Apple calls press conference to address iPhone 4, could place Australian July release date in doubt

Tech giant Apple will hold a press conference early tomorrow morning, Australian time, presumably to address the widespread concern over the iPhone 4’s flawed antenna.

The event was announced to American tech publications with little warning and few details, with many believing a final fix for the problem is now on the cards – but this could push the imminent, and so far unannounced, Australian release date back even further.

In a very unusual move Apple yesterday contacted publications directly to notify them of the conference, which is set to be held at 10am American Pacific time, or 3am AEST.

This fuelled speculation the runaway public backlash to the iPhone 4’s antenna problem, which has now reached fever pitch, is the catalyst for such a rushed event.

As MG Seigler points out on TechCrunch, “The situation has gotten out of control in a way the tightly-controlled Apple cannot find comfortable at all”.

Initially, the iPhone 4 antenna issue was nothing more than a quirk. A few users reported that when they held the gadget a certain way, their reception dropped and the signal bars on the screen were reduced. The issue was confirmed to be the external antenna, which Apple had called a feat of “engineering brilliance”.

And as more users reported the problem and started spreading the word on social networks, the issue became serious and mainstream publications picked up on it. The fact a Danish professor actually warned about the same issue a few months beforehand didn’t help matters.

Blogs including Gizmodo and TechCrunch were the first to report the issue, but others soon caught on. An email exchange from chief executive Steve Jobs himself to a customer saying the bug was just a rumour didn’t help the situation either – users became furious.

A statement from Apple confirming the bug seemed to relieve fears, with the company then promising to release a software update. But that update, the iOS4.0.1 software fix, has been released today and so far the problem has persisted.

Then earlier this week, Apple was hit with a huge setback. American publication Consumer Reports, similar to the Australian “Choice” publication, said it could not recommend the iPhone 4 in its current state due to the antenna defect. It confirmed the problem is not a software issue, as Apple put forward in its statement.

Tech analysts suggest the Consumer Reports publication was the end of the road for Apple, with the company
now forced to publically answer the issue. The problem is constantly being reported on major news networks like CNN and NBC, with even talk show host David Letterman broadcasting the issue to his late-night fans.

The question remains, where does Apple go from here? What is tomorrow’s press conference about?

A recall is becoming increasingly unlikely. Piper Jaffray analyst Gene Munster, who originally predicted last year that Apple would release a tablet-like device in the first three months of the year, says there is a significant chance a modification will be offered to current iPhone 4 owners instead – all 1.7 million of them.

“We now believe there is a 50% chance the company offers a free modification to current iPhone owners and includes the modification on all future iPhone 4s (eg. a coating around the antenna),” he said in a research note.

“…We have no knowledge of the company’s plans, but we see an in-store fix and modification to future iPhones as the likely scenario (not a recall). Despite these issues, consumers love the iPhone 4; ultimately we believe Apple will manage these issues in a consumer-friendly way and maintain its pristine brand.”
UBS analyst Maynard Um wrote in a research note the immediate impact a recall would have on sales would be too risky. “We believe a recall is unlikely as any recall would presumably be more immediate and sales halted by Apple and its operator partners,” he said.

“However, if the solution were straight forward, investors are likely to wonder why it wouldn’t be issued by press release (though Apple already addressed the issue in a statement on July 2). We believe an event is necessary as a press release to address what has become a “loud” issue would likely have drawn more ire.”
One option being suggested is for Apple to provide rubber cases to users, and to fix the defect for all future units.
But even if Apple opts not to recall the iPhone 4, and instead offers rubber cases, Australian analysts still believe a late July release date is now in doubt.

So far the major telcos have only announced they will carry the phone, with no solid date announced, and this morning none of them, (VHA, Telstra, Optus), replied to requests for comment before publication. With just two weeks to go within the “late July” timeframe, the likelihood of a July release is growing slimmer.

The same exact issue happened with the iPad earlier this year. Apple promised a release date, and as it become more likely that release date would not be met, it delayed the gadget for another month. It was suspected high demand for the iPhone 4 was already going to affect the Australian launch, and the antenna issue will only exacerbate that problem.

But is that necessarily a bad thing? Telsyte research director Foad Fadaghi says a delay is warranted if it means getting a quality product on the market.

“If they rectify the problems, then it makes sense to hold something back until the product is ready to go. If they’re offering a plastic shield or case to solve the problem, then that shouldn’t cause a huge delay, but if they are changing units then that would probably push a release back and it could well be delayed.”

“It’s not a major safety issue, it’s more of an industrial design issue, and something the company can presumably fix. They’re the biggest tech company in the world, and even though the flaw is major, the fix will be something they can implement pretty quickly.”