15 Jul 2010
Apple has called a surprise news conference on 16 July at 1800 (BST) to talk about the iPhone 4 as the clamour for the company to resolve antenna problems with the new device intensified.
The company has refused to give details about whether the event
will address reception problems that some users have reported with
the phone, launched just last month.
Apple has faced mounting criticism from analysts and consumers
over its handling of the issue.
Industry watchers said the firm was in danger of damaging its
"rock star" reputation over how poorly it had dealt with what would
normally be a minor problem.
"It seems there has been a real crisis of leadership here," said
Patrick Kerley, senior digital strategist for Levick Strategic
Communications which deals in crisis managment and reputation
protection.
"There are so many conflicting reports about this issue and a
lot of confusion in the marketplace. They need a plan of attack.
Today's companies have to react quickly before chatter on Facebook
or Twitter turns into news headlines as is the case here," Mr
Kerley told BBC News.
That was a view echoed by a number of other brand managers and
industry analysts.
"They have not handled this well at all and they have turned
this into a bigger problem than it needed to be," said Van Baker,
senior vice president of research at Gartner.
Escalating issue
Reports of problems with the iPhone 4's antennas began around
the 24 June launch date when users who pre-ordered phones were
among the first to claim signal strength fell away and calls were
dropped when they gripped the phone on the lower left side.
Some posted videos on YouTube complaining about the reception
issue.
Days later an e-mail that purported to have been sent by Apple
co-founder Steve Jobs did the rounds after one user contacted him
to find out if there was a fix for the problem.
BoyGeniusReport.com, an gadget news blog, printed the transcript
in which Mr Jobs e-mailed back "you are getting all worked up over
a few days of rumours. Calm down".
The authenticity of the exchange was denied by Apple, though
BoyGenius maintains it is authentic. The controversy over its
veracity helped to light a fire among critics and fans alike who
marvelled at the tone of the messages.
"The arrogance of this e-mail, true or not, escalated the
problem for Apple when what they should have done was get out in
front of the problem and said here is the deal," said technology
analyst Rob Enderle of the Enderle Group.
On 2 July, Apple issued a statement explaining that it was
"surprised" by reports of reception problems and that an
investigation found there was an error in the how the signal bars
were displayed, rather than the signal itself.
The casing of Apple's latest phone is made of stainless steel
and also serves as its antenna.
Tests carried out this week by Consumer Reports confirmed a
problem with the iPhone 4's reception. In what was seen as a body
blow to Apple, Consumer Reports said it could not recommend the
phone to users because of this flaw.
Recall
The tests by Consumer Reports has helped to keep the iPhone 4
antenna problem in the headlines over the last 48 hours.
There have been requests to have the phone recalled but that is
seen as unlikely given the damage that would cause to Apple's
bottom line and its reputation.
"Apple is probably one of the most important brands of the last
50 years," said Olivier Blanchard, president of Brand Builder
Marketing.
"They are rock stars in that sense and I believe that this
fiasco with the iPhone 4 is an excuse to attack a company that is
becoming such a giant. Five years ago when they were the underdog
this would have been a non-issue," Mr Blanchard told BBC News.
Analysts have estimated a recall could cost up to $1.5bn (£1bn)
whereas the cost of issuing free rubber bumpers to alleviate the
problem would be cheaper. Estimates based on the retail costs of
bumpers suggest giving out the protectors would cost nearly $180m
(£118m).
Despite the negative headlines, a number of analysts have
reported that consumers are not turned off.
"So far, in our supply chain and industry checks, we have not
seen any change in build plans or demand patterns and thus we are
not changing our estimates looking for 7.5 million iPhones in the
June quarter and 40 million in 2010," said Shaw Wu of Kaufman
Bros.
"In fact, our sources indicate that Apple is still having
difficulty keeping up with strong demand due to screen supply
constraints. Should this antenna issue become a bigger deal, there
could be a risk to iPhone estimates."
