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Following the organization's refusal to give the iPhone 4 its stamp of recommendation due to the device's antenna issues, Consumer Reports on Wednesday suggested Apple (Nasdaq: AAPL) should fix the smartphone's reception problems at its own expense.
It dismissed Apple's suggestions that owners resolve the problem by holding the iPhone 4 differently or buying a case because they "put the onus on consumers and skirt Apple's obligation to offer a product that works consistently and reliably out of the box."
Meanwhile, a debate is raging over whether or not Apple should recall all iPhone 4s sold so far.
Consumer Reports' Ire
Noting that Apple will provide a full refund to users who return their iPhone 4s within 30 days of purchase, Consumer Reports said the company should "step forward soon with a real remedy that fixes the confirmed antenna issue, and not one that involves buying an extra piece of equipment or holding the phone only in a particular way."
Apple has stated that holding "almost any mobile phone" in certain ways will reduce its reception. The company has also claimed that signal attenuation is a fact of life for all wireless phones. Further, it has suggested customers buy a Bumper -- a case for the iPhone 4 that Apple sells for about US$30.
Consumer Reports has dismissed all these explanations.
Bring Back My Bonny to Me
The idea that Apple should issue a recall for the iPhone 4 has gained traction, and there are reports that bookies are laying odds on such a move. A recall, however, would be expensive.
"With more than 2 million units sold at a cost of $300 each, that could see Apple being hit for more than $600 million," Brian Marshall, an analyst at Gleacher, told MacNewsWorld.
Other reports have set the cost at anywhere from $900 million to $1.5 billion.
Whatever the cost, it may be a small price to pay in the overall scheme of things.
"A recall could cost Apple a lot of money, but it will protect Apple's trusted brand," Chris Hazelton, a research director at the 451 Group, pointed out. "Some years ago, Tylenol did a recall of is products, and it was expensive, but this maintained its trusted brand."
No Retreat, No Surrender
Regardless of the expense, there remains significant doubt that a recall is necessary.
"Recall what? There is nothing to recall," Marshall said. "People are lining up in droves to buy the phone and there is at least a three-week lead time to get it. Apple is not the type of company that would knowingly ship a faulty device."
Apple could do one of four things, Marshall told MacNewsWorld. First, it could just fix the bug through software upgrades. He gives this a 70 percent chance of happening.
Or, Apple could offer free Bumpers to iPhone users, but the chances of doing this are slim, Marshall said. Third, it could replace the handsets of people who have formally complained. Marshall's fourth scenario is that Apple issues a total recall.
"I don't see a recall," Carl Howe, director, anywhere consumer research at the Yankee Group, told MacNewsWorld.
"Dropping a mobile phone call isn't about to do bodily damage to anyone," Howe said.
A clear coating added to the manufacturing process would likely solve this reception problem, said Howe, who used to design circuit boards. Until then, Apple might think of offering free Bumpers to dissatisfied customers.
"Overall, I think the issue is way overblown," Howe pointed out. "This is a mobile phone, not a car racing down the highway."
The Doors of Perception
Perhaps the greatest damage that the iPhone 4's reception fiasco has caused to Apple has been the perception that it's arrogant and doesn't care about the customer.
"What's really been shocking to me is how badly Apple handled this issue," Charles King, principal analyst at Pund-IT, told MacNewsWorld. "This is a company that has been unmatched in its response to customers and in being able to control and manipulate the news cycle to its own benefit. It's made one misstep after another on this issue."
Those missteps might cost Apple business in the long run.
"Apple may be correct in assuming that Apple fans and dedicated users aren't the type of users who'd pay much attention to Consumer Reports," King said. "However, Consumer Reports still carries a great deal of weight among the broad constituency of people who don't use Apple products."
That could limit Apple's ability to draw in new customers, King warned.
The burgeoning popularity of Android devices at this time makes the situation worse for Apple.
"On Thursday, Motorola (NYSE: MOT) is launching the Droid X with Verizon, and between the problems with the iPhone 4 and the short supply of other Android devices such as the HTC Incredible and HTC Evo, the Droid X could get a nice bump," the 451 Group's Hazelton said.
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