John Paczkowski

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Apple’s “Just Encase” Answer to iPhone 4 Complaints [Live Blog]

Apple’s (AAPL) iPhone 4 death-grip drama came to a head this morning at a news conference at which Steve Jobs, saying no smartphone was immune to antenna issues, promised free cases for all owners and a liberal return policy. Here’s the the live blog.

[Update: Apple has provided a video of the presentation on its Web site. It's not embeddable, but here's the link.]


9:40 am: We’re here at the Apple (AAPL) campus in Cupertino. The assembled press, a smaller crowd than usual, is waiting to enter Building 4 for the event.

10:00 am: Inside the auditorium now. This is easily the smallest Apple event I’ve ever attended — there are actually empty seats.

A quick scan of the front row reveals pretty much all of Apple’s executive bench to be in the house: Tim Cook, Bertrand Serlet, Bob Mansfield, Scott Forstall and Phil Schiller.

10:04 am: The event begins with a music video: “The iPhone Antenna Song.”

It’s a sing-a-long: “If you don’t want an iPhone 4, don’t buy it. If you don’t like it, bring it back.”

10:06 am: And Jobs takes the stage with a big grin on his face. “We saw that video on YouTube and couldn’t help but share it.”

10:06 am: “We’re not perfect,” says Jobs. “We know that and you know that. Phones aren’t perfect either….We want to make our users happy. That’s what Apple is all about.”

10:07 am: The iPhone 4 is perhaps the best product we’ve ever made at Apple and we’ve sold over three million since we launched it just three weeks ago, he says, noting that the device has been well reviewed in major publications and has a high satisfaction rate to boot.

10:08 am: “However,” says Jobs, “we began getting reports about antenna issues…and this has since been dubbed ‘antennagate.’…We heard about this just 22 days ago and Apple is an engineering-driven company and the way that we work is that we want to understand what the problem is before we come up with a real solution.”

10:09 am: “We’ve been working our butts off for the past few weeks to do that with antennagate.”

Jobs notes that attenuation problems are not unique to the iPhone 4. He rolls some videos demonstrating similar signal deterioration when a BlackBerry Bold is held in a particular way.

Another video, this one of the HTC Eris. Again the phone’s bar display drops drastically when held in a particular way.

10:12 am: Same thing with the Samsung Omnia. “It’s got 4 bars to start,’ says Jobs. “We grip it in a familiar way and the signal drops.”

10:13 am: “These phones were all tested in areas of relatively weak signal strength and they all dropped bars….This is life in the smartphone industry….Smartphones are not perfect.”

10:14 am: Jobs suggests that the controversy over the iPhone 4′s antenna issue is partially the result of the fact that the “dead spot” is so easily visible on the iPhone 4′s exterior. “X marks the spot,” he says.

10:16 am: A quick overview of Apple’s state-of-the-art antenna lab, which is pretty impressive looking. “This is a state of the art antenna test facility,” Jobs says. “We have 17 anechoic chambers. These things are not cheap. We have invested over $100 million in antenna testing facilities over the past 5 years. We have 18 PhD scientists and engineers on our staff. And so the iPhone antenna went through all of this. We tested it. We knew that if you gripped it in a certain way, the bars are going to go down a little bit, just like every smartphone. We didn’t think it’d be a big problem, because every smartphone has this issue.”

10:17 am: Jobs notes again that antenna design is a challenge for the entire industry. “Smartphones have weak spots….You can grab them in the course of normal use and you will drop reception.”

A quick discussion of AppleCare statistics on iPhone 4 user antenna/reception complaints. “If you’ve read the media coverage you’d think, Jesus, at least half of our customers have called in to complain,” says Jobs. “So what’s the real percentage? 0.55 percent.”

10:20 am: And what of return rates? Jobs notes that AT&T (T) has a buyer’s remorse program that allows users to return their phone if they’re unhappy with it. So what have AT&T’s return rates been like for the iPhone 4?

Jobs says return rates for the iPhone 3GS were 6.0 percent, which is below the industry average.

Return rates for the iPhone 4: 1.7 percent.

“That’s less than a third of the return rates for the iPhone 3GS,” says Jobs.

10:22 am: A final data point. A dropped call metric from AT&T. “How do call drops on iPhone 4 compare to those on the 3GS?” asks Jobs. “I can tell you that even though we believe the iPhone 4 is superior to the 3GS, the iPhone 4 drops more calls per hundred than the 3GS.”

10:24 am: So how many more calls does it drop?

Here’s the hard data, says Jobs. “The iPhone 4 drops less than one additional call per hundred than the iPhone 3GS.”

“Now even less than one is too much for us, but this does put things in perspective,” Jobs adds.

10:25 am: Noting that there are fewer third-party cases available for the iPhone 4 than the iPhone 3GS at launch, Jobs theorizes that the number of caseless iPhones on the street has further exacerbated the iPhone 4′s reported reception issues. “So, I have my own pet theory on this, which we have no proof of, but I’ll give it to you anyway,” he says. “When the iPhone 3GS came out, we did not change the design from the iPhone 3, and there was a healthy market of cases for the iPhone 3G that fit the 3GS perfectly because the design didn’t change. And in our stores, 80 percent of the iPhone 3GS users walked out with a case. iPhone 4 has a radically new design; none of the old cases fit. Since we didn’t show it to anybody, none of the new cases are ready, and we can’t make enough of our bumper cases. And so in our stores, about 20 percent of the people are going out with a case. And I think that has something to do with this disparity.”

10:27 am: Now a quick overview of the data points offered so far:

Smartphones have weak spots
Few complaints to AppleCare
Few returns to AT&T

“So this issue is affecting a small percentage of our users,” says Jobs.

10:28 am: “But we are about every user” says Jobs. “So what are we going to do?”

First: The update to iOS 4 Apple released yesterday.

Second: We’re going to give everyone a free bumper case. “One for every iPhone 4…if you’ve already bought one, we’ll give you a refund… through Sept. 30.”

10:30 am: “We will send you a free case,” says Jobs. ” But we can’t make enough bumpers…so what we’re going to do is offer users a choice of cases.”

Users can apply for a case on the Apple Web site beginning next week.

10:31 am: “And if after that,” says Jobs, “you are still unhappy with your iPhone, you can return it for a refund and we’ll waive the restocking fee.”

10:31 am: And now a few other iPhone 4 updates. Jobs mentions complaints about the proximity sensor. He says the company plans to have a fix for it soon.

10:32 am: The white iPhone 4 will begin shipping later this month

10:33 am: And finally, on July 30, Apple will begin shipping the iPhone 4 to a number of new countries.

10:33 am: On to final remarks now: “We love our users,” says Jobs. “We do our best to delight and surprise them. We work our asses off for our users.”

He runs through a list of Apple innovations, notes what the company has done for the retail experience (free Genius Bar appointments, One to One service, etc.)

“And when we fall short,” he adds, “we try harder. And when we succeed they reward us by staying our users….So when we have problems like this, we take it really personally….We all read this stories, and if a user is having a problem, it’s our problem….So we’ve been working really, really hard for the past 22 days to understand the problem and solve it, and we think we’ve gotten to the heart of the problem: Smartphones have weak spots.”

10:37 am: “The data supports the fact that the iPhone 4 is the best phone in the world,” Jobs concludes. “There is no antennagate; there’s a challenge for the entire industry to improve their phones to where there are no reception issues.”

10:38 am: Moving on to the Q&A now.

First question: How’s your health, Steve?

“I’m doing fine…feeling great.”

10:38 am: Considering any changes to the antenna design?

Jobs: “We’re pretty happy with the antenna in the iPhone 4; it’s better than the iPhone 3G’s antenna in almost every way….We’re getting lots of reports from customers who say their reception has actually improved…so we’re not feeling right now that there’s a giant problem we need to fix.”

Jobs: “We have a lot of iPhones in a lot of hands and most people don’t seem to be having problems.”

10:41 am: A question about grip variation. Why does touching the antenna with a single finger sometimes cause signal to drop?

“The body is an effective signal absorber…so the fact that you’ve bridged the gap between the antennas, you’re attenuating the signal.”

10:43 am: A question referencing yesterday’s Bloomberg article: Was Jobs warned about potential iPhone antenna issues?

“You’re referring to the Bloomberg article,” Jobs replies. “Yeah, that was a total crock. We challenge them to come up with any evidence to prove it….I talked to Rubin (the antenna engineer mentioned in the article) and he says it’s total bullshit from his point of view as well.”

10:45 am: Is Apple apologizing to its customers and investors?

Jobs: “I apologize to our customers … But investors … We want investors for the long haul. To those investors who bought the stock and are down $5, I have no apology. … We make great products, and if we hit a bump in the road…it’s just like having kids.”

10:46 am: Q: Is Apple a company that makes users choose between form and function?

Jobs: No. We are a company that likes to do both. You know, you look at an iPod touch and it’s wonderfully thin and it costs us extra to do that well, but we do it. The iPhone 4 antenna is an exterior antenna that doesn’t use internal space, so we can use that additional space for battery, storage, etc. We try to have our cake and eat it too.

10:48 am: Q: Is AT&T giving full refunds to unhappy iPhone 4 users and allowing them to break their contracts?

Jobs: I believe so.

10:50 am: “What we’re learning through this process is that part of our role as an industry leader in this space is to educate,” says Jobs. “So that’s what we’re doing. We’re gathering data and sharing it…and we will continue to devise products that have fewer of these issues, but right now to our knowledge it’s not possible to design a phone that does that….I mean you could make a really, really big phone…a Hummer of a phone, but then no one would want to buy it.”

10:51 am: Jobs says, “I can tell you right up front, we are not perfect. We are human…we make mistakes….We don’t know everything, but we figure things out pretty fast…and we love our customers and appreciate them. We don’t take them for granted and we work hard to keep them.”

10:53 am: Q from Consumer Reports: Does the refund apply to third-party cases?

Jobs says no. Because there are very few third-party cases available, there aren’t really enough in the market to justify a refund.

10:56 am: Q for the team: Do any of you carry your iPhone 4s with bumpers?

Cook, Jobs and Mansfield all raise their phones and none of them has a case. (Laughter)

10:57 am: Give this debacle, what will Apple do differently with its next product launch.

Jobs says he needs to get a little distance before he can really speak to that.

“We were stunned and upset and embarrassed by the Consumer Reports stuff that came out this week, but we didn’t need that to know that we had to take care of our customers….But we weren’t silent because we were ignoring it, we were silent because we were working to understand it….If we had spoken out on this a week ago, we wouldn’t have had the data we needed….Some people have wanted us to run a little faster, and honestly I don’t think we could….We have people here all night…there are cots in the engineering department.”

11:00 am: More from Jobs–”One thing I’ve learned is that when there’s a successful organization, people want to tear it down….It’s happening to Google now. Google’s a great company, but people are tearing them down. They’re doing the same thing to us. … What’s the purpose in that?…Would you prefer, that we’re a Korean company? Do you not like the fact that we’re an American company leading the world right here? …Sometimes I feel that these Web sites in search of eyeballs don’t know what they leave in their wake….We’ve been around for how many years? Don’t we have the trust from the press that we will address issues like this when they arise? I didn’t see that this week….Now we weren’t innocents in this, but the reaction to this based on the data we have has been so overblown that to digest it and determine what we can do better is going to take us some time.”

11:04 am: Jobs reiterates that the number of customers encountering iPhone 4 attenuation issues is small, but that the company still wants to make them happy. Hence today’s announcement of free iPhone 4 cases.

11:05 am: Q–Did you even consider a recall?

Jobs: “You know when you love your customers as much as we do, nothing is off the table. But we are a data-driven company.”

Jobs describes Apple’s efforts to track this issue, talks about sending engineers across the country to analyze it and develop a solution. Evidently, in some cases engineers were dispatched to the homes of customers who’d complained about attenuation.

“We called them first, of course,” jokes Mansfield.

11:08 am: Question about a possible software fix for signal attenuation. This was mentioned in the New York Times report this morning.

Jobs takes issue with the question, stresses that attenuation is an industrywide issue.

Scott Forstall steps up to address the Times article and the “latent software issue” it mentions. “That’s patently false,” he says.

Jobs chimes in: “One of many such statements we’ve seen over the past week.”

11:12 am: Jobs says, “We can’t make the iPhone 4 fast enough….We are way behind demand.”

11:13 am: Q–What impact will this have on your bottom line?

Tim Cook: We’re announcing results next week. We’ll hold off on discussing things like that until then.

11:15 am: Question about iPhone 4 sales.

Tim Cook: “We are selling every phone we can make right now.”

11:18 am: Jobs–”If you don’t own the primary technology, the company that does is going to beat you in the end….We want to own or control the primary technology for the businesses that we’re in….We decided that for us, software was the most important component….So we brought software to the phone business in a way that hadn’t been seen before….So we’ve been able to create and frictionlessly distribute software updates seamlessly since the iPhone first launched….We were the first ones to really do that in a practical way.”

11:22 am: A question about the recent spike in Jobs’s emailing Apple customers. Has Apple shifted the way it communicates with its customers?

Jobs: I get a lot of emails, my email address is out there, and sometimes I answer them. And now people have begun posting them to the Web–which is rude. And now there’s this new phenomenon, where people are just making them up. But this is something I’ve always done.

11:25 am: So was that helpful, Jobs asks the audience before delivering a final quip:

“I wish we could have done this in 48 hours, but then you wouldn’t have had as much to write about.”

And that’s it. The event’s ended.

Press Conference Photos

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Another gadget you don’t really need. Will not work once you get it home. New model out in 4 weeks. Battery life is too short to be of any use.

— From the fact sheet for a fake product entitled Useless Plasticbox 1.2 (an actual empty plastic box) placed in L.A.-area Best Buy stores by an artist called Plastic Jesus