same time wipe out the PR buruhaha.  Keep up the great articles, I look forward to them every day.

mehrman

Or-what problem? We have no problem.

Nemo

While there is much to recommend Mr. Martellaro’s fourth fix, supra, I think that $1.5 billion of the first fix is not too much to pay for Apple to restore its reputation with its customers.  And the fourth fix, supra, assumes that Apple can fix the problem with a field upgrade that isn’t in any way inferior to a fix that can only be done in the manufacturing process. 

It may be that Apple can do the fourth fix without leaving existing owners of the iPhone 4 with a phone that is anyway inferior to a subsequent redesign that solves the problem.  If it can, then the fourth fix is the way to go.  But if Apple can’t do that, it should offer newly designed iPhone 4.xs to existing owners of the iPhone 4 for free, when they are ready, and view $1.5 billion as a small price to pay to restore its reputation and its customers’ goodwill.

Another perspective is how Apple’s announcement this Friday will affect the pending class action lawsuits.  Nothing that Apple says tomorrow will make those lawsuits go away; not even providing newly designed iPhone 4.xs to every existing customer will make the class action lawsuits go away, though it would significantly limit damages and make those lawsuits much easier to settle.  It is hard to see how Apple can avoid liability for the iPhone 4’s antenna problem.  The only question is how much it will costs, and the answer to that question depends very much on the effectiveness and nature of Apple’s solution.

grshaner

I heard an RF engineer stating that it isn’t the physical touching that is the issue.  If you put electrical tape on the antenna and hold it, you get the same results as holding it without the tape.  There needs to be distance between the hand and the antenna.  Apple will need to issue a clip-on plastic bumper that leaves the dock connector open.

That being said, I think that mailing those out or picking them up in-store is still the best option.

bucknut

Well written. I like #1 or #4 as solutions. It is amusing however, to see how the pendulum has swung on this reception issue. I’m an Apple lover but not blinded by it. For 3 weeks I have been posting my issues with dropped calls and the Apple community has done nothing but berate me: Non-issue, nobody made you buy it, take it back, quit whining, Me and all my friends don’t have a problem, why wouldn’t you just get a case… I think it’s great to shout aloud how great Apple is, I think so too. But, to ignore or minimize real problems your fellow Apple lovers are experiencing is just wrong. The Cult of Mac should have a positive connotation not a negative one.

warlock

I tried the experiment and lost all bars but never lost the call I was on, then I took a piece of clear scotch tape put in on the antenna and could not duplicate the loss.  That being the case grshaner, I think your RF engineer is just blowing smoke, maybe he is a PC techie who just doesn’t like Apple.

Nemo if the clear coating will work as I suspect it would where is the reasoning for Apple to throw $1.5 billion after fixing it that makes absolutely no common or business sense.
I do how ever believe that Apple should acknowledge that a mistake was made and apologize to its customers, that I believe would smooth a lot of ruffled feathers.

BurmaYank

grshaner said:
I heard an RF engineer stating that it isn?t the physical touching that is the issue.? If you put electrical tape on the antenna and hold it, you get the same results as holding it without the tape.? There needs to be distance between the hand and the antenna.? Apple will need to issue a clip-on plastic bumper that leaves the dock connector open.

So, your RF engineer apparently was contradicting CR’s RF engineers’ findings.  I wonder why he would do that.

Bosco (Brad Hutchings)

Nemo, you’ve really changed your tune from early in this process! It’s like you’re not thinking about it like a lawyer anymore.

Here’s my prediction. Steve Jobs will not be wearing a hat. He will apologize for “indiscretions”. Although his wife will be conspicuously absent, his Mom will be in the front row. He will acknowledge straying from his Buddhism and promise his Mom that he will recommit himself to those teachings. He will announce an indefinite leave from designing insanely great products but promise to be back when he feels he has resolved some important personal and family issues. His statement will ramble on for 15 minutes or so. At the conclusion of his statement, he will great a few special guests seated in the front row and give a long but awkward embrace to his Mom.

The person I would most not want to be right now is Steve Jobs’ swing coach. That dude will be unemployed pretty quick.

dmuzzy

Personally, I could see a combination of #4 and #3. 

The customer could either take the phone in for a replacement / fix, or if they prefer, a $30 gift card to purchase the case of their choice from the Apple Store.

I can imagine that there might be quite a few people that would take advantage of a free case. But the option would still be open for those that want a hardware fix.

And those that already bought a case could put the gift card toward something else on the Apple Store that they might want (music, hardware, movies, etc).

Dan DeBartolo

Nemo has one point that I would tend to agree with regarding option #4.  A field applied coating has a much greater potential for human error, than a coating applied in a manufacturing facility with controlled tolerances for such work.  I would prefer a new phone manufactured with coating as part of the process, then the potential for some poor, overworked field tech to make a sloppy mess of the application.

ouch

5. A free bottle of KY gel to anyone who complains, so they can stick their iPhone up their…

Gareth Harris

Once the technical issue is dealt with, the next question is: Can one sort out how the media frenzy is fed by competitors using traditional apple haters? Some how this reminds me of the people who have discovered how to manipulate their ratings on the app store by suing shills.

Bosco (Brad Hutchings)

@garethharris… Nope, it’s not fed by competitors. It’s fed by the media who are tired of Steve Jobs’ arrogance. Mark my words, there will be another snot storm of the same size in August. Over what, who knows. But it will happen, because the media have figured out how to lash back and Apple doesn’t even know what the game is yet.

Gareth Harris

apologies for typo: suing = using

Lee Dronick

I predict that there will be problems with the conference because it is being “held on the left hand coast.”

Tylt

Is there anybody else out there a little suspicious as to why the white iPhone isn’t available, or even talked about?  I think that is a huge indicator that Apple knows there are issues with the new iPhone 4.  I have had numerous phones replaced by apple for free for some ridiculous reasons, and have no doubt they will handle this the way everyone is hoping they will.

Wings

grshaner said:
I heard an RF engineer stating that it isn?t the physical touching that is the issue.? If you put electrical tape on the antenna and hold it, you get the same results as holding it without the tape.? There needs to be distance between the hand and the antenna.? Apple will need to issue a clip-on plastic bumper that leaves the dock connector open.

So, your RF engineer apparently was contradicting CR?s RF engineers? findings.? I wonder why he would do that.

He probably said that because he got the same results I did. Scotch tape didn’t work for me and neither did coating the entire left side antennas with clear nail polish (both excellent insulators).

I’ve had 3 iPhone 4s and all 3 would lose connection when held with the antenna gap covered, here at home and at least 1 other place, my favorite restaurant. And I don’t mean held with a white-knuckle grip, just held naturally. The results I was getting at home was the deal breaker for me. Had to return them. Because you know, I needed a phone.

In doing the scotch tape thing and the nail polish, I found that the radiated power starts to drop significantly when a finger comes within a few thousandths of an inch from the gap. And since antennas receive as well as they transmit (and the bars agree with this) then the received signal strength would drop as well. How do I know the Tx power is reduced? Because I have a speaker amp at my desk that is susceptible to interference from radiated RF energy. I can actually hear the buzzing sound my phones make when they transmit. It makes for a pretty good relative RF power meter (highly UNcalibrated). Get a finger really close to the gap and the buzzing diminishes, followed by less bars and then a lost connection. Tells me that an insulator isn’t going to help anybody, and I have no idea how CR found evidence to the contrary. Why did tape work for them and not me? Could it be that in their tests they were using the 800MHz cellular band, and the tower near me is 1900MHz (which it is)?

I don’t fully discount CR’s tests. There must be SOMETHING going on that isn’t the same for everyone. Gives me hope that one day I’ll get an iP4 that I can use at home.

BurmaYank

I have been unable to reproduce any signal reduction in multiple attempts in weak-signal areas by touching the metal bands in many various ways (which both form & don’t form a connecting link between them as I infer should be done) on my iPhone 4.

Consequently, I’m expecting that it will eventually be established that there that there never was any real problem with band-touching causing any signifacant signal losses; that it was all just ignorant and malicious media FUD.  Consumer reports has been wrong in the past.

BurmaYank

Could it really be that SJ?s explanation for this perceived problem (as just a misperception based upon miscalibrated signal-strength indicator bars) actually does adequately explain everything everyone has seen regarding this antenna reception ?malfunction?? ostensibly ?verified? by Consumer Reports?

I have yet to see or hear of anything to clearly/credibly contradict/rule-out that possibility.

My hunch is SJ got it right in his statement, originally.

nealg

John,

Nicely written piece although some of the choices are not mutually exclusive. Apple could choose to issue a bumper for a short term solution and then do a coating of the antenna at the customers convenience if it is something that they would want. It would take a long time for Apple to “retrofit” all of the phones out there. It would not just be in this country but around the world as well.

My own take is that as a short term solution, Apple is going to do number 3 and then possibly 4. I also think that Apple is going to extend the period of time that consumers can return the phone until they can get everybody a bumper as well as whatever other fix, software or hardware to make sure everybody is taken care of. Not that this will stop some from complaining about there own situation but if Apple extends the period for returning the phone without a restocking fee, it should take some of the pressure off to make the quickest fix to whatever is the real issue, be it one of perception or otherwise.

Just my take on things.

Neal

BurmaYank

Although this very intriguing finding by

“I found that the radiated power starts to drop significantly when a finger comes within a few thousandths of an inch from the gap. And since antennas receive as well as they transmit (and the bars agree with this) then the received signal strength would drop as well. How do I know the Tx power is reduced? Because I have a speaker amp at my desk that is susceptible to interference from radiated RF energy, I can actually hear the buzzing sound my phones make when they transmit. It makes for a pretty good relative RF power meter (highly UNcalibrated). Get a finger really close to the gap and the buzzing diminishes, followed by less bars and then a lost connection. Tells me that an insulator isn?t going to help anybody, and I have no idea how CR found evidence to the contrary. Why did tape work for them and not me? Could it be that in their tests they were using the 800MHz cellular band, and the tower near me is 1900MHz (which it is)?”

does not help to explain (let alone verify) CR’s reported finger-contact-induced antenna “reception reduction?, it nevertheless brings to light a curious observable finger/antenna-gap proximity-related signal transmission impairment, which apparently can induce lost connections & which would likely not be seen on all previous cellphones that lack iPhone 4-like bare antenna-gaps.

So, is the actual transmission area then so localized to that tiny space of the gap which is so small that it can be completely obscured/covered over by a relatively huge fingertip (and consequently, if the transmission energy is thus so actually concentrated into such a tiny space, what might be the medical effect of such higher-than-expected energy concentration on the user’s affected hand tissues)?

Or, does the hand instead somehow “suck” into itself nearby transmissions, perhaps along field lines which are warpable by a very proximate hand-sink?

Curiouser & curiouser…

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